FinTech companies are fully embracing technologies to deliver traditional banking services that are adaptable and flexible to customers. The digital disruptors are characterised by mobile functionality, simplicity, use of big data, accessibility, agility, cloud computing, personalisation and convenience. Traditional bankers, in turn, need to focus on ways and means in adopting these disruptors and using them to reach out with the masses.
Traditional bankers have legacy processes and a wide organisation structure which hinders the culture of agility and innovation, whereas challenger banks have a flatter organisation structure and fewer barriers to change, which encourages innovation and the ability to rebuild faster. It is time that traditional bankers rise up and respond to the new challenges.
Banks need to leverage the existing customer base they have built on trust and security over decades and offer them services which do not entail detailed paperwork, manual interventions, longer processing and response time, and high fees. They have to work on their strengths and strategise in order serve their customers in this new digital world.
1. Smartphone banking
Banks can consider reinforcing their capabilities by using the huge amount of transactional data to consolidate customer data, digitise business processes quickly and continuously evaluate new technologies through dedicated innovation labs or partnership models.
Several banks have introduced apps that squeeze the key functionalities of a bank into a smartphone. By providing quicker and faster services through e-wallets, faster responses to queries through 24×7 virtual assistants powered by artificial intelligence and benchmarked security standards, smartphones have evolved into branchless banks.
2. Smartphone-enabled pre-paid instruments
Around 41% of India’s population is below 20 years. This group is also very tech-savvy and constitutes a huge market which banks can tap through innovative products. Innovative banking services can be used to cater to this segment. This age group makes a lot of purchases using either cash or their parents’ cards. As a result, it is difficult to monitor or track their usage and consumption.
Banks can combine prepaid debit cards and smartphone apps and allow these to be controlled by the youth as well as their parents, thereby creating a new target segment.
These pre-paid debit cards can be backed by any of the existing global card/payment providers. They can be linked to a simple mobile app which has separate log-ins for the young people and their parents. The card and the app can have several features that are likely to attract parents—such as the ability to monitor and manage the card remotely, instant loading of cash, SMS alerts for transactions declined and card lock for stolen cards.
These kind of cards may be embraced by parents who are keen to educate their children on how to manage money. A mobile-only, branchless banking service provider in the UK has come up with such a prepaid card and app which is aimed at the UK’s seven million 8–18-year-olds.
Source: CII Banking Tech Summit 2017