In an increasingly competitive environment, where technology-based financial players are transitioning or aiming to transition towards banking models to expand their service offerings, and traditional banks have launched their own digital proposals; all financial institutions are compelled to intensify efforts to remain relevant in the competition.
The Rise of Digital Proposals from Traditional Banks
This scenario intensified following the “interest rate war” period, where various entities, such as Sociedades Financieras Populares (Sofipos), offered high returns driven by a high-reference rate context.
Strategic Digital Development is Crucial
According to Vértiz, with a large number of new players in the market, these entities must be aware that to excel in a highly competitive market, they need to develop a user-centered digital strategy with truly differentiated proposals.
“The restructuring we’ve seen will be a very important lesson for traditional banks betting on the digital space, to prevent them from making the same mistakes. At the same time, it sends a message to fintech and Sofipos looking to become banks: this is not a field already won.”
Vértiz
Autonomy vs. Dependency for Digital Bank Proposals
Digital bank proposals born from traditional entities must decide whether to develop internally or differentiate with autonomy. Carlos Valderrama, director of Legal Paradox, a law firm specializing in fintech, states that granting autonomy has proven to be a successful strategy.
“In the Colombian case, Nequi, Bancolombia’s platform, operated autonomously, allowing it to attract over 20 million new users that the traditional bank might not have captured. It’s crucial that, in these cases, there is a clear strategy to avoid internal competition for traditional bank users.”
Carlos Valderrama
On the other hand, Vértiz points out that traditional entities do have the capacity to adapt and develop strategies enabling them to modernize their infrastructure and address segments already being served by digital entities.
“There is an area where traditional banks can adapt and adjust their focus. However, they seem to encounter difficulties, especially in leadership matters.”
Key Questions and Answers
- Q: Why are traditional banks intensifying their digital efforts? A: To remain relevant and competitive in a market with increasing digital proposals from both technology-based financial players and other traditional banks.
- Q: What strategy should neobanks adopt to succeed? A: Develop a user-centered digital strategy with truly differentiated proposals to excel in the competitive market.
- Q: Should digital bank proposals from traditional banks develop internally or with autonomy? A: Granting autonomy has proven to be a successful strategy, as demonstrated by Nequi’s success in attracting new users.
- Q: Can traditional banks adapt to the changing landscape? A: Yes, they have the capacity to adapt and develop strategies for modernization and addressing segments served by digital entities.
