Union Bank has unveiled an investing app, M36 – “a digital investment platform offering a range of investment opportunities for investors of all levels through a self-service app. In addition to its robust investment product offering, M36 provides access to investment advisors; life-essential products and services and a 24-hour lifestyle concierge, combining simplicity and functionality to deliver a seamless user experience”. Simply, the core aspects of banking are increasingly being digitized.
When you consider the performance of Goldman Sachs as a public company, you will realize that serving just the 1% may not deliver the alpha since massive reduction in information asymmetry makes relying on extremely expensive financial products a bad strategy. So, today, GS has joined the mainstreet, selling credit cards, looking for $1,000 investors, and more. Since that pivot, the stock performance has been visible. This is what technology does – it reduces marginal cost, removes information asymmetry and makes it possible to serve many customers, optimally. Volume matters because the unbounded supply of information has diminished the value of old-century proprietary reports.
You do not need GS to know that a startup’s app is used by 1 million users; just check Google and Apple app stores! You do not need GS to know the traffic on that website as Alexa has that. So, business models which are built on exclusivity and constrained supply of information are facing challenges.
Union Bank desires to become Nigeria’s Robinhood, the extremely popular investing app in the United States. Of course, I am not sure M36 is free as we have for Robinhood. But no matter what, the bank is looking at the scale playbook.
Why am I writing this? I am coming back to strategy. M36 does not have anything with Union Bank on it, from branding perspective. From color to name, there is nothing Union Bank. In other words, it wants to present this app as an emergent fintech in the market, to swim alone, and possibly thrive. Contrast that with Wema Bank’s ALAT which reminds you that it is from Wema.
As digital technologies disintermediate rainmakers, banks would be looking for new playbooks. The goal for most would be to be at the edge of the smiling curve and the implication is that everyone wants to be a fintech! At the end, customers will win because better products will emerge in the market.
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