how banks will win in the digital world

Some commentators argue traditional banks are losing out to FinTechs and Super Apps: but banks still hold huge advantages when it comes to consumer trust and relationship management.

Bethan Cowper, AVP, Market Development & Business Analytics from Compass Plus argues banks have the tools to succeed in the digital world – provided they take the right approach.

Consumers are increasingly making unfavourable comparisons between traditional banks and other providers such as neo-banks and tech giants.

This new wave of digital-native service providers offers relevant, attractive services such as instant KYC-approved virtual card products issued from a mobile device, account-to-account payments, faster international transfers and service-based rewards.

As we argue in our new white paper, traditional banks are burdened by their legacy technology stacks. However, that’s just one of the problems they face, as they also struggle to perform dynamic, integrated data analytics given their siloed and fragmented data sources.

Lastly, they are held back by outdated platforms creaking under the strain of integrating new technologies and payment channels.

By contrast, FinTechs, neobanks and tech giants can quickly access data to turn into actionable insights and process improvements across different product lines and service functions.

Gaining a granular overview of customer behaviour provides opportunities to cross-sell other products and develop innovative new services that capture the customer’s attention.

How banks should respond: leverage trust and technology

In “Mobile Banking: How digital platforms and super apps can power up traditional banks”, we argue that there’s still hope for traditional banks. Study after study proves that while consumers want the convenience and speed of new technologies, they prefer these services to be delivered by trusted banking partners. In short, banks hold an ace up their sleeve: they continue to dominate when it comes to customer relationships and trust.

Recent research by EFMA and CapGemini has revealed that although neobanks and FinTechs find it easier to acquire customers than traditional banks, they are currently delivering only 5-10% of the revenue per customer enjoyed by the banks.

By building or utilising an existing modern technology platform, traditional banks can unify their services, creating a truly omni-channel customer experience, while creating a single view of their operations and customer behaviours.

For banks offering both issuing and acquiring services, the digital revolution represents an opportunity to position themselves at the heart of the payments ecosystem. Investing in a great technology stack can help create a single platform not just for mobile banking and payments, but for all digital services, propelling traditional banks to a business model that doesn’t rely on legacy systems for success.

New mobile-first banking and payments platforms offer the speed and flexibility to compete with the “digital first” propositions from tech giants and neobanks while retaining the trust and customer relationships enjoyed by today’s major banks.

By building the perfect mobile platform, banks can innovate at speed and prepare for the fast-emerging omnichannel environment in which transfers of value happen anywhere, at any time, via any payment method or device type.

In addition to defending their position at the centre of payments, banks can also realise economies of scale through a 360-degree platform for mobile banking – and build fruitful partnerships with the expanding pool of players in the market.

If they combine the consumer trust they already enjoy with great technology and a mindset that’s open to partnerships, traditional banks can become formidable competitors.

To find out more about building the perfect mobile banking platform, download our white paper “Mobile Banking: How digital platforms and super apps can power up traditional banks”