Futurist and fintech entrepreneur Brett King sees more opportunities for incumbents to launch pure digital brands, similar to Citibank and AMP, as a solution to addressing increasing disruption and new consumer expectations in the sector.
King was visiting Australia as a speaker at the RFI Group's Australian Retail Banking Summit and the AMP Amplify Event.
With regulatory challenges and changing consumer expectations, AMP Bank group executive Sally Bruce said the bank has “recognised it has to do things differently”.
“We were asked why would you seek a speaker who has a weekly podcast: Breaking the Banks. But we see AMP Bank as a small challenger bank. We recognise that we need to do things differently to provide an alternative to the market which is essentially held 80 per cent by the big players,” Bruce said.
According to the AMP bank executive, the bank contributes 14 per cent to the group’s earnings and has less than one per cent in market share in residential mortgages.
“It is a rich territory for us to challenge,” she said.
Similar to Citi
Part of the strategy will include a bigger focus on rolling out financial management tools such as its Bett3R Account.
“What AMP is doing with their technology is similar to what Citibank in the US did when it launched a national digital brand,” King said.
“These are really fintech businesses coming out of incumbents. They are taking the learnings from how fintechs have adapted to the new environment and created business organisations that really look like fintechs. We are really now starting to see pure play digital brands coming out of the incumbents.”
King sees financial management tools as key to the way banks can reshape their businesses, which is more about the experience and customer engagement than by simply providing a product.
He highlighted an example where his business Moven dealt with Canada’s TD Bank to develop the financial management tool MySpend.
MySpend led to greater customer attrition and engagement with TD Bank customers even using the app to consolidate their accounts. King quipped that the success of the app was probably the “reason why the Commonwealth Bank used a similar name for its app”.
King sees the scope for challenger banks to grow in Australia given there are only two new entrants – Xinja and volt – however, in the UK there is room now for consolidation.
“There are now 40 challenger banks in the UK and not all will survive. What is clear is that they are gaining significant traction. Monzo has a fantastic passionate customer base. It will be interesting to see if that will carry through to the next decade, but it has definitely given them momentum.”