Please find a better name for these ‘banks’ – Saturday Magazine – The Guardian Nigeria News – Nigeria and World News
Remember no-slip banking? It was from GTBank. In 2005. Seventeen years ago. The concept was quite simple: enter the bank and carry out banking operations without filling out forms, without having slips. With real-time digital connections, GTBank has attempted to demystify banking. It was really ahead of its time.
But that was then. Nowadays, with new banks such as Kuda, Nomba, Prospa and Brass, the quest for frictionless financial transactions has taken on new dimensions. And because of that, these new technology-powered financial institutions are starting to look like a different kind of organism – they have the DNA of banks but are mutating into so much more. Maybe, if you really think about it, they should be known by a different name.
Take Prospa. It is a bank that offers to help entrepreneurs register their business. Once the registration is complete, he then opens, “in five minutes”, an account for the new company. This is the great differentiator of Prospa. And that’s brilliant, isn’t it? If you want to start a business but need help navigating the Corporate Affairs Commission’s online registration portal, Prospa says it will help.
This means that Prospa is not your grandmother’s bank. It is a business consulting firm that also does banking. Now, a question for Prospa is: how many of Nigeria’s 40 million underserved micro-enterprises will need to register to be profitable?
Question 2: If a business is so small that it cannot afford to hire a lawyer, executive, or consultant to register, does that business have the necessary cash or volume of business? to actually bring a profit to Prospa?
Of course, the bank has positive projections, otherwise it wouldn’t have attracted more than $3.8 million in investor funding.
To be sustainable, however, Prospa may need to add even more additional services to its bouquet. Services such as: financial accounting and market strategy for its clients. Maybe it could even add some management consulting, the kind you would typically expect from a company like Accenture or Deloitte. Or, who said a bank can’t effectively manage all of its customers’ lifestyles, plan, negotiate great deals, book trips and vacations, plan and manage school fees, and more. ?
Do you see where I’m coming from?
The more we follow the explosion of possibilities offered by technology in financial services, the more users can rely on service providers to manage more aspects of their personal and professional lives. The more these new banks become much more than… banks.
In the case of Brass, he went even further in the whole banking-do-more-than-ordinary business.
Once a prospect registers with Brass, banks integrate them into a portal from which payments can be made, invoices can be sent and reconciled, and team access to accounts can be controlled. Brass comes across as less of a bank and more of an empathetic butler who intuitively senses your pain and serves you what you need to de-stress and get your bearings.
When it comes to loans, Brass says he can quickly smooth out cash flow wrinkles. “Capital is available,” it says on its website, “based on your cash performance and history with us.” The website, by the way, is festooned with customer testimonials.
If we assume these customer referrals on the Brass site are legitimate, you can see how this can trigger a customer acquisition cycle for the bank. The new prospect sees real, trackable business testimonials on the bank’s website. Prospect tries the bank. Prospects become customers. The customer is impressed with the banks’ services such as simplified operations, low fees on transactions, transparent monitoring of funds, favorable interest rates, access to loans, business advice, integration of access to Teams and cross-platform mobile apps. The customer shares positive opinions on the services of the online bank and by word of mouth. Positive reviews attract more prospects. And the cycle begins again.
It also helps that right now digital banks around the world are having a great time in the sun, especially because they seem to have gained a lot of trust from their users.
According to the 2021 Edelman Trust Barometer, 70% of consumers surveyed in 27 countries, including Nigeria, say they trust the tech industry. Fifty-three percent trust the financial services industry. Although these figures show a drop in the level of confidence compared to the previous year, and although the financial services sector only obtains average marks, technology clearly leads all other industries. So, by bringing the halo of technology to financial services, fintech companies gain more converts to their services.
In the meantime, as we noted earlier, is the number of new users of fintech services large enough to make a difference? Despite the quality of these services, digital banks are still largely dependent on internet connections and a tech-savvy clientele. This suggests that their customers are likely to be concentrated in cities – Lagos, Abuja, Port Harcourt, Ibadan, Kano, Kaduna mainly. This may sound like a setback, but is it? I would say that’s a good start.
The more technology becomes accessible and becomes second nature to more people, the more natural it is to jump on board a fintech platform to plan everything.
As it stands, digital banks are blurring the lines between consulting firms, software as a service (SaaS), money transfer start-ups and banks – and keep calling them all ” banks” suggests that we are ignoring the major shift unfolding before our eyes.
In the meantime, while regulators may be in the process of finding a separate classification to capture this evolution, at least the rest of us can rest in satisfaction that, thanks to technology, the real style bank of life finally becomes a reality.