30
Perhaps the greatest market available to challengers, the mobile-focused and digital banks is that of the Millennials – tech-savvy young adults who see convenience as a cornerstone of their day-to-day lives. “Had the needs of Millennials been serviced by incumbent banks the gap in the market for disrupters would have been significantly smaller,” argues Danilkis. “Millennials have had it tough, with earnings lower, unemployment higher and personal debt deeper than in previous generations. Their opinions of banks were forged in the fires of the global financial crisis and distrust of large financial institutions is rife.”
What appeals to this jaded, bank-averse generation? Google, Amazon, Apple, PayPal and more. A Viacom study found that 71% of Millennials preferred going to the dentist over talking to their bank, showing that incumbents are struggling to keep up with a digital, mobile-first outlook. Has a march already been stolen on the banks by the likes of Apple Pay and Android Pay, Venmo and Square? Jean-Stéphane Gourévitch, Head of Business Development at Mobile Convergence Ecosystems, told a room full of bankers last year “you’ve sold your souls to Apple”. Embracing projects like Apple Pay, he argued, gives banks an edge in the payments market. In the long- term, however, Apple may turn on them when it looks towards P2P.
“Customer expectations are of course being shaped by tech companies,” states Mullen, “but they are also being shaped by their communities, by the media and by the experiences they have with lots of different types of companies. We don’t know what the future holds – we try to go out there and take part in creating it.”
So as the challengers go forth to create the future, what can legacy banks learn from them? Challengers are integrating and providing new products and services quickly with minimal operational impact by leveraging modular, API enabled architecture. “In an age of high user experience expectations and time-poor consumers, incumbents must allow their customers to bank whenever, wherever and however they choose,” says Danilkis. “Challengers are integrating and providing new
www.ibsintelligence.com © IBS Intelligence 2017
products and services quickly with minimal operational impact by leveraging modular, API-enabled architecture. It is critical that incumbents overcome this innovation interruption to compete in the increasingly digital space.”
“Challengers don’t have to earn money in the same way as legacy banks,” adds Mullen. “Challengers like Atom can be transparent and straightforward in a way that legacy banks find very difficult to achieve … don’t have to depend on inertia … don’t have to depend on cross- subsidisation or on cross-selling.” The location of banking has changed, just like it did in the 90s with the advent of the internet. Before, it moved from the branch to the desktop PC, now it is moving from the PC to the pocket. Banks must now connect their services to people through a channel where the environment is totally dictated by the customer. Mobile banking penetration is certainly on the rise in Europe and USA – it’s expected to pass the 50% mark by the end of 2017.
Is agility perhaps the answer if complex legacy systems are holding the incumbents back? “By harnessing cloud technology and the digitisation of near all processes costs are drastically reduced across infrastructure, management and operations,” states Danilkis. “This allows banks to focus resources on utilising tech-driven solutions to design a modern customer journey, tailor products and improve customer service. SaaS offerings allow banks to give their customers the convenient, secure and functionality rich banking experience they demand.”
Mobile banking is on the rise, that much is clear. The problem is whether banks have the wherewithal to realise that a valuable section of the market is being claimed by up-and-coming tech companies. There may not be a large demographic section of underbanked in the UK, Europe or the US, but there is certainly a market for on-the-go payments, transactions and account services. It feels very much like a tipping point is on the horizon, an M-Pesa moment. The race is on in 2017 to see who will be riding the wave when the tide turns.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
