Financial Inclusion – Traditional banks are not delivering but can fintech finally provide the answer to compelling & profitable solution?
The UK arguably has led the world in creating banks steeped in our nation’s history, traditions and international aspirations.
But with the universal banking model being challenged and interest in investment banking on the wane (ANY EVIDENCE FOR THIS?), the focus for UK banks is on personal, business and corporate customers.
With startups, challengers and traditional competitors focused on the same segments, banks find themselves at a crossroad in terms of customer proposition, brand differentiation and margins.
Spaghetti backend technology, enterprise grade form filling and general colleague apathy has meant banks can only muster providing a poor customer experience to low-income banking customers, often losing trust as they do it.
Online only, removal of ATM usage and generally making mainstreams products worse hasn’t yielded much in the way of success. (IS THIS TRUE? I THOUGHT BANKS SUCH AS FIRST DIRECT WERE DOING QUITE WELL)
One way ahead for banks at these crossroads is to learn from other markets where banks have successfully focused on a proposition that creates value by understanding their needs and building propositions for low income customers with operating costs that can make them profitable. I DONT UNDERSTAND WHAT YOU MEAN HERE
Ensuring that sustainable services and company growth is based on developing long-term relationship and mutual value. SENTENCE FRAGMENT
Low cost technology, high quality digital services and correspondence banking approaches are now capable of removing legacy challenges of (DO YOU MEAN BY?) providing profitable high quality services to low income customers in the UK.
Leading global brands have used ‘frugal innovation’ to develop high-quality products and services that match the needs and price point of low-income customers. Success with low-income business models comes from only including elements that are valued by low-income customers.
Tata’s Nano car in India, M-Pesa in Kenya, Capitec’s approach to simplicity banking in South Africa and mBank in Poland stand out as examples of how new approaches to business model can achieve step-change in customer services and business productivity.
Can UK banks learn from pioneers of inclusive market in developing and emerging market to develop low-cost, high value disruption for the UK banking market to support them achieve their growth agenda? The bank that can deliver this might also stumble upon the recipe for serving more than just low income customers if they do.
A new approach could be a sensible option for UK banks. However, we see a huge number of amount of fintech players entering this market with innovate technologies and business models and much lower operating costs willing to step into this breach.