By Clement Chirenje
In April 2020, PayPal added 7.4 million new accounts. The simplicity and direct access of retail-oriented banking services and tools have been embraced.
The strategic prioritization of banks and fintechs are and will continue to be in stark contrast. While banks are keeping a hawk’s eye on cutting costs, managing risks and allocating capital, the fintech is marching towards the higher end market where margins are thick and sweety. The higher end market being the sanctuary for traditional banks because of their huge cost base. Fintechs do really mean business.
Faced with lower revenues and demand than ever before- while working to accommodate Covid-19 restrictions and operating at the same if not amplified cost base, banks need to revisit their incumbent business models.
To survive, banks need to achieve a low cost base and build leaner organisations. Achieving these, banks need to rethink their distribution across sales and service, support functions (including risk and compliance) and back office operations.
All this points to the digital innovation journey. Unfortunately many institutions still rely on legacy tech stacks and corroded risk architectures with scant digitisation.