Remember the time when you used to stand in a long queue at the bank or outside an ATM branch to withdraw cash, and struggle to find coins to make a payment?
The brick and mortar banking system seems like a distant memory as they have come up with their apps to allow bank from home in a digital era. But customers need more than an app, and that’s where banks have lagged behind.
Traditional banks struggle to meet the new demands of their technoid consumers. In a survey conducted by Capgemini, 71% participants mentioned customer expectations as a major disruptor for the banking sector. Their back-end technology and legacy culture are not malleable to keep pace with the evolving society. The focus on local in a global world, minimal services, poor customer service, and boundedness to regulatory restrictions began to tire consumers and paved the way for the fintech revolution.
The first wave of FinTech was driven by the rise of the internet, the adoption of smartphones, and the financial crisis of 2008. The new-age financial services, with agile IT systems, circumvented the regulations to provide better banking services. Investments into FinTech companies took business and customers away from the traditional banks.
FinTech platforms, focusing on banking as a service, appeal to the millennial and GenZ populations. And with two years into the pandemic, digital banking has become a necessity for all age groups. Most applications allow customers to make contactless payments, apply for loans easily, self-manage money and accounts, receive personalized offers, and converse with a human agent from within the application.
Banking is now developing into a lifestyle-based service to cater to individuals who think and live differently. Big tech companies and super apps are acting as one-stop-shops, offering their customers products and services on a unified platform using emerging technologies. This includes banking services, e-wallets, bill payments, and insurance renewals along with shopping and entertainment. Let’s look at Amazon’s versatility for instance. You can buy a wide range of products, book flights, watch movies and listen to music via Amazon Prime, and pay your bills via Amazon Pay to name a few services. You can now transfer money through WhatsApp, an initial chatting app!
The Capgemini survey showed that 54% respondents view increasing demand for digital channels, 50% respondents view emerging technologies like blockchain, artificial intelligence and machine learning, and 46% respondents view bank offering from FinTechs and big techs such as Google, Amazon, Alibaba etc. as major disruptors of traditional banking services. These platforms are disintegrating the customer base which relied on traditional banks by building a favourable brand reputation in the financial sector. Compare the brand value and services of Google Pay versus big traditional banks such as Standard Chartered or HSBC! Wouldn’t you have a sense of trust in paying via Google? And wouldn’t you prefer transferring money with a QR code instead of adding a beneficiary and then going through the entire process of RTGS? Moreover, these platforms use their database to provide personalized offers and deliver smooth services unlike the mainstream banking system.
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Until big banks don’t keep up with the rising demand for intuitive and personalized services, they face a constant threat to fall behind their innovative counterparts. One path to future success can be building partnerships and digital ecosystems with a vision for the future that is likely to be dominated by super apps.
If you’re curious to know what a super app is and the ingredients an app needs to become a super app, stay tuned for our next post!
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