It felt like yesterday when virtual hopefuls were calling traditional banks dinosaurs that were ripe for disruption and, in some cases, extinction. The coronavirus pandemic has derailed and rewritten the trajectory, finews.asia writes.
The ongoing pandemic has fuelled a significant head start for traditional banks not only to boost virtual activities and income but, more importantly, secure early mindshare of their platforms' users.
Their virtual rivals in both Hong Kong and Singapore have experienced various obstacles – launch delays, postponed license issuances and marketing hurdles – giving conventional lenders near free rein to set the scene for the post-coronavirus digital banking market.
First-Mover XP Advantage
Banks may not exactly be the first movers of developing or launching various platforms and functionalities as basic as online trading or digital account-opening. But the pandemic has created an opportunity for banks to act as one as many users seek a permanent alternative to brick-and-mortar banking in a dramatically different environment while lacking brand awareness with regards to new virtual entrants.
Except for those with the most insufferable user interfaces, banks have had the pandemic and closed branches on their side to aid continuous repetition of usage and reinforcement to create habitual behaviors – in the absence of virtual rivals, many of whom heavily pride themselves on user experience – that will pay long-term dividends.
Even for fintechs that also have competitive pricing, history has proven the difficulty of conversion or addition of other systems after the first good experience. Think iPhones and their storied track record of extremely low pricing elasticity without major innovation upgrades.
Early Returns
Finews.asia first wrote of the potential early mover advantage that could be gained nearly two months ago as virtual banking launches were being set back by the ongoing coronavirus pandemic. Since then, traditional banks have already seen early returns.
DBS opened more than 24,000 stock trading accounts since Singapore’s tightened lockdown in early April. UOB quadrupled online investment purchases in the first quarter. Only 6 percent of HSBC’s regional retail transactions in March were conducted online despite its dominant branch network.
