Digital Maturity in Banking: Irreversible shift in consumer behavior from Super Apps, Fintech and the Platforms
When we hear and read the news headlines like:
Kabbage getting acquired by Amex.
Europe’s Neo-Banking losses increasing (N26, Monzo, Revolut)
We tend to lose faith in the ability of start-ups to scale up like the big traditional incumbent banks.
I do not blame you because some of the young founders do need to be humble in their ‘disruption vocabulary’. They are too vocal about criticizing the big profitable banks.
Only Profitability in Fintech (start-ups) must be celebrated. Fund-raising is a kind of equity loan and hence a big responsibility to scale.
A lot of Fintech are winning too- Transferwise , SoFi, LuFax, Adyen, Zhong An, Square
Digitally Mature Banking Models- What the bankers must learn from fintech and platforms?
Just because a fintech company did not succeed in building a profitable model, does not mean it failed. It succeeded if it managed to create “an irreversible shift in consumer behavior and expectations’
25 Journeys: Traditional Banks customer-centricity and operating model must transform as soon as possible
- Go Paperless as soon as you can in all your processes
- Instant solution to customers- no wait, no frustrating experiences
- Be prepared for the branchless future too, it is not that far off (a couple of decades)-Branch banking must give way to cloud banking
- Employee light models in Banking will emerge, maybe Robot-branches. Retrain your workforce for the age of AI, Data Science and Blockchain
- AI- Artificial intelligence-based underwriting, compliance
- 24*7 and RTP (Real-Time Payments)
- Global Money Movements with no hidden charges on a real-time basis
- Predictive banking- Tell the consumer on what they can afford now and what they must plan for. Personalized Banking using data ethically.
- PoS (Point of Sale) ecosystem partnerships for pre-approved loans
- Mortgage support- End to end support in real estate customer journey
- Data security firewalls, Anti-money laundering process
- Play incubator/accelerator to spot disruptive financial technologies
- Think financial inclusion and Banking for all. Do not leave the bottom of the pyramid for others
- AI- Chat and voice bots in customer service for immediate resolution
- Transparency and no hidden credit card or bank statement expense items
- Trade loans and instant guarantees, logistics ecosystem partnerships
- Investment products that are not traps to confuse or cheat customers
- Increase mindshare and timeshare for your banking app — compelling value proposition (user stickiness)
- Upgrade legacy systems, software, and Blockchain technology used cases in banking
- Compliance, risk, underwriting, retail, corporate, investment teams must act as one integrated force- Banking frauds/malpractices required them to act independently but ideally the bank is one ecosystem
- Think ethical and greater good- 2008 financial crisis and social bailouts age may be over forever
- Be prepared for the age of Super-Apps and Platforms in Banking (it is already here)
- One-stop solution thinking- Look at Alipay and WeChat home page and you will know what I mean
- Platforms have earned the trust and they are just a couple of great investment products away from luring your customer base
- Banking as a service (BaaS) subscription-based models
Platform-Economics in Financial Services- Bank’s real competition is platform-based models
Your real competition is Platforms like- Alipay, WeChat, Amazon, Uber and Social Media Giants like Facebook.
The fintech is merely changing the customer experience.
Alipay is a mega super app that serves together over :
- one billion users,
- 80 million merchants and
- over 2,000 partner financial institutions for digital payment and digital financial services in China.
- Alipay, the largest commercial app in 2019 and has a presence in almost all the countries in the world
Super app users are addicted to the amazing customer experience and have been permanently spoiled by it
Just upgrading mobile app may not cut it out for you.
Only the banks that can compete with these mega fintech platforms and super apps will survive in the future.
The digital banks like Webank and Mybank are bringing down operational costs to the lowest possible levels, and traditional banks cannot compete with them. Digital banks know the A,B,C,D of Bank-Tech.
A couple of Banks may be kept alive by the governments just like national airlines for matters of pride, but they may not stay profitable.
Digital and Fintech Expert