The changing face of challenger banking – what does the future hold?

There is no question that challenger banking, especially in the UK, has revolutionised the way we look at financial services. The simplicity of transactions, transparency of fees and the ability to connect with your peers have helped millennials, as well as millennial-minded older generations, adopt challenger banking apps and websites to handle basic banking – especially around traditional products such as current accounts, savings and loans.

Much has been talked about why challenger banking has evolved and how well it handles the on-demand behaviour of the smartphone generation. What we need to understand deeper, however, is what this space will develop into in the future and what changes are already under way.

Customer acquisition is getting trickier and more expensive

43% of all challenger banks around the world offer only basic products

There have been over 20 challenger banks already launched just in the UK, and several more are in the licensing process. The products being offered by these challenger banks are fairly similar. Research undertaken by the team at Burnmark has shown that 43% of all challenger banks around the world offer only basic products such as current accounts and savings accounts. This means that a substantial number of them are competing with each other, targeting similar segments of the population. The rest of them offer a set of financial products including mortgages, SME lending, children’s savings and insurance – still focusing on traditional products. As the number of competing banks increases in this space with similar offerings, customer acquisition will become increasingly difficult and more expensive.

Consumer data owners will compete with challenger banks

Google, WeChat, Facebook, Uber and so on are, in a way, challenger banks themselves: they already have financial services underneath their core offerings. It’s possible to handle payments on Facebook, and Uber offers loans to drivers. The power and monetisation potential comes from “owning” the consumer – being the first destination for consumers’ needs and owning as much of the consumer data as possible – and this group is way ahead of the challenger banks in utilising consumer data (and masses of it) to offer well segmented financial services.

Millennials may no longer behave the way we expect

the future of challenger banking could be highly dependent on how this group evolves to handle banking and financial needs

The millennials of today (usually defined as born after 1980) have been the biggest adopters of social media, the biggest downloaders of apps and music, and the best proponents of open sharing. However, some research suggests that Generation Z (those born after 2000) may behave slightly differently. This is turning out to be a population that values trust and privacy immensely, much more than their older millennial peers. What if this generation chooses to not share their personal data with non-trusted apps and service providers? There hasn’t been a large-scale research project yet on this topic, but the future of challenger banking could be highly dependent on how this group evolves to handle banking and financial needs.

The demographics and economics in Europe are changing fast

The nature of consumers in Europe, and the economic conditions, are quickly changing. The potential impact of Brexit and the demographic changes from mass immigration are still not clear, and these are areas we will delve deeper into at Burnmark in the future. Changing interest rates, the nature of smartphone use, venture capital availability, tax and regulation policies, and trust issues with banking will all contribute to major changes in challenger banking. Whether this will help or hinder new banks coming up remains to be seen.

Read more about this in Burnmark’s challenger banking report.

Reprinted from

Why the newly banked will be the biggest problem for digital banks

In the past three years, 100 million people have opened bank accounts for the first time in Africa. In China, there are 500 million people who are ‘newly banked’. In India, 187 million new accounts were opened in just one year on a governmental scheme. In the UK, around 100,000 people came into the banking stream, either for the first time or after a long break, in the last three years.

This growing segment of the newly banked, who have emerged from the unbanked population and not-quite-yet-in-the-fully-banked category represents one of the biggest challenges for traditional and challenger banks in the world (yet, is not talked about as much as it should be!). They have a unique set of problems, and deserve a unique set of solutions – that are not available in the market today.

The newly banked population does not find a bank account useful

India’s unbanked population halved in the last four years, according to a report, which means 324 million new accounts were taken in that period. In just the past year, under a Prime Ministerial PMJDY scheme, 187 million new accounts were opened. However, 43% of these accounts lay dormant, with no balance and no deposits or withdrawals.

In the UK, around half of the people with new, basic bank accounts still chose to manage their money and make transactions in cash. Around 15% of newly opened accounts were closed or abandoned.

These figures paint such a dire image that it’s a mystery why banks are not taking more steps to bring the newly banked into the well-banked, or at least, the underbanked groups. Offering financial literacy is just one obvious element to fix the problem – the most important change needed is for the bank accounts to offer relevant transaction channels and sensible costs. In Africa, for example, mobile payments on basic phones have taken over the transaction ecosystem, and banks offering viable alternatives is a difficult proposition, yet possible.

This is because the experience of moving into banking hasn’t been great

The newly banked population probably used cash for transactions before the bank account, and transferred money using either mobile phone text messages (Africa) or specialised remittance firms (India and UK). In reality, it probably worked fine for them. There was a clear lack of perceived need.

The expected customer experience (once the bank account is opened) is that it caters to a specific niche challenge the customer visualises would be solved with a bank account. It could be something like reduced bill costs or ease of bill payments, better loan facilities for agriculture, or sometimes availability of online shopping. A good example of catering to a specific demographic is that of six Zambian banks coming together several years ago to provide a secure money transfer mechanism that effectively replaced cash and cheques in the region. In China, a technology firm offers a SIM overlay that can be used on any phone to access bank accounts remotely.

Solutions from banks, including those in partnership with technology firms, have to cater to these niche socio-demographic and geographic challenges. If appropriate pricing along with these direct solutions to solve niche problems are not present in a newly opened bank account, it’s unlikely this population will stay with the bank. They will either go back to their old ways with cash, or will look at fintech apps or technology solutions to meet their specific needs.

The newly banked population may not have access to a branch

Over 66% of the newly banked population were considered “rural” by a study. If this population doesn’t have access to a branch, it is likely they will not get the personal customer service support or financial product aid they would otherwise be getting. Despite all the branch-bashing that banks face on a regular basis (especially from us fintech fans), branches are in fact one of the best ways to put the newly banked at ease. If full branches are not viable, banks could consider using retailer shops as mini branches, or using field agents to encourage financial access (both models being used exceedingly well in Ghana and Kenya).

How do we keep them there?

The only solution to keep them with a bank is unfortunately not quite pleasing: a bank will have to exert greater focus on customer service, financial literacy and access channels specifically targeting the newly banked. This does mean increased costs, increased effort and investment into segment personalisation, but in the long run, without this investment, this population is unlikely to remain with the bank. A simple preventative measure like this will also help them face the fintech competition head-on. A student lending app or an app that helps improve your credit score may appeal more to this young, financially untapped population than having a bank account that provides no clear benefits.

Banks are increasingly partnering with fintech firms to handle this gap. Technology investments are great, but banks need to know and be in control of what those investments are being made for.

See my slides from the Dot Finance Africa event on fintech trends in the region:

Key takeaways from the ING Think Forward initiative

The Think Forward initiative from ING Group was an opportunity for academics, economists, banking and technology leaders to address the issue of the complexity of financial decision-making.

The economic and geopolitical uncertainties in the world have led to a previously unknown level of consumer confusion in decision-making, and this has had a significant impact on how people plan and budget for their financial future. Several discussion groups at the program attempted to identify key challenges and areas of further exploration to understand more about consumers’ changing patterns of decision-making.

The task of the day set forward by Ralph Hamers, CEO of ING, was that we unravel the irrational element of this decision-making, and understand how we can attempt to empower the population with better decision-making.

The amount of insights that came out of the discussions was tremendous. I have summarized my biggest learnings below.

The power is now solely with the consumer.

Every breakout stream spoke about consumer desires. Consumer expectations around transparency, tailoring of solutions, usefulness and relevance of information, financial literacy and simplicity came up again and again as topics to address. It was clear that the industry needs to achieve a simple shift in thinking. For example, we need to address the fact that any kind of borrowing causes emotional distress to the borrower, rather than about loan products or mortgages or fees that a financial firm offers. We also spoke about how important visualizing the future is, for customers to make the right financial decisions, and how empowering customers with a simulated future can be extremely valuable.

We need trusted facilitators rather than suppliers of information.

The power of the peer group was discussed often, and regardless of whether or not we personally like social media, we agreed that the peer group has tremendous power of influence. The role of the financial services firm as a facilitator of trusted information within the peer group was expected to be far higher than it is today. Any facilitator who can help provide trust in peer-to-peer information can help immensely in the decision-making process.

Financial well-being isn’t related to income level, geographic location, market, gender or age group.

It is indeed a universal problem. The level of well-being varies from group to group, but it’s a challenge that needs to be addressed from various angles. This is something that was felt could be addressed only with highly diverse task groups, with representation from different ethnic and demographic groups. We heard that women are quicker to admit they have limited knowledge of a financial product, but how do we use this honesty and transparency to ensure we give them the confidence and knowledge to come into the financially literate group?

The ‘millennials’ as a homogenous group does not represent the future consumer.

Noreena Hertz spoke about the ‘new millennials’ constituting the age group 15-21, and how 79% of these young millennials are worried about the economic future, 40% worry about debt (teenagers worried about the economy?), and how this will invariably affect their financial decision-making. The important thing to note here is that the millennials themselves have different sub-styles of decision-making, and clubbing them together sometimes isn’t a good way to understand the future consumer’s behavior. This new generation is highly attuned to the dangers of technology, credit and online banking, and can react to new technology developments in a completely different way to those in their 20s and 30s. The innovative technology developments of today could be looked at suspiciously by this upcoming generation. It’s important to understand their motivations better.

We don’t have enough information on the future consumer.

Leading on from the above point, it was clear that we as an industry don’t have enough knowledge to understand the new millennials, nor current teens. Every industry expert in the room felt that there’s a lack of information on the future consumer and what their desires and behavior will be.

“I don’t think we’re ready for disruption yet. We don’t even know what today’s teenagers want in terms of retirement and financial security” — Annamaria Lusardi

Who utilizes customer data better, banks or fintechs?

Customer data and the opportunities for creating innovative business models out of it has become a recent favorite topic of mine.

I spoke on the topic at FinTechStage Luxembourg’s dinner overview hosted by Luxembourg for Finance and the Luxembourg Ministry of Finance, and we had an audience of banking CEOs and fintech influencers keen to find out more about the power of data in solving universal financial services problems.

Banks and fintechs have unique ways of dealing with the collection and analysis of customer data, then building offers and revenue models on top of, ending with the disbursement of data-based offers back to the customer. When looking at this entire data value chain, there are two aspects that affect the quality of the ‘building’ and disbursement of data-based models.

Data and transaction volumes: the more customers, the more data, thus better quality of data-based output.
Number of data points: banks tend to use more obvious data points when storing and building on customer data. Fintechs, as is well known, use more ‘cool’ data points such as Facebook friends.
Rules of analysis: the quality of analysis and the number of built-in rules will determine the level of innovation in the offers and customer experience given to end-consumers.

Banks have the advantage of volume

Banks already hold massive amounts of customer data, and more importantly have already invested in huge amounts of data infrastructure to handle all of the transaction and customer information. They can play around with it, try out any number of new and innovative models on it, and are well placed to find best-experience use cases for customer data.

However, the most unique aspect of customer data at a bank is that it’s regulated at every aspect of the data value chain. There’s no clear inference on whether this is an advantage or a disadvantage, and could be either depending on the use case. Yet, the fact that every customer’s information is mandatorily collected as per local KYC rules ensures that there’s a minimal level of data point analysis viability for every customer acquired.

Challenger banks have been very clear with the message that data is as powerful as money (if not more so) in the way banks’ offerings will be made. Secco Bank and Almond Bank are two examples of those using a data-based API model to give the power back to the customer.

Traditional banks have already started looking at innovating around data. Some of them partner with fintech firms to obtain nontraditional data such as social media or biometric data points, and others adopt technologies to make existing processes such as KYC easier.
Fintechs have the advantage of quick innovation

Fintechs are, of course, the ones that brought the idea of innovation to customer data owners. New data points such as Facebook likes and Twitter followers were discovered and added to decision-making models around lending and risk. The quality of a social circle was given the same amount of importance as an indicator of credit risk as the amount of savings.

Fintech firms such as Trulioo have created massive global databases, enabling search for personal data across regions the big banks hadn’t previously considered. First-of-its-kind databases for rural African regions ensured new challenger banks or payments services launch quickly and meet local KYC requirements. They are building niche databases with global appeal.

New, cloud-based data-sharing models emerged. Despite countries such as Luxembourg struggling with data location and privacy regulations (that are set to change in the near future), there’s a high appetite for cloud-based infrastructure and the ability to share data with multiple banking and technology partners. Big data fintechs such as 1010Data (a cloud-based platform for big data discovery and data sharing) and Xignite (a platform that provides market data APIs) have begun to enable this change.


fintech-innovation-new-data-business-modelsThere’s no singular winner. Of course there isn’t. Every blog I write these days seems to end with the same message: banks and fintechs ought to work with each other; banks have the advantage of scale and fintechs have the advantage of agility. There are huge gaps in creating a seamless customer experience across multiple digital channels and data paths, as well as in creating products and bundles that the customer has a high desire for. We need to reach a stage where we start providing the services that the customer doesn’t even know he wants yet.


Matthias Kroener, CEO of Fidor Bank, mentioned in our panel discussion at FinTechStage that the sign of a good customer experience is when the service provider gradually becomes invisible. By partnering with fintechs and creating joint data-based offerings, customers need not know the difference between a bank and a technology company. What should ultimately matter is that they get the experience and offers that matter to them.

My slides from the presentation:

FinTech Influencer Survey: 51 Experts Reveal 2016 Trends

What are the trends expected to drive fintech innovation in 2016? I am happy to publish, on behalf of Envestnet® | Yodlee®, the results of the second annual Global Fintech Influencer Survey.

Last year, we decided to ask 40 influencers what they thought of the fintech landscape of 2014, and collected their predictions for 2015. By the end of 2015, it was clear that the fintech industry had raced on beyond imagination! The amount of innovation and the sheer number of startups that came up in 2015 were astonishing. This year again, we attempt to capture the influencers’ thoughts on the highlights of 2015 and the predictions for 2016.

We asked the experts about the fintech firms that (they think) made the most impact in 2015.


We asked the experts to predict the three hottest fintech sectors in 2016.

Please read the full survey results here.

The emergence of regtech as a catalyst for innovation

When I first heard someone use the term regtech (regulation technology) about a year ago, I had some pretty strong feelings about it.

I didn’t appreciate the thought of further fragmentation of the fintech industry, as it impacts collective innovation and cross-fintech solutions. I also felt regtech as a separate space would struggle to create its own identity and brand, competing with the through-and-through coolness of the fintech parent.

One year on and, no, I haven’t changed my mind on those worries, but I’ve seen regtech emerge as one of the key areas of innovation in the past few months, inviting a huge amount of interest from regulators, central banks, corporate banks and traditional risk and regulatory firms. My recent interview with Ruth Wandhöfer from Citibank talked about how regulators are increasingly getting involved with topics of innovation, and how some parts of the world are utilizing regulatory structures and bodies to create high-velocity innovation (for example, Singapore). Ron Shevlin recently spoke about ways of easing compliance in a Breaking Banks podcast.

There are three factors that I believe have helped regtech emerge in its own right:

  • Making regulations and compliance easier is one of the biggest immediate challenges banks and corporates face today. Although they aspire to offer the world’s best user experience to their customers, sometimes compliance and reporting actually get in the way of offering that desired customer experience. If there’s any technology out there that can help them take care of this pesky issue first, isn’t that what should be invested in first?
  • The regtech industry has only one primary selling channel to worry about: banks and investment firms. Plus, technology built specifically to ease banks’ regulatory burdens is a huge market in itself, and the B2B market is a much easier market in which to find growth compared to the large consumer markets fintech startups have traditionally targeted with payments, crowdfunding, lending and investment management.
  • Every bank in the world wants to find a better way to handle KYC.

When we realize how closely banks and fintech firms are partnering with each other, and how they’re not each other’s biggest enemy (as mentioned in my previous post), we begin to see how lucrative this market is proving to be for some of the fintech startups coming up globally.

However, the best view of what startups are doing in the space came from one of the events I was invited to recently: the 3D FinTech Challenge, an accelerator program focused entirely on regtech.

Quotes from regtech startup founders

I asked the startup founders at the event how they ended up in the regtech space:

Tim Sadler (CheckRecipient): “We think there’s still a huge amount of low-hanging fruit in terms of what corporations can be doing to protect their data, and recent advancements in technology and data science present a huge amount of opportunities for startups operating in this space.” 

Eli Abi-Lahoud (Quarule): “Regtech has the potential to address challenges around making sense of regulations, understanding how they apply to the business, assessing regulatory rules over trade/account/reference data, analyzing compliance state, and understanding what-if situations. Soon, this technology will be seen as a must-have instead of a ‘nice to have’.” 

Anthony Pereira (Percentile): “In the immediate post-crisis years, it became very evident that the world of risk management needed to move on from just ticking boxes and reporting numbers, to actually trying to understand risks and having the ability to address them. This means more automation and fewer manual processes. Better governance and faster compliance are just two of the many benefits that lead to improved regulatory and investor confidence.” 

Ariel Attias (Athena Portfolio Solutions): “After paying more than $235bn in fines and compensation since the credit crunch, and filling buildings with compliance officers, investment banks understand that they won’t be able to continue carrying the huge amount of compliance costs on their balance sheets. Today, everybody is asking how we can mitigate the conduct risk, and how we can reduce compliance manpower. The answer is clearly regtech.”

Donald Gillies (Passfort): “We’re in the regtech space because firms large and small have massively underinvested in technological solutions to regulatory problems over previous decades, meaning there’s an incredible opportunity to innovate here. This chronic underinvestment manifests itself in spiraling compliance costs and is compounded by the increasing quantity and complexity of regulations being introduced by regulators globally. Technology has redefined the economic parameters of so many different industries in recent years and we think it’s about time these efficiency gains were realized by compliance teams.”

What the regtech startups are up to

AlgoDynamix, winner of the challenge, offers a unique technology to combat trade fraud, helping the customer trace any suspicious or irregular activity during large market or financial instrument shifts (for example, the selling of a stock just before an announcement in M&A activity).

Following the 3D FinTech Challenge, I did an analysis on other regtech firms around the world to see if there are common problems they’re working on, and whether any major monetary investment has been made in any of these problem areas.


There are scores of other firms, not on the list, innovating around data and machine learning, even directly contributing to KYC challenges. Although there has been very little investment beyond seed funding in these startups, there is clearly interest from several banks and corporates to work with them to find targeted solutions.

Other great news is that London is emerging as the clear hub for regtech, beating Silicon Valley hands down. It’s definitely an interesting area to watch out for in the coming year.



How are banks and fintech startups working together?

Earlier this week, I spoke at Next Bank Europe in Barcelona on ‘Digital Banks and Startups’, and how they can work together to innovate faster. I felt the topic would be appropriate for the audience there: a unique mix of fintech entrepreneurs and digital banking heads, all worried about finding scalable innovation, a quicker path to profitability and making a substantial impact on the fintech market while at it.

We have seen that banks have been much quicker to invest in early stage fintech startups than venture capitalists, but fintech startups have had much more success selling their offerings in the mass market than to banks. This dichotomy was worth exploring:

  • Are banks investing in fintech firms as a precautionary measure without seeing an immediate integration potential?
  • Are there certain areas of fintech that banks invest more in, and other areas where they watch and learn, letting fintech firms do the groundwork?
  • Other than for regulatory reasons, are banks willing to open up their systems for partnerships with fintech firms?


Lending, payments, big data & analytics are the three major areas of investment by banks (these also happen to be the earliest areas of investment). The investments made into firms such as FastPay and OnDeck in the early days were seen as supportive of innovation, but without any plans to integrate the offerings immediately into the bank’s banking systems or product portfolio. However, with reasonably heavy investments in 2015 into firms such as Stockfuse (that attempts to develop consumer trading behavior) and MX Technologies (that provides omni-banking across silos in banks), banks are exhibiting an immediate desire to change. The fintech firms are putting more pressure on banks to innovate and launch customer-centric offerings, and investing is one way the banks have responded to the increased pressure.

The US still leads the way with investments – banks in the region have invested over $6bn. London and Europe have seen less than $1bn in investments so far, but are closing in on the US with some recent VC and bank-led investments in multiple sectors.


Watch and learn

The banks’ incubator programs have created some of the most successful fintech startups. Not all of them have directly helped the banks themselves, but have helped the banks explore the latest technologies and learn what works best in the market. Most of the fintech startups that were present at Next Bank Europe for the BBVA OpenTalent Europe Finals were revolutionary.

Data shows that lending and big data were the favorite sectors for incubator programmes in 2014, and for this year – yes, you guessed right – several sectors have seen an almost equal amount of interest. Even lending has its own sub-sectors, with a high degree of interest from banks in small business lending and invoice financing. The winners of the BBVA OpenTalent Europe contest, EverLedger and Origin Markets, both had their eyes on a clear market, and intuitively created solutions to support the respective markets. EverLedger uses blockchain to combat fraud (combining two of the hottest sectors in fintech today), and Origin offers a marketplace for corporate bond issuance – both areas of high interest from banks.



This is the interesting way in which banks ‘plug up’ gaps with the help of fintech firms. Open banking and the availability of APIs have the potential to contribute to a full day of discussion (I won’t attempt it until the market takes a stance!), but there are interesting examples. Tryum, a personalized relationship science company, received the Pingit Payments APIs from Barclays, and Namu (a white label mobile banking app) received front-end APIs from Citibank through their respective incubator programs. Both of these firms have used the experience of working closely with banks to innovate quickly, and to develop solutions that immediately appeal to the financial services world.


What to watch out for

The trends are singing a wonderful song. The next few years will be when banks invest significantly in fintech startups who can quickly help improve their offerings.

Gamification will be one of the most dramatically different ways of improving customer interactivity, and thus, customer-centricity and satisfaction. Loyalty, derived through this improved focus on customer-centricity, will be very important as traditional banks are faced with challenger banks and competition from alternative business models.

Banks will also launch a wider base of customer touchpoints, so that customers have more opportunities for interaction within the relationship. Banks could be seen offering business units around remittances, currency transfer, peer-to-peer lending and tax advisory services.

Customer advisory services will become heavily data-, analytics- and machine-learning-dependent, while also becoming simpler and more intuitive at the app level. From my conversations with traditional banks of all sizes, security is bound to be an area of increased focus for the year.

No one can predict the future. Banks’ investments vary between short-term and long-term investments, as well as tactical and futuristic ones. There are different strategies being adopted by banks and VCs today, and it’s all because there’s no singular path out there.

These are the 7 fintech firms that nailed their marketing campaigns

I have tried to compile a list of my favourite marketing campaigns run by fintech startups. It ranges from product launches to physical and online campaigns. Here goes!

The “Pop-Up Store” Campaign: iZettle

Image source: Flavourmag

“Launch a pop-up store for small businesses” as a campaign idea rarely comes up in marketing meetings (okay, never), but that is what payments firm iZettle decided to do. iZettle set up a pop-up store in central London which was used for trading by a different business every day for 6 days, but always using the mPoS technology from iZettle. The campaign helped establish the firm as a credible alternative to traditional PoS players by reaching the mass market quickly and creatively. It achieved all this while also creating a unique image as a supporter of the local community and small businesses.

The “Tube” Campaign: Nutmeg

 Image source: Twitter

London tube carriages are now the current favourite outdoor advertising venue for UK-based robo-advisory and wealth management firms. It all started with Nutmeg. Their advertising on the underground trains and stations during ISA season was perhaps the most memorable physical campaign by a FinTech firm ever. Legions took to Twitter with tube shots praising the brand. London does not have an underground mobile network, and an average commute is over an hour on the Tube. The campaign gave commuters sufficient time to think about personal finances and what is not working with the traditional modes of investing.

The “Cash Register” Product Packaging: Square

Image source: Wired

Marketing a new technology is very hard – how do you make the public aware of subtle technological differences with competitors who have been established in the market for decades? The best way, as Square proved, is by creating a killer showcase product that demonstrates how well it all works. And how much simpler life can be without the “competition”. When Square launched a new type of cash register, businesses around the world took notice. It proved that all you need is an iPad to get rid of the clunky, expensive machines running credit cards in your neighbourhood coffee shop.

“The Ice Block” Marketing Stunt: WePay

Image source: unibulmerchantservices blog

This one was a while ago, but remains one of the most memorable marketing stunts ever by a FinTech firm. WePay dropped a massive ice block with frozen money where a Paypal conference was taking place in San Francisco, blaming the competitor for freezing the customers’ accounts. The stunt was soon on the front page of tech magazines. WePay had a very clear marketing message established prior to the stunt – including a landing page It shows it is not all about the stunt; but also about how you align any attempted stunt with your core messaging and marketing activities.

The “Sports Sponsorship” Campaign: BitPay

Image source: Twtrland

BitPay, a bitcoin-processing startup, decided to sponsor a real college football game aiming to introduce sports fantatics to the world of Bitcoins. The sponsorship is now over, but the success of the #bitcoinbowl hashtag is still talked about in social media. The hashtag was trending for a long time, and is still being used to make Bitcoin jokes. It may have been a short-lived partnership between college athletics and virtual currency, but it is one more example of how FinTech firms continue to think beyond the obvious.

NB: BitPay now sponsors a NASCAR racing team.

The “Help Your Customer Grow” Strategy: Kabbage

Image source: DirectCapital blog

One strategy to help grow your own market is by helping your target customer base grow real quick! Kabbage, a small business lending firm, tries to make its customers’ lives easier by giving them a voice (through a dedicated Small Business Blog) and by giving them advice on how to grow in a tough market. It also launched a separate programme, Karrot, to lend to startups and individuals who may not yet be a small business, but are growing into one.

The “funny TV” Campaign: TransferWise

Image source: YouTube

FinTech can do funny. The ad from Transferwise is an example of FinTech firms going the traditional TV commercial route, but with a very uniquely funny voice. A cross between a spoof and a conventional commercial, the TV campaign hits out directly at the competition: the bankers (yes, the whole lot of them). There was never-before-seen debauchery on screen, but all for the larger good (destroying the banking industry). The commercial was not just cheered on by disruption proponents, but also by the masses of consumers unhappy with their banks.


Please feel free to share any other amazing campaigns!

Why Turkey is still the digital banking capital of the world

While 29 banks are in the race to get their licenses in the UK, including a sizable number of digital banks, Turkey – the social-media-based banking innovation hotbed of Europe – didn’t launch a single new bank in the past few years.

Until earlier this month, that is, when BNP Paribas’ TEB launched its digital bank, CEPTETEB. In fact, the digitally obsessed Turkish millennials ensure that #cepteteb is a trending topic on Twitter (which is refreshing to see for someone in the UK, where bank Twitter handles are only used for complaining).

Yet, why hasn’t there been a digital bank in Turkey sooner? The answer is quite simple: the so-called ‘traditional’ Turkish banks have been so innovative and customer-experience-friendly that they have been faring much better than the newly launched digital banks in other countries. The UK is notorious for its gaps in customer-centricity in banking offerings. In the US, only 23% of customers are happy with their banks.

The ‘traditional’ bank Garanti, with its 12 million customers and 950 branches, launched special products targeting millennials, and ran education campaigns to get them started on current and savings accounts over a year ago. It integrated wallet, savings, loans and offers into a single access point, the iGaranti mobile app. The app even had a ‘conversation’ feature that enabled users to ask questions about their bank accounts.

10 years before banks started fintech incubation and accelerator programs, Akbank, a $12bn local bank, launched an entrepreneurship program to encourage technology adoption related to banking. Turkey’s largest bank, IS Bank, lets customers withdraw cash without cards using QR codes on phones.

The banks in Turkey have tried to make even the worst aspect of customer experience an experiment in digitalization. DenizBank started using iBeacon technology to provide a queue number as customers walked into the branch. One of the most hated banking procedures is loan application, so Akbank made this a tad more exciting by providing ‘credit kiosks’ that handle the loan process, right down to ID scanning and loan agreement printing.

This wasn’t restricted to just the private banks. Ziraat Bank, the state-owned bank of Turkey, launched unstaffed video kiosks to replace teller counters, handling money, forex, bonds and bills (branch elimination at its finest!), proving that the market and the banks (as well as the customers) were ready to embrace digitalization in a big way in Turkey as far back as 2011.

Turkey vs experience and capital

The CEPTETEB launch has come at an appropriate time, with the Turkish banking market seeing some unprecedented movements in the past month. BBVA has just become the leading shareholder in Garanti Bank, Turkey’s third largest bank. HSBC is currently in talks to sell its Turkish arm to ING Turkey. BBVA and BNP Paribas investing in the country is an interesting sign, as both have been the largest investors in fintech. BNP Paribas has already launched three digital banks worldwide (including Hello Bank in the UK), and BBVA has announced a venture capital fund to continue its ‘fintech spending spree’. It’s an interesting equation now, with Turkey’s own digital programs versus the larger banks’ experience and investments from outside Turkey.

An example would be the recent agreements BNP Paribas has signed with Facebook, Google, LinkedIn and Twitter. These will definitely improve the way BNP Paribas TEB integrates digital media into its offerings. On the other hand, Garanti Bank has offered a Facebook-integrated mobile banking app, and Deniz Bank has been accepting loan applications via Twitter for about three years.

The next step in the digital media war would be for both sets of banks to improve the scale of their offerings, ensuring it reaches the under-30 market of Turkey, which is over 50% of the total population today.

Turkey is proof that the size of firms isn’t a barrier to innovation. It’s where traditional banks have learned to innovate, and at a faster pace and with less investment than most of its peers. It will work well for the new digital banks to give it the attention it deserves, and of course, learn from it!