Retail Banking

Daily Review: Banks are Launching Own Digital-Only Banks in Response to Challengers

MEDICIGlobal Head of Content

After a period of observation and learning, financial institutions are getting on the challenger bank bandwagon themselves, embracing digital transformation outside main business structures: digibank by DBS Bank, Incredible Bank by River Valley Bank, Popular Direct by Popular Bank, FNBO Direct by the First National Bank of Omaha, Finn by Chase, Greenhouse by Wells Fargo, PurePoint Financial by MUFG Union Bank, etc. Another bank, RBS, is now exploring the opportunities with its anticipated app-only offering.

While challenger banks launched by startup teams had the leeway to gain footing in their respective markets, institutions that are just getting into the game still do have certain advantages – brand recognition behind the main business, access to data on existing customers of the institution behind its digital-only arm, and the opportunity to market the new solution to existing clients, among other things (like resources and experience). In the next year or two, the digital banking landscape will most likely change with banks increasing the pressure on startups with own online-only options. Just like with reclaiming control over the payments, institutions are well equipped to reclaim a seemingly lost edge in providing financial services in rapidly changing environments.

Pick #1. Revealed: The First Details of RBS’ Next-Gen Challenger Bank

RBS has set an internal target of switching 1 million of its existing NatWest customers onto its mobile-only offering. RBS is aiming to launch a “beta” in Q3 2018. RBS will target its less financially literate NatWest customer base who often struggle to make ends meet at the end of the month.

RBS is considering a “marketplace” business model for the new bank, where it will earn commissions by helping its customers to save by switching to financial products provided both by RBS and also other smaller FinTech players across the industry.

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Pick #2. Goldman Sachs Makes First Hire in Cryptocurrency Markets Unit

Goldman Sachs enlisted Justin Schmidt, a former trader, to be the first head of digital asset markets in Goldman’s securities division. Schmidt began his role on April 16.

“In response to client interest in various digital products, we are exploring how best to serve them in the space,” Goldman Sachs spokeswoman Tiffany Galvin-Cohen said in a statement.

Goldman was one of a few major financial institutions to begin clearing CME and Cboe Bitcoin futures for clients when the derivatives products launched in December.

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Pick #3. Get Started With Blockchain Using the New AWS Blockchain Templates – Amazon Launches Blockchain Service

Amazon is launching AWS Blockchain Templates. These templates will let users launch an Ethereum (either public or private) or Hyperledger Fabric (private) network in a matter of minutes and with just a few clicks. The templates create and configure all of the AWS resources needed to get users going in a robust and scalable fashion.

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Elena Mesropyan

MEDICIGlobal Head of Content

Global Head of Content, MEDICI

Elena is a research professional with a background in social sciences and extensive experience in consumer behavior studies and marketing analytics. She is passionate about technologies enabling financial inclusion for underprivileged and vulnerable groups of the population around the world.