In our last online panel discussion, Reimagining digital banking during and after COVID-19, we asked experts from all pockets of the financial services industry about how banks, old and new, should respond to the pandemic crisis. Here are four key thoughts we’ve taken away from the discussion. 

1. “Traditional banks and challenger banks will become more and more similar.” 

Gediminas Misevičius, head of open banking at Swedbank, expects incumbent banks and newcomers to take a leaf out of each other’s book: traditional players will create smoother digital solutions, while challengers will expand their product and service portfolios in the future. Trust, however, remains a key differentiator. Most people still keep the lion’s share of their money in established banks and use their neobank accounts mainly to top it up with “pocket money” for a specific purpose, such as travelling. But why shouldn’t customers – or service providers – get the best of both worlds? “We’ve seen examples where we’ve teamed up with a fintech firm to integrate their solution into our platforms and their app’s adoption rate has grown ten times. This is because customers will trust a solution that a traditional bank has selected, with all checks in place.”

2. “Uber didn’t kill taxis, Airbnb didn’t kill hotels, and challengers won’t kill incumbent banks.” 

The way Head of Revolut Business Vaidas Adomauskas sees it, traditional and challenger banks cater to wildly different customer needs – based on wildly different business models. For a large bank, he says, there’s virtually no value in serving a micro business, like a web development company with 10 employees, a few million euros in annual revenue and no need for a loan. For a neobank like Revolut, however, it makes perfect sense. “If we onboard 500 new businesses a day and charge them £25-100 per month, our unit economics will hold up because our workflows are simple, fast and automated. What we do is expand the market and serve a niche that has traditionally been underserved.”

3. “The most dangerous thing to do right now is to think about the future in a linear way. Think in scenarios instead.” 

If this situation keeps up for the next 12-24 months, by the time the crisis is over every single person will have figured out how to live without physical branches. We will see major changes in people’s behaviours, whether it’s about travelling or attending meetings or using office spaces.
Frank Schwab, Co-Founder of Frankfurt FinTech Forum

Frankfurt FinTech Forum Co-Founder Frank Schwab doesn’t believe in “going back to normal” and doesn’t think that anyone else should, either. Especially because the coronavirus crisis is not going away anytime soon. And even if it does, the changes it has brought about are here to stay. “Even my children spend half of their days in video conferences now. If this situation keeps up for the next 12-24 months, by the time the crisis is over every single person will have figured out how to live without physical branches. We will see major changes in people’s behaviours, whether it’s about travelling or attending meetings or using office spaces. My advice is to start thinking about scenarios. Look at your worst-case scenario and take it from there.”

4. “We tend to overestimate what happens in the short term and underestimate what happens in the long run.”

In other words, Amara’s Law, coined by Stanford computer scientist and futurist Roy Charles Amara , is alive and kicking. “Many of us fear that this crisis will turn our world upside down. But 10-20 years ago we thought we’d be driving flying cars by now. And here we are, worrying about the most basic issues, like washing our hands,” Flutterwave’s Linas Beliūnas pointed out. He believes in focusing on omnichannel experiences instead of preparing for the impending digital doom. “How Amazon has evolved is a great example. It started out as an e-commerce company and now they’re going into bricks-and-mortar retail. I think the same will go down in the banking world. Branches and human contact will remain important for a part of the population.”

Reimagining digital banking during and after COVID-19

Reimagining digital banking during and after COVID-19

Tune into our online panel discussion with ETRONIKA and learn how industry experts from across Europe think banks, old and new, should respond to the pandemic crisis.

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