World banking world is changing rapidly, as well as revised approaches to regulation, and most importantly – permanently changed the banking client that was faced with an incredibly large number of proposals from the Finance. The result is a fully digital company, financial services, not burdened with older, less flexible systems, aggressively pursue clients, fulfilling their requirements of new and special ways.
“Chinese Internet giant Tencent’s WeBank was created in the hope to benefit from its extensive user base of microblogging and peer-to-peer chat – give an example of the IBM researchers. – Leaders of electronic Commerce such as Tesco in Europe, Rakuten in the Asia-Pacific region and Walmart in the United States, also entered the banking sector. Worldwide entrepreneurs and even traditional banks create a digital-only banks. BankMobile, Number26, Atom, ZenBanx, and NuBank is just some of the names that have appeared in recent financial news. These palankov have something in common: digital technologies lie at the heart of their value proposition”.
In IBM believe that existing and new banks, or as they are called in the document “newbank”, – can be divided into four models, according to the degree of penetration of digital technology and business processes.
“Model a” digital banking brand, isolated from the “parent” classic Bank. Not all banks are risking their brands when it comes to digitization, and some that refer to “Model And the” create associated trademarks of digital banks. Bankers in this group believe that the creation of a new brand with a unique value offer and products designed to attract targeted customer segments is a more secure strategy. These digital brands may be sold as a new Bank, but usually they use the infrastructure of their parent banks, when possible. As an example, the paper leads FRANK from OCBC in Singapore and LKXA from CaixaBank in Spain.
“Model B” – a Bank with a digital remote channels. Unlike digital banks “Model A” “Model B” I believe that a superior user experience needs to go beyond branding and can be achieved through the provision of new mobile and online applications focused on user experience. On the other hand, instead of having to create a Bank from scratch (which is expensive), those banks resell the products a real Bank and needs to reallocate client funds in the insured account of a real Bank. Examples include Simple and Moven in the USA.
“Model C” – digital “daughter” of the classic Bank. It is a synthesis of user experience and new business processes. To this model of running big banks, when they realize that their existing systems and business processes are too inert for a radical and rapid changes. The banks in this model are created from scratch as a new digital Bank. In addition to the new digital channels digital banks “Model C” also rely on more flexible and modular backend system, to provide customers with optimized end-to-end interaction. New server system also allow these digital banks to innovate at the product level. For example, Hello Bank by BNP Paribas.
“Model D” – 100% digital Bank. This is a full banks that build their core value proposition around digital technologies. Digital native does not necessarily imply banking branchless banking services. However, it is expected that customers of these banks will interact with their Bank primarily through digital channels. Some digital banks “Model D” does not have branches, while others prefer to augment digital channels customer relations or in the financial centres, in cafes, or using video chat through mobile devices. Examples: Fidor Bank of Germany and Tangerine of Canada.
The Trinity of success
The experts of IBM found that the scalability of digital banks is the most important success factor for all four models listed so. While successful banking business needs not only reduce operating costs but also in building confidence to the customers. Not many customers are in a hurry to entrust their savings to an unknown Internet company. Therefore, if the Bank does not have a strong parent brand, the independent digital banks are having difficulty attracting customers.
The second important success factor is the management of the customer experience. Many banks paid the price because not enough attention is paid to clients ‘ interests.
And finally, the third success factor is the ability to profit by expanding the initial success in basic Deposit products on more complex products and fee and Commission income. Products for mortgage lending, investments and asset management are often very profitable, but at the same time they are difficult to sell without direct interaction. Customers buy these products infrequently, so ease of use of digital services less important than personal trust.
In the end, a real digital Bank needs to optimize the interaction with clients, products, processes, and data around digital technologies. Successful digital banks attractive “front end”, as well as effective digital security on the “back end”.