I have been breaking my head on what kind of new bank I would invest in (supposing I have the money for it of course). I have read about several business plans already, however if I invest in a bank it must become a reasonable competitor towards other banks.
It must be a business model that thinks ahead, looks for customers now and learned its lessons from the past. It must be somehow a game changer. And because I am most familiar with the Western European banking concept, it must be located in Western Europe,
preferably in Belgium, so I know what I start with when I invest the money. How would this bank look like?
Let us first start with a couple of examples on new banks and new bank models. That gives us the chance to learn from the past (condition 1). We have seen Internet banks entering the market like mushrooms. When interest rates were still at a higher rate
there was one internet bank after the other. Especially Iceland became the big exporter of internet saving banks. In Belgium there was also Rabobank, there was Deutsche Bank, there was Keytrade Bank... all of them were looking for new liquidity in the Belgian
market. And it worked! The bigger banks started to see they had to higher their internet rates. And because they had a higher cost rate (because of all the branches for example) they started to differentiate their savings accounts. They were offering internet
savings accounts to compete with these new internet banks.
Unfortunately for the internet banks this was not really a basis for real competition with the big banks (like KBC, Fortis, Dexia for example in Belgium). Customers didn’t come for service, nor for investment funds or mortgages. They only came for an interesting
interest rate. From the moment the interest rates got lower and the margins between the rates offered at the big banks and the internet banks became smaller, the latter became less important and less popular for the Belgian banking customers.
And then there was Metro Bank in the UK. It looks like just an ordinary bank, but it has another concept of servicing clients.
Thanks to Chris Skinner we have all been able to follow this new success story. It is a Retail Bank, a concept invented in the US, now for the first time entering the Old Continent. Examples of how they make the difference are: (1) instant creation of ATM
cards on the spot at the time of account opening; (2) no-fee Visa Gift Cards for customers; (3) foreign ATM fee reimbursements; (4) late opening hours and even open on Sunday, (5) no appointments for customer talks, you get in and can have a talk whenever
you want. I guess this could work out. However, I wonder if that really is the shift that makes other banks change their businesses...
No I do not think so. Another example of a new bank is Jibun Bank, which is also a story that has been
followed up by Chris Skinner. This bank is a Japanese bank that only runs on Mobile Phones, with extra customer service via internet and telephone. There is one channel and that is Mobile. In order to become a client you must for example take a picture
of your ID card and send it to them and they create you an account. Now in this case there has been a massive interest of new clients opening accounts (within 3 years they hope to have an account base of about 3.4 million), and thanks to its business model
they have a much lower cost base.
Where Jibun saves a lot of money compared to its competitors in the banking industry is the branch network they don’t have, nor its personnel, they have no cash or ATM so those costs are 0 as well. Because they automated as much as possible even in the
back-end they can save on personnel cost. I guess that could make other banks rethink their business model if the concept keeps going on its current track.
What would my new bank have to be aware of?
- It must have a brand new infrastructure in order to be vital for the next era of innovations;
- It must try to save costs where other banks are struggling with it because of their decisions in the past;
- It must attract a new young population, as it is the future of our bank;
- It must serve its customers anywhere, anytime, but it must give its customers also the independence of going when and where to go, ALSO for their banking activities.
So my new bank will learn from the past, attract customer from ‘the now’ and look to the future for its strategy and infrastructure. An infrastructure that can handle a multi-channel approach, channels from now and from the future (because who knows
how fast we will go from innovation to innovation?). This bank will no longer accept or give cash itself and there will be no branches anymore. This is a risky approach in a conservative banking continent maybe, but it is worth the try.
This bank, let us call it YouBank, will be servicing people online, on their mobile, even via cards if they want, but there will be no branches anymore. This will save us a lot of money. As YouBank has no branches, they have a lot less real estate and personnel
to pay, with a much lower cost base as current banks of any importance. OK, for marketing issues it could be interesting to have some street visibility, but thanks to our approach we are able to spend the marketing budget a lot more focused. As we are heading
for a young potential customer base, we need to be present on events, not really on the streets. We will be there on the waves of internet. We will be visible in online and real life events.
Thanks to our mobile technology we can really be present for our client anywhere, anytime. OK, there is no branch for a more personal service for our clients. But whether you connect with your laptop, your Smartphone or iPad you can always login for your
needs. And if you really need someone to talk to, you have that opportunity of course, thanks to a well trained call centre awaiting you phone calls. You can reach this call centre directly via the website, or mobile application. This has the huge advantage
that you do not have to go through several typical options on the phone (or Skype) anymore, as you asked for a call in a certain application or function. Via a link with the back office, people from the call centre immediately know what kind of question to
expect and thus it is very easy to distribute these calls to the right specialist from the first time. If someone is going through the mortgage webpage of mobile application, this will be sent on to the call centre and a mortgage specialist will pick up the
YouBank can still arrange a meeting with you, but it will be a virtual one. We try to catch up the successful technology from other banks and
thanks to HSBC we know there is an alternative for branches. Unlike HSBC we offer this service for all our customers, not only our most valuable ones. Although we do not have a branch to invite customers, we can simply do it with a Skype-alike application
to discuss our gamma of products.
What about our clients who wish to deposit cash? No problem of course! Thanks to
PayNearMe.com or another cash-to-account service (like the one of
Bpost) our customers just have to go to a retail location offering this service and they can deposit the cash their and it will be automatically added to their accout. We will no longer invest in the costly cash transactions, others can do it! Depending
on what the customers want we can still see how much of the costs we reimburse for these transactions.
Will we still offer cards? Of course we will! Debit and credit cards. This is the only way our customers can retrieve cash. Of course they have to go to ATMs of our competitors, as we no longer invest in cash. Here again, we can offer a limited amount of
free cash retrieval at other banks as this will probably still be cheaper then investing in it ourself!
As long as contactless payments haven’t become more main stream I am afraid we need to offer this. Why still cards if there is mobile you might ask? As long as other banks do not want to invest in a new infrastructure for merchant payments cards is a necessity
in the current payments landscape in Europe, at least in Belgium! Although we will stimulate mobile payments, cards will still be supported.
What do you think of the YouBank concept? Could this really be a game changer? I feel like it could work!