I’ve been asked this question on multiple forums that why a bank is required to sell soaps, it is not their place to be and they’re not good at it so why bother, and they’re not wrong. This is not a bank’s competency so why invest time, money, resources and effort in building this platform or ecosystem. Why banks are willing to build mobile apps that are doubling as the platform apps which other companies have also tried and met with mixed success.
Is this just an exercise in futility, which the developers sitting in the bank saw as a good way to pass their time and they came with this idea to develop apps that make little business sense? No, instead there is a very well-crafted business sense to it. Let me walk you through the genesis of how we get here, and then you decide where you want to go from here.
Banks of the 20th Century
Let’s go back a bit, say a couple of decades. I come from New Delhi and there was a very tiring and tedious process to get the banking activities done. My mum started her small entrepreneurial venture way back in 1987 and I grew up helping her in her venture, sometimes just by operating the machines and sometimes running errands for her. Going to the bank to deposit the checks was one such chore I had to do for her while she used to sit through at her own office’s front desk dealing with walking in customers.
Those visits to the bank were quite boring and I used to hate them. Just to deposit the checks, sometimes withdrawing money (if the amount was bigger than the daily ATM limit) and sometimes passbook updates. Yeah, I grew up doing that but never took it seriously as I was more focused to visit the comics store which was there next to the bank and not think too much of what the process was I was performing in the bank.
When I started working and joined my first employer, they opted for opening a new bank account for me in ICICI and I only then noticed the ease of transactions as their ATM limits were higher, the online banking through the website was quite easy and overall user experience was much better than visiting the branches and I could skip the queues, then why still keep the accounts with those nationalized banks with lacking features, but my parents insisted to continue with the nationalized banks and preferred to visit bank branches instead of doing it online.
Banks in the social construct
Banks historically have been one of the places to socialize. People used to run into a lot of neighbors or acquaintances during their bank visits, sometimes new friendships were struck and even sometimes new business deals for local mom and pop stores and SME segments. That’s what I got as a takeaway when my mother explained me the benefits banks bring for small entrepreneurs. Even branch managers were the original ecosystem catalysts who may connect small businesses to potential customers or even to other businesses.
Building connections and empowering ecosystems and contributing to the local communities have always been a function banks have been performing, even so much so that certain communities came together and opened their own mini banks as corporation banks which were built by the communities as a means to have a common savings scheme or funding instrument for that community.
Now, if this function has been so much ingrained to bank’s existence then why this can’t happen in a virtual setup. Now, to facilitate this to happen a bank can have two primary approaches, first being supporting a pre-existing platform or ecosystem by providing them funds and even access to their partners to that ecosystem for all to benefit and create a win-win-win scenario, and other being creating their own ecosystem if there is a lack of one in the existing landscape.
Banks have always been an integral part of the society and them putting an effort to build a virtual ecosystem is not too different from a banker introducing two of its customers to each other who may have common interests. They’re not selling soaps or creams but acting as a lubricant to smoothen the social engagement of two business matches to generate value and wealth for all. If this goal of value generation is at the heart then I don’t mind if a bank sells soap.
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