Now, this was just waiting to happen. For the last couple of years, we at Hitachi, have been talking about a "bank within a bank". If we think about it, that's what First Direct has been within HSBC.
It's a scenario, where a well established bank, creates a sub-brand with a completely separate processes, technology and branding. (In the case of HSBC, it just happened through acquisition 30 years ago). If the sub-brand survives, then you can entice your mainstream customers to slowly migrate over to the new platform. This is a win-win from several perspectives:
- You can build an entity that carries no baggage from legacy processes or technologies
- You can provide a completely differentiated set of offerings to this new segment
- If the offerings sustain, you can even offer them to your mainstream customers
- Longer term you can migrate all your legacy customers to your new platform (if that became the order of the day)
Amongst all this however, the most important thing, as a customer, is trust. One should never underestimate the importance of the relationship and trust that the larger banks have built over decades (in some cases, centuries). At the end of the day, if a digital brand can demonstrate the agility of a 21st Century Gen X, Y, Z (or whatever we call them these days) organisation backed up by the heritage of trust and stability - then I am sure you have a winner in your hands!
None of the so-called neobanks have yet been able to turn their popularity into profit, and some have struggled to convince customers to trust them as their primary bank.