How a Super App can help banks become their customers’ Primary Financial Institution (PFI)

Today's retail banking market is hyper-competitive. One of the biggest challenges banks face is how to remain top of mind and be the primary financial institution (PFI) for their customers. In this interview, we asked VeriPark's Executive Vice President & General Manager of Middle East & Africa, Zubair Ahmed, to outline some of the ways banks can become the PFI for their customers.

Q: What do you mean by primary financial institution (PFI) and why is it important?

Becoming your customers' PFI involves much more than persuading them to open an account with you.  It's about building the emotional connection that makes your institution their trusted first point of contact for everything from savings and loans to longer term financial planning, such as mortgages and investments. Customers have more choice than ever before. They have thousands of financial institutions available at their fingertips. This means they can easily select the best bank for different products.  

In a well-connected digital world, they are also not restricted by bricks and mortar branches or the location of ATMs. This access is still important, but it's only part of the overall equation. As a result, banks have to ask themselves 'how do we capture customers?' and 'how can we nurture that relationship to build loyalty? In other words: How can we become our customers' primary financial institution (PFI)?

To improve customer retention and increase profitability, banks must remain top of mind and become an invaluable daily resource for their customers. The keyword there is daily resource. It's all about becoming part of your customers' lifestyle rather than simply being a banking app, website or venue where customers go just to do their banking.

The fierce competition for market share is likely to intensify as disruptive forces, such as digital technology, continue to change the landscape of the banking industry. We've already seen lots of new trends and market entrants competing for market share over the last two decades. Now, the Covid-19 pandemic is expediting yet more inevitable changes.

Q: What impact do you see Covid-19 having on customer behavior?

There has been a huge shift to digital; not just in banking but also in other areas such as online shopping and booking travel and hotels for example. This has been one of the biggest ways human behavior has changed since the pandemic started. More than ever, customers are ready for digital experiences.

There are big opportunities here for banks to add value. Customers want fast, convenient digital experiences with self-service tools and more choice. Yet, they still love having expert advice at their fingertips; when they want to go deeper into a product, they value human engagement. And, they don't want to have to wait around for it.

One thing that remains the same in the pre and post pandemic world is trust. But, banks now need to exhibit their trust worthiness in the digital as well as the physical world.

Q: Has Covid-19 been a wake-up call for retail banks in terms of digital transformation?

Many banks see these disruptive market forces as a difficulty or threat. In fact, they are an opportunity to expand their services to current and new customers. We are already seeing this happening, even just in the last six to nine months.

We have found that, when they embrace the changing landscape, banks can deepen their customer relationships. In some cases, we've seen customer acquisition rates climb by up to 10% and customer interactions increase by around 250%. As a result of this, operating income can increase by as much as 30%.  

According to the latest research into the 'new normal' for banking, more consumers than ever intend to switch their primary financial institution and leave their multi-location mega bank. This is another big opportunity for some operators. Pre Covid-19, the propensity to move from a mega bank was around 13%; this has increased to 27%.

There are a number of reasons for this. But, mainly it is because the pandemic has forced many customers into digital banking for the first time. Digital banking is no longer seen as just for millennials.

Q: How can VeriPark help banks become the PFI for their customers?

Digital customers are often seen as less loyal because they have more options and it's easier to change banks if their needs are not met. Customers can manage multiple providers from a single mobile or laptop screen. However, this is not what excites them.

They don't want to have one app for their credit card, another for lifestyle discounting and a third for budgeting and planning. They would prefer to have everything they need in one 360 degree app. This Super App concept is what will enable banks to become their customers' preferred financial institution (PFI). 

A Super App means having a single mobile app for onboarding, payments, budgeting and planning, savings and investments, loans, insurance and anything else you desire. It all comes built in.

For example, with a Super App onboarding involves just five steps and takes four minutes. Pre-planned, pre-approved elements are built into the rule engine. This requires a lot of integration to pull in the information; document capture, performing OCR, face recognition, video capability and more.

It's not just about having a good-looking front-end and then another 20 people in the back office spending the next 48 hours stamping papers. It's a total end-to-end automated onboarding process.

Then, the payments service needs extra functionality; so you can make a payment to a friend who is a customer of another bank for example. Within the same Super App there's a budget planning element where you plan your goals, decide what you want to spend your money on and create interesting ways of saving. You can shake your device and introduce some gamification, so it tells you that the payment you are about to make goes against your budgets and goals.

Other elements might include onboarding for pre-approved loans or meeting special insurance needs, such as emergency 24-hour cover for example. An umbrella concept surrounds the entire app so it progresses with you through life. That way, when you are in a position to start investing money for example, the option is already there for you.

Maybe your investment service connects to the latest stock market stories and tips. Some of these services may come from third party providers but that will be completely transparent to the customer within the app. And, it is all completely personalized; the customer can adapt it suit to their needs and everything that happens is context sensitive.

With a full understanding of an individual customer's budgeting, planning and lifestyle goals, banks can send offers, discounts and coupons at a time that makes sense to that specific customer, rather than at a time that makes sense to the bank. All these functionalities come from lifestyle thinking. In a nutshell, you have a Super App that pulls together experiences and shared memories, such as splitting restaurant bills with friends, into a single app where the functionality enriches as you grow; from graduating and getting your first job to getting married or starting a business.

It's all about transforming from a transaction centric to a customer centric mindset.

Q: That sounds great. Can you give us an example of how it works in real life?

Together, Enpara.com and VeriPark have created rich and meaningful digital and mobile customer experiences.  Enpara is living proof that if you do what you promise, the customers will come.  Read their success story here.

Watch Zubair Ahmed's talk about this topic

Watch this 20' session with Zubair Ahmed about the same topic, recorded at the ENBANTEC Retail Banking Conference EMEA on Nov.19, 2020