Attending an SAP analyst conference, Dr. Kerstin Geiger raised the issue of convergence, specifically that the boundaries between industries are blurring. We at Celent see this quite strongly in banking. We lots of entries into the banking market from various industries, some of which are quite closely aligned to banking:
- Insurance (USAA and MetLife)
- Brokers (Charles Schwab, Merrill Lynch)
And perhaps more surprising, some that have nothing to do with banking.
- Supermarkets (Loblaws in Canada and Tesco in UK)
- Retailers (Wal-Mart, Azteca in Mexico)
- Mobile Network Operators (KDDI, Globe Telecom in Philippines)
- Transit operators (Japan Rail, London Transit, Hong Kong Transit)
What are the implications for banks, and the technology providers that support them? Celent believes that banks need to be more responsive to the customer as a whole. Combinations of banks and supermarkets, or banks and MNO can offer powerful new value propositions around convenience, payments, and incentives that banks alone can't offer, creating bundles and relationships that banks alone can't touch. These new types of customers are going to want to mix and match banking capabilities with other capabilities in their core competency. Do you give frequent transit riders a cost advantage on their deposits? Do you give heavy telco users a better rate? Do you give people who keep large balances in their prepaid telco incentives on their mobile rates? Does a mobile operator offer location based marketing to its customers used in conjunction with its payment infrastructure? These are areas in which stand alone banks just can't compete. Celent believes that technology vendors in this space need to build modular, service oriented architectures for these customers. SAP is doing so, placing all of their industry vertical content on a single platform....except banking. Red Gillen, a senior analyst at Celent, will soon publish a report on Jibun Bank, a joint venture between KDDI, Japan's #2 telecom provider and Bank of Tokyo Mitsubishi UFJ, one of Japan's megabanks. This is a mobile only bank making inroads into the mature Japanese market, no mean feat. What do you think about this new convergence in banking and across all industries?
