My father banked with Barclays for all his lifetime, he had a Cheque book, savings account, fixed account, knew tellers by name and even kept some of his crucial documents in a safety deposit box.
Today the new bankable millennial only has an M-Pesa account where he or she can literally draw money from all the 42 banks in Kenya without belonging to any of them.
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While some might see it as the death of brand loyalty, some will see the democratization of credit market as a revolution that will avail more customers to banks and an opportunity to save on costs.
While it took a salesperson, a branch, glossy printed fliers and layers of paperwork to enlist one loyal customer, banks can literally recruit millions of customers in a very short time and at minimal costs.
Take Barclays for instance, it had not been playing in the mobile bank space due to constraints of being tied to Barclays Plc and almost all other banks had a head start.
However, in just 9 months Barclays had recruited over 3 million new customers on its Timiza Virtual banking platform, exceeding the lender’s own target of a million customers per year.
The trick is that you do not require a bank account with Barclays to operate a Timiza account. With just a smartphone and M-Pesa, Timiza accounts allow you to save, borrow money, repay the loan, pay bills, buy insurance.
Timiza lending platform offers loans of up to Sh150,000 with a built-in insurance cover at a Sh42 premium for Sh100,000 personal accident and Sh50,000 funeral insurance cover.
But then arises the worry that always made banks fear such platforms, how well do you know the customer. Banks should figure out a way of leveraging mobile banking especially better use of technology to assess loans.
The bank knew my father, his occupation, his parcel of land, his family size and how to contact him. But all these information was spread over files, computers, and memory.
That’s where technology comes in, big data has allowed banks to know their customers better and more intimately. They can wish a customer a happy birthday just out of correlating their data and know which customers need insurance to offer a package instead of a product.
This requires significant investment in technology which according to the latest figures by Barclays makes up the bulk of its re-branding spending.
In 2019 alone, the bank’s Separation programme will involve immense investments and implementation of over 70 technology-specific projects, which will further eliminate service dependency on Barclays Plc. Barclays intends to make cost saving in other areas of the bank just to channel the resources towards funding sustainable investments especially in automation and digitization.