Anthemis Group founder Udayan’s Goyal’s blog on predictions for banks in 2013 was picked up by bobsguide and formed the entire section of their retail banking section. You can read the full article here. Below is Udayan’s excerpt.
2013 will see a host of digitally native banks, which aim at tech-savvy customers and youngsters, start to take market share from more traditional retail banking institutions that are still relying on branch, phone and online banking while ignoring social media, the mobile channel and other ways to connect with customers. Unlike vertically-integrated ‘old FIs’ with high fixed costs, these ‘digitally native’ challenger banks are built from the ground up combining the philosophies of bank 2.0 and social 2.0 technologies.
Financial institutions such as Fidor Bank, Movenbank and Simple are designed for the digital consumer. They focus on design-led user experience, transparency and simplicity. Simple, for instance, offers sophisticated mobile applications giving customers access to a full range of banking services on their iPhones, enabling users to easily track their expenditure, disposable income and saving goals on a single screen. Fidor Bank provides banking services for the social generation – interest rates are dictated by its number of Facebook likes and a single interface shows all your holdings from precious metals to virtual currencies like World of Warcraft Gold. Movenbank is the first bank designed to be used on your mobile phone with sophisticated analytics which will allow customers to track their spending against their usual patterns as well allowing them to modify behaviour based on instant feedback.
Digitally Native banks have extremely streamlined business models. They have very low fixed costs, are not lumbered with legacy IT systems, have few employees and usually no physical branches. Some firms like Movenbank and Simple do not even have risk capital: they use other institutions’ banking licences. They are not real banks as such but offer a banking experience for what is becoming the only part of the consumer banking process that matters – customer interaction.
Some digital native-focused banks are already successful. Simple only recently launched but has on-boarded 50,000 customers and has another 250,000 on its waiting list. Fidor Bank has 250,000 live customers but operates on just over 30 employees. This spectacular growth is set only to continue in 2013 and is likely to be a seriously disruptive force in the global retail banking industry.