Go on the attack while the challengers get weak
Even the most conservative banking professionals know that the financial industry will not progress if they continue with “business as usual.” Established institutions are taking full advantage of the fact that challenger banks are feeling the consequences of COVID-19 much faster. So, it’s important to seize the opportunity and become a challenger with your own so-called “flanker brands.”
The tougher the times, the more cautious investors are. As they move their capital more and more into supposedly safe investments, fintechs are currently finding it more difficult to obtain new capital. In Germany, 16 fintechs were acquired in the first six months of last year alone. From January to July 2019, there were 36 cases where banks took a direct stake in fintechs, according to the cooperation radar of PwC. And in the coming months, the technology and the much-wanted knowhow that newcomers offer is likely to be available for even less money – this clearly signals an opportunity for established banks to expand their own profile with innovative solutions and business areas. Consolidation gives well-funded market leaders the opportunity to finally occupy the fintechs’ not-so-new space, and to secure market share with young and increasingly with older clients who fall well into the “over 50s” segment.
Digital banking: time is money
The demand for digital and mobile banking solutions is growing, and in this period of upheaval driven by Corona, time is money. When established financial brands package their experience and know-how up into new digital offerings that offer a young look-and-feel and compelling user experience and offer them as flanker brands, i.e. new brands in the same product category, they maintain pace with the competition and gain market share – regardless of the level of their brand awareness and good reputation. Since the digital offerings are not complex and are well-known to the bank, such projects can be implemented very quickly, especially since they are based on existing IT infrastructures.
Usability and convenience that appeals
This offers financial institutions the opportunity to gain experience with new types of banking and to develop best practices. How and whether offers that prove themselves to be lucrative in the coming months will merge with the main brand can be decided later – the main thing is that banks quickly offer their customers services that are of value in the crisis and are appealing in terms of usability and convenience. One thing is certain: Bringing innovative products to market cannot be put off for long.