Serkan Fergan, Digital Banking Group Director, TEB
It has been a colossal quest since scientists started to explore the nature of fundamental forces. Newton’s classical model tried to bring postulations on certain interactions of the forces, leaving some gaps on how these forces communicated with each other. In the 20th century, standard model came up with particle physics to explain fundamental interactions, leaving gravitational force aside. Beyond the standard model, there have been many attempts and still ongoing to formulate a grand unified theory, known as theory of everything.
Digital banking has enjoyed similar progress in the last 30 years since the internet became widely available. It emerged in the confined limits of the Classical Model in the 90’s. Banks reflected their daily transactional banking transactions within a hierarchically architected set of menus, expecting the customer to find where is what is needed. As a result, banks achieved greater efficiency, cost savings, increased accuracy through this newborn channel.
Digital banking soon after evolved into the standard model when the market was flooded with smartphones and native applications came out victorious in the battle versus other technologies in this domain. Customers were able to enjoy a better experience in their hand held devices’ small screens, find their ways with ease. Banks in the standard model era rejoiced greater agility, security, and new ways to communicate with their customers. Smartphones or better to say mini banks were always with customers whenever they felt the need. Customers started to share more information about them, giving banks a chance to propose timelier, relevant offers, and innovative methods to transact. Newer applications were booming in app stores by the hour, people downloading myriads of them to answer their instant needs. Smartphones were now loaded with applications mostly used only a couple of times and left aside unused yet taking up a lot of space on these devices. On the other hand, your application might go unnoticed in the herd unless backed up by a significant marketing budget. The users whose phone capacities were already at their limits had to make choices among those operating systems offered to unload infrequently used ones. Something was inconvenient in this standard model.
Today, its quite difficult in the digital world to earn trust. People are not happy to share neither their credentials nor their personal information with new apps they download. Telcos and large institutions are still deploying new apps one after another, assuming they could embrace customers in many different aspects. I believe those days are soon going to be bygones.
We are today exploring the theory of everything— an unifying theory for all forces of the universe. Super apps are starting to showcase their strengths. As the name suggests, super apps are an all-in-one experience that offer access to many services within a single app. Asia has been long experimenting with this new theory. These super apps leverage their wide customer base and their level of NPS and try to persuade their customers to use a wider span of their proprietary services in other fields. Banks have been renowned as authorities of trust and have a natural advantage at this point. People confide their financial records and secrets in banks. In this digital age, banks are highly regulated and banks that have achieved a level of success in digitalization are historically good at helping customers with their daily transactions, lending options, sales, and CRM capabilities. Innovative ones are offering other features like personal finance manager applications, subscription methods and innovative payment methods, and benefits through affiliates mostly for their card programs. But what if banks could order a holiday planning program, what if you could book a flight, buy a ticket for your favorite band coming to town, what if you could rent a car through your bank? I believe banks should start analyzing their customer segments and form a strategy around the everyday needs of their customers. Banks that will be able to build a successful business case around this idea, to my belief will be indispensable in the eyes of their customers.
Scientists are struggling to move forward on their quest for a theory of everything. We bankers should consider embarking on our journey to create a bank of everyday needs for our customers. Would you be willing to order your next carboy water to your address from your bank’s application and pay instantly without confiding any payment details to the water company?