“How come America put a man on the moon 45 years ago but still has not produced decent online banking?” asked recently on Twitter Michał Panowicz, mBank’s Managing Director for Products, Digital Channels and Marketing and one of the speakers at last week’s Net Finance Conference. As provocative as the question is, Panowicz is in a strong position to ask it. After some big investments in the bank’s online and mobile offering, the bank has just announced record profits for the first quarter of 2014. Digital innovation is obviously paying off. But once you’re on that road, there’s no turning back. You can’t "undisrupt" yourself.
As my colleague Benjamin Ensor wrote some time ago, innovation often happens in clusters.This means that innovation by one company causes its competitors to not only match it but also to try to leapfrog it — resulting in rapid cycles of innovation. This is what is happening in Poland right now. During my trip there last week, a few bank executives told me of the increasing internal and external pressure not to fall behind digital innovation. There a couple of other reasons why Poland is a great testing ground for new financial services ideas; it has:
· A competitive environment with plenty of digital disruptors.There are some old banks in Poland, but many were created after 1989 and don’t suffer to the same extent from the legacy problems haunting their Western counterparts. The newcomers are ambitious, agile, and determined to take market share.
· A highly responsive audience. Banks in Poland are competing for young, savvy consumers and a growing middle class. These consumers never really had a chance to get attached to previous channels and distribution models. For example, Poland’s use of cash is still very strong, which ironically makes mobile payments easier to propagate. They are replacing cash rather than cards: The latter never really had a chance to become too entrenched in buyers’ minds and retail networks.
But if you think that these differences make Poland’s disruptive market unique and not a threat to you, think again. Most of Poland’s banks are foreign-owned, which means that once their parent firms have tested and perfected these solutions in Poland, they can adjust and easily export them. Here are just a few examples that may be coming your way soon:
· Bank Millennium enabled screen sharing as part of its online banking service. Customers who need assistance can call an "online expert" and share their screen with her. The expert can highlight items on the screen, but access is otherwise passive to allay any security concerns.
· Bank Zachodni WBK (BZWBK) launched an advanced financial education game called Your Family Budget. Young people — as well as yours truly, for research purposes exclusively, of course — spend an entire day planning the financial life of a family while learning about savings, investing, and planning for unexpected events. The best planners can win the bank’s prepaid cards; incidentally, they also get used to BZWBK’s brand and products.
· Idea Bank helps its SME customers manage cash flow and deal with admin through its transaction system linked to accountancy systems deployed in the cloud.
· mBank’s new mobile app features location-based retailer offers. The bank also uses its online banking service to extend investment and wealth management to new customer segments. To help customers choose their investment strategy, mBank’s online banking site shows which funds are most frequently bought by other mBank customers. And as if this wasn’t enough, mBank has just announced a partnership with telco Orange, to white-label its solutions.
· PKO Bank Polski has already emerged as a leader in Poland’s mobile payments market with its IKO mobile app. The bank is now expanding its offer to children through a whole separate transactional service filled with game mechanics, educational content, and social media sharing. PKO BP has already gained 250,000 customers under the age of 13.
Not every initiative will end in success, but Polish banks are good at making lemonade from lemons. After the disappointing results of the highly digital and innovative Alior Sync,which only launched last year, Alior Bank has decided to turn this obstacle into an opportunity: Telecom T-Mobile is now taking over Alior Sync and is actively testing the bank-telco partnership model.