DREAM ON: EU Banks Dream of Digital Ecosytems and Superapps
Banks have had years to figure out digital and failed.
I give tremendous credit to European banks for rising to the challenge posed by Neobanks. They’ve come a long way quickly when forced to do so by open banking!
Still, the reality is that the EU’s neobanks are only getting bigger.
A few years ago, the question was, “Will neobanks survive?” They did, and some are profitable now, while others are on track to be profitable.
Ironically, banks also dream of striking it big in digital markets and look to big tech and superapps for inspiration.
The problem is that they’ve had years to figure out digital, and while they’ve improved, they are still miles behind big tech and neobanks.
Just because you dream it doesn’t mean it will come true.
👉TAKEAWAYS
🔹 European banks are more likely than those in other regions to expect neobanks to be their company’s biggest competitors in the next five years.
🔹 Payments are the space where European banks predict that new entrants will gain the most market share.
🔹 Europe’s banks are meeting the competition head-on by building greenfield digital banks, creating super-apps or ecosystems, and providing “banking as a service” offerings to brands and fintech firms.
🔹 European banks are investing in technology such as AI and augmented and virtual reality to improve the customer experience,
🔹 Over one in five see migrating to the public cloud as a strategic priority to ensure agility and security.
🔹 European banks are emulating how non-traditional players have used technology to reach consumers underserved by traditional financial services.
🔹 European banks could do more to offer “green” products to appeal to consumers concerned about climate change.
What surprised me a bit was how many banks are putting core banking on cloud. Just 5 years ago, this would have been considered heresy!
👊STRAIGHT TALK👊
The majority of banks across the globe dream of creating a digital ecosystem.
It’s quite amusing and shows, to their credit, that banks have learned from big tech and now want to own platforms and superapps. That is fundamentally good!
The problem is that none have gone much beyond digitizing their existing services, and neobanks still beat their ability to do that.
It’s not wrong for banks to think big and have aspirations, but so far, banks in Europe and elsewhere have shown little of the digital prowess required to build a real digital ecosystem.
So what should European banks dream of?
First, they should dream of kicking neobanks butts with better apps and lower prices.
They can’t continue being beaten by challengers like Wise and others and then tell us you’re building an ecosystem. Who will want to use it if they’re doing business elsewhere?
Most importantly, don’t tell us you will build a super app; no one will believe you.
Thoughts?
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