Banks banding together to provide services in socially threatened regions
Several cases in international practice exist to support this
Lawmakers from several countries are concerned that the digital drive leave the financially excluded — now excluded totally from the financial system. Banks branches follow the well off, their dissemination connected to the deposit ratio, digitisation trends not satisfying the socially fragile segments as they tend to trust a person — and so would rather do a costly micro-finance transaction than deal with the intricate web of bank terms.
Hence, socialist-leaning Democrats in the US and MPs in the UK are deciding on how to counter the escape of banks from the socially fragile regions with either emboldenment of postal system to neuter the deficiency of live interaction — or motivate banks to come together — as often cellular networks do as they have to install modern equipment for standard level of service.
So, banks are coming together to propose shared hubs where rotated specialists can help users with basic queries like setting up of direct debits: probably better solutions exist.
- Banks need to distribute simple products through retail channels and agree on remote ways of authenticating customers. The reason why fintechs are finding success first with small-token consumers is in equal terms for the simplicity of the offering. Less is more.
- Simple products are straightforward and are more easier to make part of remote KYC regimes law-makers are equally interested in: digital provisioning of financial services frees up capital and creates a level-playing field for all irrespective of physical presence.
Those digital strategies that succeed are able to turn hardware into software — a tool scaled through implicit trust achieved through understanding of transparent and governed terms.