Pekao entering the UK banking market is only a first step initiated by leapfrog economies champions
It may have been believed that financial services would be disrupted by banks with proper roots: the founders team honing their skills in a established financial hub (where often the amount of capital concentrated is proportional to the number of established emerging tech brands). In fintech, leapfrog innovation is increasingly the case, fuelled by sophisticated models tested in geographies where mistakes come dearly, so those businesses that survive are those with lean structures, agile cultures, and realistic approach to revenue generation (see our last post about the cost of distribution influencing fintech trends)
> Access to capital — still is a major factor in a world replete in cheap long-term capital
> Access to users — ecommerce rails allowed a new distribution model, aided by cheap hardware and storage, but the critical part is still the third element
> Leapfrog expertise — accounting for local traditional may give you a decent advantage and so that’s what Pekao is doing
It would rely on digital rails and western market capital to compete against the likes of Transferwise and debit card programs like Monzo by applying its brand and connection to win the wallets of over 1 million Polish residents of UK hamlets.
Keeping it simple would be a good aid to enter the market, while a number of cloud based core banking (10x) or payment (Railsbank) or card-scheme service providers (Wirecard) exist to build a case, yet what is important is the business logic and value underneath to capture the users who are starting to use general use products, embellishing the lines of ethnic products, so marketing has to be massive.
Would it be easier to join forces with origination agent in the UK to build a better connection with the Polish users back at home? Tech innovation in financial services offers both ways to explore.
Probably the key reason for the leapfrog nation champion to enter a new market is about the end goal — the shareholder value generated. Where many digital challenger are now praised through the inflation of their multiples in private investment rounds, established leapfrog players valuations are dented by the limited geographical presence. Going global would serve the latter in both ways — exporting their expertise and achieving a massive surge in valuation. So this should be tracked more closely as local champions go global.