How fintech projects are “killing” and strengthen premium banking at the same time?

Premium banking is probably the most conservative area in banking. If the struggle for the mass customer is carried out by reducing deposit rates, convenient financial management, quality service, then in the “premium” this is not the main thing. VIP customer accounts have long been obliged to have separate business class departments, personal managers, access to prestigious loyalty programs etc.

But mobile banking is considered to be a phenomenon that forever changed the rules of the game in the industry. It also affects premium customers — mainly by making “elite” services and credit terms available to everyone. It would seem that it’s the “killer” of this niche — but this is only a raw conclusion. After all, the demand for desire / need to receive a unique service remains holding it’s place. I propose to consider the positive and negative effects of the fintech revolution on premium banking products.

Fintech as the “killer” of premium banking

Modern financial products are primarily disruptors, troublemakers for the banking environment. Mobile banks in smartphones have shown that the whole huge massive structure of traditional banks, which are sometimes more than 100 years old, is not so needed. That finances can be managed independently and conveniently. That favorable credit lines can be given to everyone, the concierge service can be replaced with a good support, and a personal manager is sometimes worse than independent access to all operations from a smartphone.

Premium banking changes are similar to the situation on premium accessories market. The more and more rich people don’t buy watches for $ 50,000 or more — they use Apple Watch. Gold Vertu smartphones has aready become a thing from the past, giving way to the latest iPhone. The highest quality product has ceased to be a privilege — now it is the basic right of the consumer. And this consumer is all of us, our friends, clients, etc. — and we want everything to be only better.

Mobile banking gave us freedom to manage our money from our smartphone: around the world, at any time of the day, as quickly as possible and with the possibility of 24/7 support. It’s mostly a premium banking 10–15 years ago.

Fintech as a re-inventor of premium banking

So, financial technology made yesterday’s premium the current basic. Question: why premium banking is still alive? Very simple: because the advantages I described above, have not been its main value for a long time.

The essence of premium service at the bank is the benefits of a closed “club format”, custom solutions for customers and personalized communication. All three points are already being actively mastered by mobile-first banks, repackaging to their own format and economy.

Personalized communication. Every year, business is more actively putting communication with customers into automatic mode: FAQ, chat bots, requests, etc. The possibility of personal communication with support often becomes a search quest. Introverts are happy, but the fact remains: personal communication is expensive, and therefore, only premium segment of the business can allow it. Does the mobile bank have a good support? So, in its premium version you will have part-time secretary. Secondly, in the near future the physical departments in banks will be the only “premium” you can really see and touch.

Custom solutions for customers. Here fintech projects won’t come up with anything new. Accelerated procedure for purchasing bonds, transferring large amounts to personal purposes under an electronic license, alternative investment, access to special lounges, etc. All this has appeared or will appear in mobile banking — it will only be as automated as possible.

Closed club format. This includes both the practical cases mentioned above and something less tangible. In a situation of universal accessibility and standardization of financial services, some customers still want to feel special, stand out from the crowd and emphasize their individuality. This will provide an individual versions of mobile banks with a different design and their own “elite chips.” And if this doesn’t seem an argument to you — Valve earned more than $400 million in 2018 by simply selling the cosmetic upgrades in the Dota2 online game (which don’t give a gaming advantage). And gamers are not so different from the premium bank customers. Believe me.

CEO of the international payment system LEO, the shareholder of IBOX Bank