In the age of digital disruption, the banking industry, like many others, must innovate, and innovate fast, to stay relevant.
There is a paradigm shift in the financial services industry occurring in Asia today.
Telecommunication companies, e-commerce platforms, and retailers are now disrupting the way payments are made and money is moved, without many consumers even being aware of these changes.
New banking services are popping up in areas of the economy that no one ever dreamed would challenge the major financial institutions.
In many cases, for users, moving between traditional banking services and new financial applications and services is now an obvious choice – a seamless process between purchase decision and payment.
Uber, the world’s largest taxi company doesn’t even own any taxis. Airbnb, the world’s largest provider of accommodation, doesn’t actually own any property. So what’s to say that in the future, retail banks won't provide bank accounts?
This isn’t just a question of product development, but one of innovative marketing – cutting through online noise by presenting your product or service in a new, fresh, interesting and even unexpected way. Every year, with every campaign.
Telecommunications Companies are Challenging Banks
Take the Kenyan company M-PESA (M for mobile, pesa Swahili for money) for example. Launched by Safaricom in 2007, the mobile phone-based money transfer and microfinancing service has revolutionised the way payments are made in Africa – something that is particularly important in a country where many workers in cities send money home to their families in rural villages.
By 2010 M-PESA had become the most successful mobile phone-based financial service in the developing world.
In 2015 it grew 34 percent to 8 million monthly active users outside its home market with 27.5 percent revenue growth. This is an example of a telecom company moving money (Read more...) than banks.
B2B E-Commerce Platforms are Challenging Banks
Alipay.com is a third-party online payment platform with no transaction fees. It was launched in China in 2004 and now has 289 million monthly active users and recently reports US$49 billion in mobile gross merchandise volume (GMV) during the first quarter of 2015. This is an example of a B2B e-commerce platform that is challenging the banks at online value exchange.
Transportation Companies are Challenging Banks
The Octopus card is a reusable contactless stored value smart card for making electronic payments in online or offline systems in Hong Kong. (It was launched in September 1997).
In 2015, Octopus cards will enable over 13 million daily transactions worth in excess of HK$150 million (US$19 million) per day. This is an example of a transportation company that has taken US$7 billion worth of value exchange per year away from banks.
Online and Offline Retailers are Teaming Up to Generate Big Data to Drive Sales
Walmart recently reported that it had reached an agreement with Alibaba that will allow customers to make payments at Walmart stores in Shenzhen City in China through Alibaba’s payment facility, Alipay.
The payments will be made in-store by scanning QR codes from customers' phones.
The two major corporations have also initiated a coordinated big data and member management online-to-offline program. This gives them the ability to generate marketing insights and consequently drive sales. Walmart will accept payments via Alipay at 25 stores initially, with plans to expand the partnership to additional stores in the future.
Most recently, KFC China announced a similar partnership.
Alibaba's bank is just the beginning. How much better will they be able to serve their clients' banking needs when they have access to their personal preference and online habits through data from their mobile phone?
I am just back from a weekend in Shanghai where WeChat and WeChat Wallet have become one of the preferred methods to pay - all on mobile. People are paying for everything from eating out to their gas bills through their WeChat account. It conveniently links directly to a users bank account and the safety net is that WeChat is the interface between the consumer and the purchase. Consumers in China trust WeChat more than divulging credit card details.
To capitalize on the advancement of new technologies and new business models banks are being forced to innovate.
They are expected to be able to provide the same style of user experiences that customers have become accustomed to in daily transactions with retailers, supermarkets, public transportation, and even telecommunication companies.
And this need for marketing innovation has now reached nearly every sector of the economy.
Retailers have been working with MasterCard’s digital marketing team to make in store purchase as seamless as online by adding NFC transaction capabilities to cash registers and adopting cashless payment systems.
Restaurants are driving up the number of covers they can serve every day by adding touch screen electronic waiters to tables that speed up service or enhance booking services.
Some are even extending the digital engagement from simply ordering and paying when you are ready, to changing the ambience of the restaurant such as Inamo in London.
In the field of marketing it is easy to find areas to innovate and now startups are challenging the way so many sectors will work in the future.
Many corporate brands have even formalized a financial support model to drive innovation. Many big brands have built methodologies in house to test out new marketing channel like Periscope and Meerkat.
I believe that consumers today don’t buy our products or our services. They buy the way we innovate.
Innovation is a requirement today within the marketing departments who are looking for ways to differentiate the brands they serve. Innovation in the way we listen, think, deploy and measure our campaigns help brands stay relevant in the new world of mobile first, instant gratification and customer-centric expectations.
And innovation is in constant demand by IT departments internally who are looking to enable new services and capabilities.
*Image via Shutterstock
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