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2.2 Newcomers with a Banking License

The providers that can potentially assail the entire business model of banks are either direct banks or new providers from outside the sector, who prepare their entry to market via payment transactions. The basic logic in the age of “big data” is that precise knowledge of the customer's payment behaviour makes it possible to design perfectly tailored solutions to financial needs in real time—as long as the solution components are also available in the background in modular form.

2.2.1 Direct/Online Banks

Direct banks only became possible due to the internet, which therefore also makes them “newcomers”, even if they have already been successful in many countries' markets for decades and can boast of steadily growing customer numbers.[1] They allow the customer to cover the entire range of needs, from financing to investments and payments, online at much better conditions—thanks in no small measure to the lack of fixed costs for the branch system. The USP of the direct banks is their permanent 24/7 availability, including transaction processing in real time. In addition, customers who wish to take responsibility for their own actions can use tools to enable them, step by step, to make complex financial and investment decisions and to process these. The “rewards” are much better conditions and a more direct fulfilment of needs. Another difference to classic providers is the fundamental outward classlessness of the customers—the range of services can be used equally by all customers, irrespective of their asset class. On the other hand, not all “premium services” are offered. Conclusion: in the coming years, market share is likely to increase steadily, if we bear in mind the thought traps mentioned in the previous chapter. The direct bank is already the established reply to the decreasing willingness to go to a physical bank branch. By being permanently available via all communication channels, the model exploits two of the thought traps of classic banks. It is already the case that the most satisfied customers are those of the direct banks.

  • [1] For an overview of German-speaking direct investment banks see e.g., Bankentest (2013).
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