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Is Banking Really Broken?

The short answer to this, yes. Banking is traditionally defined as the process of serving customers financial needs (pay someone, get credit, protect their cash and livelihoods etc.) But the institutions who has been providing these services — the big banks are feeling the heat. Things are changing very quickly with regulators seeing the need to improve, with the rise of technology and the ‘software eating the world’ prophecy.

“Banking will be necessary, but banks may not be in the coming 5 to 10 years” — Piyush Gupta, CEO, DBS Bank

The focus has to start with customers, their needs and wants. Why do they need to go to a bank in the first place? Nobody likes waiting in line to speak with someone just to get a simple task done. Most customers that we have surveyed and spoken to don’t actually want a bank account, but they want the security of the institution and a surplus on their cash. Customers don’t want a credit card or loan, but rather, that expensive handbag, gadget or house that they are not able to presently afford.

The most taxing part about this is often that the banks are built as silos and often have complicated products which are not entirely transparent on the fees and late charges. This is implicated when the business model is driven by profiteering from consumers inconveniences. This is exactly the part that needs to change.

Therefore, after the financial crisis in 2008, many fintech startups spawned across the world seek to re-design different functions of delivering the personal finance experience. What we are experiencing looks alot like this:

 

Fintech model = consumer wins 
In essence, the banks become the backend (where all your money is actually kept) and the frontend consumer-facing part are now the startups, where often are young companies who has customers interest at heart. The promise is clear: Faster, Cheaper and Better than the big behemoths before them.

Some fintech startups have even progressed to becoming banks of their own with actual credit facilities to serve their consumers (e.g. Alibaba and Moven).

The fintech wave in Singapore

In 2016 the Monetary Authority of Singapore (MAS) spelt out a mandate to solve 100 problem statements by the industry and consumers. It was a clear indication that Singapore is aiming to become a fintech hub of Asia, to embrace technologies to serve consumers needs better.

Here at Seedly, we thought about how can we redesign the experience ground up — being focused on customer needs, instead of adding random bells and whistles. As fresh graduates ourselves, and pretty much no idea on the way ‘things should be’, it was a good start. The banks here have been attempting to build better functional mobile apps but they are designed as silos individually to serve their own existing customers.

Therefore, we studied successful use-cases with Mint (USA), Moven (USA) & Atom Bank (UK), before going online to find out what users were really asking for both locally and regionally. We adopted the best practices in improving the UI/UX (interface and experience) for the personal finance management process and designed Seedly for ourselves.

“What were we already doing that required a 10x improvement?”

We found that retail banks often left a key element to third-party applications and mobile wallets to fill in — budget and expense tracking. We further realised that this was an important bedrock of a user’s journey on managing his own money. Therefore, that was where we started, our own slice of the pie that we could target:

  • Automated expense categorisation
  • Simple easy budgets, cashflows for non-financial trained people
  • Safe & secure links to sync bank transactions

In the past 6 months, we have been experimenting with different ideas, user interfaces and processes with beta users and we hope that our customers will appreciate what we have created when we launch our first iOS version in August 2016.

Conclusion

With all that being said and personal experiences both as a fintech startup and a consumer, it is no-doubt an uphill battle. With any revolution, there will always be high regulatory barriers to overcome and work within.

Most importantly at the end of the day, the customer wins. It will be interesting to see how the landscape pans out in the next 5 years, as we are only at the very beginning of this fintech movement in Asia. Our prediction would be that as financial services takes center stage, more technology giants would takeover the roles of banks, with trust built on existing customers relationships. Apple bank? Samsung Bank? Microsoft bank anyone?

Seedly is an everyday personal finance assistant that aggregates your financial data across up to 6 local bank and card accounts and gives you a complete personal financial picture. We currently serve over 6,000 users and growing in Singapore and are supported by NUS Enterprise, TOP 9 DBS HOTSPOT startup and East Ventures. We aim to become the #1 personal finance management app in Singapore and the region.

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