Banks, broccoli and the peril of going out of date
M&S has removed expiry dates from its food – a welcome move, no doubt, but what does it have to do with banks?
Well – to stretch a Forrest Gump quote – a bank is like an M&S head of broccoli. Reliable, functional – important, even – but a) not something that always excites consumers and b) something that could go out of date before anybody has realised. To solve both problems, banks can look to partnerships.
Partnerships are not a new feature of the industry – and we are seeing more of them emerge every single day. Just recently, Santander announced a partnership with SAP Spain to support digitisation and enhance the onboarding process for new clients, while Morocco’s Attijariwafa Bank launched a partnership with Thunes to power their cross-border payments.
To understand the importance of partnerships, it helps to understand the challenges banks face: a growing number of threats and competitors, a customer base that is becoming more open to new providers and a stretched pool of resources to respond to these issues.
Partnerships help address these problems. By partnering with a specialist fintech, a bank can improve its services without having to dedicate significant cost and effort into doing so. This is particularly useful when partnerships are directed at services outside of a bank’s core offering, which means banks can then focus on the services they deliver best. Without this action, banks risk becoming unattractive and, worse, dated. Customers will go elsewhere for an increasing number of services.
These are delivered by fintechs that, unlike banks, are able to specialise, relatively unburdened by bureaucratic processes and risk averse cultures, and are able to step in quickly to solve customers’ unmet needs. The more customers move away from their traditional bank providers and towards these fintechs, the more they expect to be offered new ways to manage their money seamlessly in a way that works for them, which creates longer term risk for banks.
These departing customers are often people who might otherwise stay with their existing provider but are frustrated or bored by some aspect of the banking process. For example, businesses looking to support employees through the cost-of-living crisis might turn to fintechs to power their payroll and allow people to choose the day they are paid, helping them to get through the month. Many may also prefer to stick with digital banks post-pandemic as an alternative to visiting a branch in person. These providers are more alluring than a bank that, to again use the broccoli analogy, is going stale.
Partnerships help keep banks fresh. When banks turn to partnerships, innovation ceases to be a costly or complicated process. In fact, partnerships are a fast-track ticket through the development costs and growing pains of building infrastructure internally. They allow banks to launch new features in a matter of months and leverage the support of an external team entirely dedicated to the integration, meaning that it requires minimal effort to achieve great results.
Through something as simple as an API integration, banks can offer new products that make customers’ lives easier and keep them engaged and excited to use their services again. And integrations are not simply added value for customers – the time and money they save also converts into added value for a bank’s business, too.
Partnerships are a proven solution that allow banks to successfully navigate growth and overcome barriers to innovation. Those that take advantage of partnerships now will retain and grow their customer base and ensure their longevity in an increasingly competitive market. Those that delay action risk ending up like a head of M&S broccoli that spent one day too long in the fridge – you can still use it, but you’ll know that it’s a little past its true potential.
About the author:
Prasangi Unantenne is head of implementation at Wise Platform. She has 15 years of experience in financial services across a range of roles, including product management, business development and operations.