Economy· Macro· Fintech

Banking as a Service, the new emerging digital banks

minutes 2018/10/31 07:33:45
China's Financial News, China News, Banking

Oct 31, 2018 (China Knowledge) - Number of digital banks are also participating in the ongoing Hong Kong Fintech week. Digital banks are banks with a formal banking license but operate exclusively through a digital platform such as a mobile app. These banks seek to challenge traditional banks by giving customers greater control over their money and bring more value to customers.

For example, Revolut, a digital bank based in the UK, provides customers real-time updates when they spend their money. It also categorises their spending into segments such as food, entertainment and travel to allow customers to see how exactly their money is being spent. Next, the app also allows the user to set budgets in each of these categories and helps the user to meet budget targets. Finally, Revolut also gives customers the option to round up their bill to the nearest dollar and automatically places the excess change into a separate savings fund. These features all serve to give the customer greater control over their money.

For value, Revolut gives customers access to the interbank exchange rate in real-time and allows them to send money across 24 different currencies. In addition, customers can also buy and sell cryptocurrencies through their platform. Revolut also plans to introduce commission-free securities trading in the future.

Another digital bank, Starling bank, adds value to customers through fee-free foreign exchanges. The company has also integrated a marketplace within their platform for customers to access a large number of fintechs. The marketplace gives customers greater choice and transparency on the number of financial services available. For Starling bank, this is also capital efficient as it gives both itself and the fintechs a new customer acquisition channel and provides easy scalability.

Starling bank seeks to monetize its services by charging the fintechs it hosts a fee for each customer the fintech gets through its platform.

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