FF Virtual Arena: Finance For The Future: When Banks Become Brands
The way we do banking in the world has changed indefinitely. Through the introduction of digital tools like APIs, the migration to open banking, and the dramatic shift in customer preferences, banking has taken a leaf out of the retail book and is developing products that put consumers first.
In a recent Virtual Arena, FF News invited Ruediger Vogt, the Head of Payment 4.0 at Giesecke+Devrient, and Ramsey El-Dabbagh, who works in Corporate Development for Algbra, to discuss the growing ecosystem being developed around personalised banking. We are now confronted with a customer base that is more active and switched on to what financial institutions do and what they can offer to them as individuals.
“In certain key communities, when we talk about the values component and the ethics component, people are actively searching for more ethical things, that are more inclusive, and correlate with their faith, or correlates with sustainability. Our market research found that 60% of customers were willing to move to a more ethical financial institutions provider, given that they know how the market operates,” said El Dabbagh.
To meet these demands of sustainability and ethics, banks and FIs have the agency of new tech to build products which reach a wide net of people, especially when it comes to those underserved or flat out ignored by the market. Vogt, who has been a part of Giesecke+Devrient’s payments evolution for over a decade, explained how ESG goals must be achieved by banks and fintechs by going beyond the aims set by regulators.
“[To enforce sustainability] we’ve pledged to replace all virgin plastics in our payment card products by 2030 at the latest, with recycled, industrial if possible, or biodegradable materials, which we announced last week […] we’re looking at ways we can accelerate this, and it all very much depends on the cooperation with our customers,” said Vogt, on the personal investment Giesecke+Devrient are taking in making their product more sustainable for customers.
Both companies represent the past, present, and future of banking and how fintech has made strides in challenging the culture of the old guard – Algbra, an ethical banking fintech, was launched in 2020, and Giesecke+Devrient has been in business since 1865. Fintechs have the luxury of launching products with new technology already at hand, the real change comes from established institutions who are experimenting with new options, on the back of old technology and cautious stakeholders.
“You can scale up to the tens of millions in niche marketing companies like the U.S. or India, and we’re seeing this in our customer base. It can be a better model to be a leader in the niche with devoted followership than trying to be all things to all people, and as a result, becoming unattractive and irrelevant to many clients,” explained Vogt. What is necessary for financial institutions to innovate and cater to under-banked or non-banked people is clear to their individual needs, as no one customer is the same.
With this point of view, big banks and fintechs have realised that people want more from their financial services providers. In a world of instant gratification and digital multiplicity, consumers have more options and forethought to shop around – it is thus the goal of the banks to bolster up their products and give them what they want.
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