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Ecosystems: The future for banking?

by Inside Out

The traditional integrated banking model is breaking apart. In its place, a diverse digital banking ecosystem of bank and non-bank players is emerging. Bringing together ways to make a consumer’s daily life easier is the future of Digital bank.

Banking for the future: An open ecosystem

Within the banking industry, ‘ecosystems’ are the buzzword of the moment. Many observers believe the idea that banks will work more closely with other parties, including from outside the world of finance, is inevitable. However, while ecosystems may be an important part of the sector’s evolution, it is customers that must be key. Put simply, all future plans should be driven by customer expectations and their needs in terms of use, information and accessibility.

Some banks have embraced ecosystem strategies. “The capability to connect to various platforms with a digital, responsive platform is vital. Banking ecosystem may represent the next frontier of banking innovation and a long-sought growth engine for banking profit pools.” said Mr Thomson Fam, CEO CIMB Bank Vietnam, in a case study.

While among some other banks, there is a justifiable fear that opening up an ecosystem reduces their potential rewards by increasing competition. However, the reality is that it makes the pie larger, giving everyone the opportunity to grow. This is driven by the network effects that a healthy ecosystem creates, among other factors.

In Vietnam ecosystems in business have become a noticeable model in leading large companies such as Vingroup and Viettel. However, banking ecosystem have not yet been explored and the CIMB partnership with tech players is one of the first. CIMB bank Vietnam recognized the opportunity and is now focused on developing this four-way partnership to provide a comprehensive ecosystem for a variety of customers.

CIMB Vietnam as a case study for banking ecosystem

People still routinely say “there’s an app for that”, but the truth is, this phrase is outdated, bordering on unhelpful, as a business strategy. Today’s customers increasingly demand connected experiences — not an app or a website, but cohesive experiences that allow them to do what they want, when they want, in the ways they find most convenient.

Crucially, CIMB leaders realise that they can’t do everything themselves to meet the needs of customers. Instead, they must connect with others. Through aggregation, interaction with customers becomes broader and richer and extends beyond banking: “we want to help customers on their entire journey, including outside the narrow confines of what currently constitutes banking” – said Mr Thomson Fam, CEO CIMB Bank Vietnam.

Partnering with service providers: Toss, SmartPay and ON, CIMB Bank Vietnam leads the digital innovation in this financial ecosystem. Tapping into technology and financial solution can allow participants to leverage one another’s strengths for mutual benefit.

CIMB Bank’s Partnership Strategy – Excelling on engagement

Within financial services, it often looks like there is a stark choice to be made between cooperation and competition. Much of today’s innovation is taking place as a result of partnerships between banks and fintechs, to add value for customers. A move from a ‘product-push’ sales mentality to proactive ‘needs-driven’ solution offerings

“There are many survey results track with evidence that consumers are increasingly open to getting financial services from technology companies rather than traditional banks. Some banking leaders may not know, for example, if new technology companies are competitors or partners — whether consumers are open to getting their financial services from technology companies or through technology companies that have partnered with banks as service providers. But for, we are so confident with our current Partnership Strategy for Vietnam market” – Ms Le Hien Trang, Director Marketing & Partnership said.

1. TOSS – an unicorn from South Korea

New CIMB – Toss Visa Debit card soon to be launched in this November

Originally focused on encouraging people to practice an active, healthy lifestyle through its Step Counter app, which grants users rewards for the number of footsteps they achieve daily, Toss now partnered with CIMB Vietnam to introduce “CIMB-TOSS Card”, where users can open a virtual prepaid card directly on Toss app with eKYC (electric Know Your Customers), a solution powered by CIMB Bank.
Using Toss app, users are rewarded for walking, playing games and shopping online. By launching this co-branded virtual bank card in Vietnam, Toss and CIMB Vietnam also show their ambitions to empower Millennials lifestyle through Fintech.
This November, Toss and CIMB will introduce physical CIMB-Toss Debit Card soon this year with many “wow” benefits. This is also the first card in Vietnam with an minimalistic design, using Aurora color that transfer youthful and freshness, suitable for target customers in the 20s and 30s.

2. SmartPay E-Wallet:

SmartPay E-wallet has almost two million individual users.

A second partner of CIMB Bank Vietnam in 2020 is SmartPay, an E-wallet application offering an online payment account registration service with more than 193.000 merchants and nearly 1.8 million users in provinces and small cities on its platform.
SmartPay users can register a bank account directly on the SmartPay app using the eYKC solution CIMB provided and managed and experience other diverse features on this e-wallet with ease. For registration users will need to provide photo ID card, citizenship identification and a live selfie. The full journey is secured and data sharing complied with GDPR regulations.

3. ON APP: Digitization of the client experience

Snailship App – The solution for online shop owners and shippers.

The most recent collaboration for CIMB is ON – a Social Commerce Platform, tailored for buyers, sellers and delivery services across Vietnam. For sellers and shippers, to fix the pain points of COD, CIMB offered ON a B2B solution: Digital account opening & Payment on delivery. From there, all shippers and sellers can register CIMB account directly on ON app and enjoy Payment on Delivery which is more secure for both. The partnership between CIMB and ON will increase efficiency, productivity and safety of transactions.

“Digital footprint” and “Banking ecosystem” will be the way forward for all banks. The future of banking will be determined by those banks that start early, and ones that are willing to disrupt traditional business models to push the boundaries of customer experience. How well banks engage in coopetition with Fintech startups playing in emerging technologies will determine how they can differentiate in an increasingly crowded market that will likely see high customer churn.

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