November 4, 2019
A decade or two ago, timely visits to bank branches were quite common – and these visits were dominated by paperwork (usually multiple documents). Today, smartphones and the Internet have made visiting bank branches almost inessential thanks to most banking activities being conducted online. As new businesses emerged in payments, lending, and other segments of the FinTech ecosystem, there was also a rise in neobanks, which emerged as contenders to traditional banks, but is this the reason for traditional banks for launching their mobile-first offerings?
The primary reason for launching a mobile-first offering could be attributed to rapidly changing consumer preferences. Customers across the globe are looking for unique experiences – and a smartphone has become just the platform to deliver those experiences. Another aspect that propelled the launch of new mobile-first offerings is the necessity to capture the millennial demographic, which could provide an opportunity to cross-sell higher-margin financial products as their needs evolve. By launching mobile-first offerings, traditional banks also gained the opportunity to stay innovative as they get to start with a fresh slate, which would enable them to squeeze out the overly competitive startups. In this article, we analyze the traditional banks that have rolled out mobile-first offerings in Asia, the Middle East, and Africa.
It should be noted that traditional banks have been launching online services via internet/mobile/tele-network channels for a very long time now. Banks such as Japan Net Bank, SBI Sumishin Net Bank, and Jibun Bank were established between 2000 and 2010; interestingly, all these banks are based in Japan. Between 2014 and 2016, traditional banks launched 7 new mobile-first offerings. A few notable offerings that were launched during this time were meem by Gulf International Bank, Timo by VP Bank, and digibank by DBS Group in India. Between 2017 and 2019, 19 new mobile-first offerings were launched by traditional banks. Notable launches during this period include digital banks launched by Standard Chartered in Africa, YONO by SBI, digibank by DBS Group in Indonesia, Neo & Neobiz by Mashreq Bank, ALAT by Wema Bank, and Octo by CIMB bank in the Philippines and Vietnam. We also found that there are many more such initiatives in the works, and even though one might think that there’s a slowdown (2018 & 2019) by looking at the numbers in the chart, that doesn’t seem to be the case. In the future, there will be many more announcements related to incumbents’ mobile-first offerings but the numbers might not be as big as the ones observed in 2017.
Large customer bases, relationships with households built through established distribution infrastructure (digital & physical) over generations, access to vast talent pools, and data assets generated through decades of operations – these factors could make traditional banks’ mobile-first offerings successful. In the next one or two years, we believe that there will be a significant shift in the digital banking landscape: an increasing number of banks will launch their mobile-first offerings or expand their current offerings to new geographies to stay relevant in the ever-changing financial ecosystem.