Targetting pre-chasm customers

Ever wondered if banks could be mobile instead of being location at a particular place?, Did you ever think of a mobile app through which you can just request a mobile ATM which happens to be a BMW electric car to come to your premises at a particular time so that you can complete your banking transaction?, Did you ever know that tie-up with mobile network providers could radically change the way credit assessment of customers is done?, Did you ever imagine banks offering concierge type services such as hotel booking or restaurant reservations? Before you even think that all these is a piece of fairy-tale or a science fiction film, Let me tell you that all of these innovations do exist right here, right now.

Disruptions in fintech sector have forced banks to reinvent the way they used to operate. Customers today require faster service at a minimal cost and they need a great customer service experience. The first step when a customer encounters a branch is for opening an account. Wouldn’t it be great if banks come to you for opening account? No, we aren’t taking about the Bank Mitra. In Indonesia, “Floating banks” are capturing new customers by travelling to island populations. Next comes the cumbersome task of following the regulatory norms such as KYC, exchange of information back and forth between multiple departments before an account is formally opened. E-KYC has come as a boon to the customer. It reduces the processing time to literally on the go verification and the account gets opened instantly. Next big problem after opening account is making payments in a jiffy. We now can send money to accounts instantly through IMPS, Send money to accounts linked to a phone number directly thanks to the technology. Using advancements such as UPI, We can send money through twitter handle like statements too. In rural India, people often withdraw cash to serve their daily cash requirement. It is really tedious to search for an ATM or a bank branch, Wait in queue and then get the amount subject to availability of cash. Now a days, we have mobile ATMs too. In Poland, Customers can use a mobile app to request a mobile ATM housed within an electric BMW i3 to come to them at a specified location and time. This greatly enhances the customer experience and increases the retention rates.

Next big problem is to decide the credit worthiness of a first-time loan seeker. In Kenya, Banks are partnering with mobile network providers to assess credit risks of first time bank customers. Next big problem banks are facing is that customers are no longer loyal to just one bank. Banks aren’t able to leverage the customer relationship properly. Attracting and retaining this new generation of banking customers requires banks to reinvent the customer experience. They must match the agile, entrepreneurial spirit of their young customers with similarly crafted banking practices. Do you limit the definition of banks to deposit taker and loan giver? Perhaps we are living in an age where this doesn’t seem apt. Banks are venturing into providing other services too such as offering concierge type services including car rentals and travel arrangements. Few banks are building their internal capabilities while few banks tie up themselves with upcoming start-ups. Routes to developing new ways of banking are novel and diverse, but share a common goal of bringing news ideas to fruition quickly. Speed to market is critical in meeting the rapidly evolving needs of customers, defending increasing competitive pressure and managing specific challenges of banking in emerging and rapid-growth markets. To ensure customers stay glued to them, Banks must be active on social media. Kotak Mahindra, India’s fourth-largest private sector bank, has launched Jifi, a bank account that integrates social media platforms. Customers can open a Jifi account by signing up via Facebook or email, with account updates received via a direct message to their Twitter handle and loyalty points accrued based on Facebook “likes.” Poland’s increasingly mobile population inspired mBank to develop mobile banking functionalities based on customers’ requests. Functionalities include access to key information and offers without logging in, discounts based on geolocation, and the ability to make payments by using telephone numbers and Facebook identification. It’s a useful reminder that banks in emerging markets must make a road map for customer innovation, regardless of whether evolution is radical or incremental — and not get sidetracked by the FinTech momentum.

There are 2 billion people around the world, who have never opened a bank account. Realizing the potential of the unbanked requires novel approaches to meet their specific needs. Over the next decade, it is predicted that 40 million new bank accounts will be opened in China and 15 million new accounts will be opened in Nigeria. This growth in demand offers a huge first-mover opportunity for banks that can capture new customer relationships at an early stage. But banks in maturing markets must reinvent their approach to address this new generation of customers. Traditional branches or banking methods simply don’t work in many developing countries. Instead, some banks in these markets are employing inventive methods to meet customer requirements and satisfy expectations from shareholders worried about returns and from governments focused on greater financial inclusion.

Mobile money platforms are enabling microfinance, while popular crowdfunding apps have opened up both investment and donation opportunities. Location services and GPS tracking are a boon for advertisers, including banks wishing to promote their brands and services to relevant and targeted communities. One indicator of customers’ financial stability is how often and by how much they “top-up” — replenish — funds in their accounts via their mobile phone. For example, a customer who tops-up one large amount at the same time each month may have a salaried job, while another who tops-up very small amounts on an ad-hoc basis may indicate that he or she has a more informal employment status. If customers regularly move from one specific place to another on weekdays as indicated via their phone’s GPS tracker, this could indicate they are commuting to and from work and thus have a stable job. Mobile calls from overseas might indicate jobs that require traveling or, if done on weekends, high disposable incomes that allow for leisure travel. With the availability of more open infrastructures and data feeds, these institutions can develop new applications, harnessing the greater flexibility associated with application programming interface (API) technology, and quickly provide product customization and experience to support new and existing customers. But realizing these benefits is not easy. Many of the most promising markets lack a mature financial services ecosystem. They are challenged by a patchy telecommunications infrastructure, limited IT vendor presence and scarcity of customer data. These factors make it difficult for banks to effectively reach and engage customers, manage risks and improve operations and highlight the need for different approaches to banking.

Banks in maturing economies often face internal challenges, as well as macroeconomic limitations. For example, processes around operational risk, anti-money laundering (AML) and Know Your Customer (KYC), the due diligence to verify the identity and integrity of clients, as well as comprehend their risk tolerance, investment knowledge and financial position are more likely to be underdeveloped. Data governance, standards and infrastructure are often unsophisticated. Banks in emerging markets that are overcoming these issues successfully aren’t trying to replicate the traditional processes of developed market banks. Instead, creative approaches are solving old banking problems. Poland’s mBank may have the world’s fastest and most convenient loan in retail banking. Customers request loans online or via their mobile phone and have a response within 30 seconds. The Quick Loan Program uses an existing platform of pre-approved loans and accesses information on customers’ salaries and employment status. In Kuwait, Boubyan Bank’s interactive video tellers allow it to expand into new locations where full-size branches are not viable. ATM-based technology allows customers to talk to a live remote teller who controls the machine to conduct transactions, such as cash deposits, transfers between accounts and cash or check acceptance without a card.