A man rings a bank to ask about opening hours. "When can't you make it?" comes the reply. It's an old joke. It reflects a time when banks were just buildings—buildings that closed at 4:00 PM and didn't open at all on weekends.
A new wave of Fintech is rethinking the banking system. They're using real-time alerts, voice calls, data analytics, and more to steal customers from old-school incumbents. Tim Green, mobile writer, editor and influencer reports on a major account transfer.
Today we live in more progressive times. Branches still exist. But for most customers, the bank now exists within an appWe can view balances, make transfers, order cards, and more with the touch of a finger. It's easy.
But it could be even simpler. In fact, in a world of negligible interest rates, one could argue that user experience (UX) is the key competitive advantage—far more significant than fees and returns.
And there's no doubt that the new generation of mobile-first banks is winning the UX battle. Companies like Fidor and N26 in Germany and Monzo, Starling, Atom, and Revolut in the UK have no branches and aren't hampered by decades-old technical infrastructure. They're using this lack of legacy to focus instead on rebooting the customer experience.
A good example among many is Monzo's approach to payment records. When account holders browse their purchase history, they can click to reveal additional details such as the store logo, product information, and store location. Push notifications about transactions are also sent in real time. This is not only beneficial for recordkeeping, but also helps reduce fraud.
These characteristics illustrate how challenger banks see mobile as a means to redefine what a bank is: a smarter, more personal financial institution, rather than simply a channel that can facilitate existing functions at a lower price.
Crucially, a mobile-centric user experience also generates real-time data, which these banks can analyze to provide useful services. Valentin Stalf, CEO of N26, gave an example in an interview with Reuters. "If I happen to book a trip and rent a car with my N26 card, my app will immediately use that information to offer me travel and car insurance," he said.
However, N26 won't be providing the insurance. Instead, it will be a specialized partner. This is because most new digital banks use a "bank-as-marketplace" model, in which the bank directs customers to a range of providers via its app. Again, this is only possible in a mobile-centric world. This type of innovative thinking is helping the Berlin-based company sign up 2,000 customers a day.
Curiously, it's not just start-ups that are driving the mobile-first banking trend. In a surprising development, mobile operators are also entering the market. In 2017, Orange obtained a banking license, joining others such as O2 Germany and Telenor Serbia in offering comprehensive banking services. What makes MNOs think they can be successful as banks?
Simple. They believe the banking sector is going mobile and can offer better mobile UX than incumbents. O2 Banking customers can, for example, register via an in-app video chat session with an agent. Within five minutes they can have an active account with one MasterCard Free. While ubiquitous smartphone ownership is causing banking disruption, it's not the only factor.
There's also regulation. In 2018, the European Union introduced the Payment Services Directive 2 (PSD2). This forces banks to disclose customer data to third parties if customers agree. The change in law allows innovative companies to create apps that can help people make better financial decisions.
In the UK alone, 14 startups registered on the first day of PSD2—and virtually all of them were mobile-first. One example is Moneyhub, a personal finance management app that brings together a user's bank account, card, investment, savings, and loans in one place. Users can set spending goals and then get a timely boost to help them stay on track.
Another consequence of open banking is that it offers startups the ability to layer their services on other channels. After all, why create an app when all your customers are on Facebook? This is "everywhere banking," and it's already happening.
For example, Plum created a chat bot within Facebook Messenger. It offers a service similar to Moneyhub, but it does so by “chatting” with the user in a chat session in real time.
In many ways, services like Moneyhub and Plum demonstrate how messaging is crucial to the customer experience offered by new fintechs. They value the asynchronous quality of messaging. They know it allows people to immediately digest information, but respond when it's convenient.
Naturally, new Fintechs are able to provide their advice, real-time alerts, and chatbot sessions thanks to the "communications platform as a service." CPaaS transforms communications into software. It offers companies the ability to integrate voice, video, and text capabilities into their customer experience.
Naturally, emerging Fintechs are able to provide their advice, real-time alerts, and chatbot sessions thanks to "communication platform as a service." CPaaS transforms communications into software. It offers companies the ability to integrate voice, video, and text capabilities into their customer-facing applications as needed. CPaaS has been crucial to banking innovation. Without such a flexible and cost-effective API-based model, it's arguable that most Fintechs wouldn't exist.
The disruption introduced so far by challenger banks is just the beginning. Technologies like artificial intelligence, voice interfaces, augmented reality, and blockchain will undoubtedly bring new ideas and startups. But one thing won't change: people will demand the ability to retrieve information and get answers whenever and wherever they want it. Communication will be constant, even on weekends.
