Revolutions Are The Locomotives Of History
– Karl Marx
When was the last you visited a bank?
When was the last you withdrew cash at the bank counter?
Even if that was not very long ago, I bet that the frequency of these visits is not the same as before.
Money is a high trust and high emotion area. People prefer security over everything else. Hence consumers continue to bank with large traditional banks. This trust has resulted in banking being a complex and ambiguous and highly profitable industry!
But the banking industry as we know is ready for disruption. The digital revolution is set to change the game in banking landscape. Digital Banks are all set to become the new challengers.
Digital Banking is a whole new way of banking. They are thinking differently – thinking the same way as the Uber-Instagram-Whatsapp style startups. They offer pure play banking services through mobile apps and digital channels only – no branches. They do have call-centres. They do not have legacy thinking, infrastructure or even legacy issues.
Digital Banks have a fertile ground because of various factors:
1. The New Generation users have a disconnect with traditional banking models. Their relationship with money is driven by different motivations as compared to earlier generations. They want to deal with a bank that speaks their language and understands their mindset.
2. The Mobile Generation wants the best of technology in all walks of life and banking is no different. They will want to transfer the funds with same ease as sharing an Instagram snap.
3. The New Generation is comfortable with trusting Apps for money. The m-Commerce and e-Commerce experience have given the confidence to try Digital Banking models.
4. Pure play and on-demand services are the mantra in digital economy. Traditional banks try to cross-sell and push multiple products. Millennials want pure-play banking and Digital Banks will fill that need.
Digital banks are leveraging the best of technology to create competitive advantage. Offering real time intelligence – analysis of money spent or affordability of that new car ! Giving ideas to save money. Atom Bank plans to use 3D visualisations and gaming technology for its app, and plans to integrate cutting edge biometric security. Digital Banks can also offer personalisation. Of course, all of these value-adds can be copied by traditional banking giants.
UK already has seen the launch of Digital Banks – Atom Bank, Starling Bank, Tandem, Mondo etc. Lunar Way has been launched in Norway.
Interesting Times…Another industry faces the digital challenge ! Expect High-Street Banks to learn from these banks. Also acquire these new banks. In any case, the banking industry is ripe for a paradigm shift !
Image Credit: KHRawlings
