How the Banking Status Quo is Being Challenged in the Age of Fintech and APIs
It’s no secret that digital disruption is challenging the status quo in the banking world. The Digital Banking Asia Summit team spoke with Jeremy Berger, Chief Operating Officer at Arival Bank, a venture-backed digital banking startup for SMEs, to discuss new trends, innovating models, APIs and open banking. Jeremy is also the Portfolio Director of Life.SREDA, one of the first fintech only venture capital funds in Southeast Asia.
Additionally, Jeremy helped create (and now advises) Goldbell Investments, the corporate VC arm of the Goldbell Group, focusing on investments in fintech, mobility and automotive innovations. Prior to joining the venture capital and startup scene in Singapore, Jeremy worked for various fintech startups as well as one of the largest wealth management firms in the US.
HOW ARE BANKS TRANSITIONING FROM A TRADITIONAL BANKING BUSINESS MODEL TO AN ECOSYSTEM APPROACH – WHAT ARE THE NEW TRENDS?
Despite that fintechs o er better solutions in terms of speed, transparency, user experience and inclusion, most traditional banks don’t consider them as a competition at the moment, in the context of number of clients and size.
However, most traditional banks are starting to realize that they can lose momentum if they don’t keep up with trends: that’s why they pursue R&D, learn and invest, trying to expand their traditional business in di erent innovative directions. In other words, they are creating what we call an ecosystem – that is certainly driven by fintechs.
Some success cases with such approaches are: Deniz Bank from Turkey that
won The Efma–Accenture Banking Innovation award in 2017 for Best New Product or Service for their Augmented Agricultural Banking App, or Barclaycard (UK) winning the Wallets & Payments category with “Grab+Go” service for shopping ‘pocket checkout’.
Common trends within these ecosystems faced by traditional banking (complemented by fintechs) are open-API banking, instant payments, borderless onboarding, social credit scoring, and more.
HOW IS ARIVAL BANK DISRUPTING THE STATUS QUO? WHAT INNOVATING METHODS AND MODELS ARE YOU DEPLOYING?
In traditional banks, it takes patience and time to make innovative ideas a reality: the decision making cycle is long, while risks that outweigh potential benefits and underserved clients are still ignored. I’m talking about crypto-related companies, SMEs and GIG economy workers. This is exactly how Arival Bank disrupts the status quo: by targeting customers traditional banks don’t want to onboard. Arival is going to be one of the first digital banks to exclusively on-board these underbanked businesses.
Fintech banking is a new banking model we are deploying. Essentially, we deliver a full suite of banking products and tools designed for businesses. We’re powered by open-API banking meaning we can partner with some of the best fintechs on the market and integrate their amazing products into our blanking platform for clients. This removes the pain that businesses face of going bank to bank, fintech to fintech, looking for their favourite services – considering Arival unifies their favourite fintechs inside one banking interface.
HOW ARE APIS TRANSFORMING THE BANKING MODEL? WHAT OPPORTUNITIES DO THEY OFFER?
APIs allow banks to strategically add value in many di erent ways for their users. Whether they want to personalise the customer experience, speed up onboarding, improve their customer support, or even integrate predictive financial intelligence tools. APIs enables cooperation between banks and fintechs to fill in the many gaps traditional banks currently have. Above all, APIs can unify logins, aggregate data, and ensure the transparent movement of money.
CAN YOU TELL US HOW YOU ARE USING APIS AND WHAT THE BENEFITS ARE OF AN OPEN-API BANKING APPROACH?
Arival Bank is using open API to integrate banking products – B2B remittance, Savings Accounts, Online- Factoring, etc – by partnering with 3rd party fintech service providers. This approach allows us to really customise the user experience and provide a full suite of products in one interface.
HOW CAN FINTECH PARTNERSHIPS HELP WITH CONTINUOUS IMPROVEMENT IN THIS AGE OF RAPID CHANGE?
If we look at worldwide fintech landscape today, we will be able to find a number of fintech solutions that solve specific problems in their field better, faster and more e icient than traditional banks or financial institutions (look at Robinhood, Stripe, TransferWise, LendingClub as examples). But the problem is that they only tackle one or two specific issues. At the same time, these startups are scattered around the world, and it would take years for them to come together and create an institution that could potentially replace traditional banking.
This is why what Arival Bank’s mission is so important: we bring together the best fintechs from around the world to deliver fintech services on a new technological level, providing innovative banking to the millions of underbanked businesses in this world.
Digital banking penetration across Asia is increasing at a rapid pace. As such, the race is on for Asia’s banks to deliver superior digital experiences and reinvent customer acquisition strategies. To win in the new digital market, banks will
need to embed innovation and agility across all facets of people, technology and processes.
To be part of the conversation, join us at our inaugural Digital Banking Asia Summit 2019, part of the 2019 Future Banking week, to explore how you can structure your digital-first banking strategies to become future-ready.