NatWest is attempting to increase its market share against fintech. The bank is planning to make staff available for longer hours, introduce new investment products for less affluent savers, and boost the size of its credit card business.
However, NatWest needs to consider what really makes fintech banks profitable. The fintech business model is all about branches and accounts. The majority of fintech banks, if not all, do not operate a single branch. This means that fixed costs are significantly lower than traditional banks, when taking into consideration not only employees, but hardware and utility bills in those branches.
In addition, opening a simple account with a fintech bank is easier and faster than with a traditional bank. Fintech banks have accumulated many international consumers who are looking to open a bank account in the UK but are unable, because traditional banks like NatWest have made it very difficult for them due to background checks.
While these techniques could raise more questions in terms of fraud, the main point is that the demand for fintech accounts is higher than traditional accounts.
NatWest credit plan sounds more promising than longer hours and cost-effective investments
NatWest needs bigger plans in order to increase its consumer base. Forcing its employees to work longer hours in order to battle the fintech 24/7 model, does not appear to be a great idea to cut down costs, as the bank will need to pay over-time those employees or will have to hire more people.
Instead, the bank needs to consider its target audience in terms of new investment products. Making investments more accessible for consumers with less financial power could prove effective.
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However, for the plan to be successful and for the bank increase its customer base, it needs to make the process of opening an account for those investments easier and faster than fintech. Because those kinds of consumers often prefer investing through fintech banks due to it being easier, not because it costs less.
Boosting the size of NatWest’s credit card business needs to be done carefully. Being able to offer higher credit limits and lower credit fees is a great weapon for NatWest, which could prove to be very successful against fintech banks.
This is simply because NatWest possesses the financial power and fintech banks do not, allowing the traditional bank to offer its consumers more credit for fewer costs. However, NatWest needs ensure that consumers obtaining that kind of credit can pay off their debts, for finance complications and bankruptcies to be avoided.