Banks need to think outside the app

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Bankers understand they need slick mobile apps to compete in the digital age, but the battle for new customers will take place elsewhere on a customer’s phone in the years ahead.

In countries where mobile payments have taken off faster than in the United States, big banks have staked out a presence in places outside of traditional banking apps. Customers and prospects spend hours of their time online, chatting with their friends on social media, or perusing online real estate listings. Being an organic part of that online experience requires fresh thinking and in some cases new services that are not strictly banking.

So the most forward banks are already experimenting with strategies to answer questions like these: How can a bank insert itself in a relevant way into an existing ecosystem where people gather for nonbanking activities? And does it make sense for a bank to create its own ecosystem of sorts?

There is perhaps no better example of this dynamic playing out than in China, where banks such as Citigroup — the only U.S. bank with a retail license in that country — provide banking services through WeChat, the popular social media and mobile payments app. Citi offers most of the features of its mobile app through the WeChat platform, giving customers the ability to apply for credit cards, access their account balances, obtain instant loans and more.

Citi considers its partnership with WeChat in China as a bellwether or sorts for the way retail banking may evolve in other markets in future years.

“Customers think about banking while they’re doing other things, like shopping, making travel plans and talking to their friends,” said Gavin Michael, head of technology within Citi’s global banking division. “There is a very natural role for the bank to play in those kinds of digital environments, rather than artificially driving them to a Citi-owned property.”

In Belgium, meanwhile, BNP Paribas has developed a standalone app aimed at acquiring new mortgage customers by not just offering loans, but by helping them search for real estate online.

BNP recently integrated the app with local real estate websites, giving users the ability to search for properties based on neighborhood preferences, such as the availability of local schools or public transportation. Users also can estimate how much they can borrow based on their income, or make an appointment to talk with a BNP banker. Those who are ready to buy a home can obtain a digital mortgage.

Home on the Spot is designed to provide a service to customers — and noncustomers — before they decide to take out a mortgage, according to Michael Anseeuw, head of retail banking at the BNP Paribas Fortis, the French banking giant’s subsidiary in Belgium. “It’s on the one hand differentiating ourselves from competitors online,” Anseeuw said. “On the other hand, it’s also a strong belief that if you want to be relevant as a bank in the future, you have to be earlier in the process to capture your customer.”

BNP has said previously that it might roll out similar services to its subsidiaries in other markets, including Bank of the West in San Francisco.

Home on the Spot launched in Belgium three years ago and since then has been updated with new features. In the future, BNP hopes to give users the ability to hire movers and set up electricity and other utilities after they close on a home. “Finance of tomorrow has to be completely integrated in the life of a customer, and a customer is not looking for a mortgage — a customer is looking for a house,” Anseeuw said.

With the rise of new technology and open banking, companies need to start thinking differently about how to compete for customers in a digital environment, according to Anseeuw. That could mean partnering with big tech companies, and offering services on their platforms, such as how banks have integrated with Apple Pay. Or, in the case of BNP, it could mean creating an entirely new platform of your own.

“We believe that housing is an ecosystem where we have a role to play,” Anseeuw said. “And if we want to play in that ecosystem it means that, as a bank, we have to be relevant in all steps of the process, and not just when a customer looks for his mortgage.”

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Digital banking Internet of things Digital mortgages Citigroup BNP Paribas Big Ideas
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