Out with the old: Digital Banking is here to kick ass
I like going to the bank, said no one ever….. At least not in Nigeria.
People love… sorry, people like banking. It is a necessity. But people do not necessarily like banks. Definitely not the action of walking into a bank building to complete a transaction in Nigeria.
Most people would rather just use their phone or, worse case, visit an ATM. But to walk into a physical bank?……….
A lot of bank customers are disenfranchised with their banking experiences so far. Their interactions with traditional banks have left them frustrated. This is especially true for millennials, many of whom consider it a waste of time.
And who can blame them? I can reel off a number of reasons myself — Time to transaction completion? Customer service staff attitude to “small” account holders? Complex form filling procedures for seemingly simple account add-ons? To name but a few.
Many banks are rigid in their approach to the market. Rigid in their approach to this (millennial) target market.
Most banks feed business juggernauts and tycoons huge loans while ignoring the startups, the micro to small enterprises, the enterprising millennial trying to fund his innovative idea, and most especially the young professional trying to forge ahead in his/her career path. They forget too easily that these are the CEOs of tomorrow. The future business juggernauts.
Obviously, millennials are underserved by a banking sector that either largely ignores them or offers them irrelevant and inappropriate products and services. This has led to a huge gap in the market.
It’s ridiculous that in this day and age, a millennial wants to take a loan, and the bank is requesting for collateral. In this age of sharing economy — Ubers, AirBnB and so on — a bank would be requesting for a house, landed property, etc, as collateral to secure a loan.
It should come as no surprise that customers are looking elsewhere for their financial needs to be met. They are turning to other sources — the fintechs, who are agile and intuitive financial service providers primed to address the fundamentally underserved young generation.
These are the companies heralding the age of digital and the rise of digital banking.
And this is why the digital banks will thrive in Nigeria. They have been able to identify a gap (scratch that, it’s larger than a gap, it’s a chasm), that the traditional banks have failed to fill and they have moved in. And being digital, they are faster, and can operate with more precision.
The gap in the market and the shift towards digital has combined to create the perfect atmosphere for digital banking to thrive.
Why do I say so? Consider that millennials grew up with the internet as a basic infrastructure that delivers most services. Today’s banking customer carries out a lot of digital transactions — buy airtime, pay for internet, utility bills, send money to loved ones, pay rent, medical bills, etc. meaning there’s a ton of data to mine.
The shift to digital means there is a massive chunk of data being generated about customers — their habits, their expenses, their lifestyle, their preferences and so on. These are the raw materials which can be used to develop appropriate product offerings and services which customers need.
But change is not so easy.
Right before our very eyes, the banking experience is evolving along with the customer experience but unfortunately, many banks have failed to realise the massive shift that the digital age is heralding.
In the next 5–7 years, many banks will realize they alienated themselves from customers, simply because they didn’t speak their language — digital — early enough.
The best banks are the human ones. Human in the sense that, they “get” the customer’s needs. They understand them.
The availability of data means, digital banks can be more “human”. They can be proactive. No longer do we have to wait for the customer to approach us (not like, they enjoy approaching their banks anyway). Now, we can preempt and even predict their needs and offer suitable products and services to meet them in real time. With data analytics, we can also offer accurate advisory services that will help customers invest smarter, and develop better financial habits.
With Africa’s youthful labor force, we’re seeing a generation of workers who are extremely comfortable with technology and cannot imagine life without it. For them, services should be about convenience.
Little wonder how a lot of millennials prefer to tweet at their banks rather than call or (God forbid) visit an actual branch. The future is digital. That much is obvious.
Think about it for a minute. Today, you can request for and receive a loan from a loan disbursing fintech within 5 minutes without leaving the comfort of your home. Yet, you will have to fill forms and join a queue, an experience that could take weeks, if not months, to be considered for a loan if applying via a traditional bank.
When the time comes to request a loan, the bets are off as to where customers will go.
It may seem like we’re saying Digital Banks are coming to take the traditional banks’ lunch money but the truth remains, out there in the business world, it’s evolve or die. These days, businesses have to move at the pace of innovation and respond to market demands.
And right now, the market is demanding agile, innovative, and proactive financial service providers.
Gone are the days of crazy huge marketing budgets to promote a new banking product/service that nobody really wants. In fact, a lot of the profiles and personas we used to develop financial products are going obsolete fast.
A new generation of customers have hit the market, with new demands. Fortunately, digital banks are uniquely positioned to meet these demands.
With the advent of digital banking, banking as a service is finally entering its finest hour. And Nigeria is ready.
We are ready.
