Existing Banks vs. New Banks – Personal Finance as a Strategy

With a host of new banking options suddenly available to the Indian consumer, the battle of banks is hotter than ever. Involving users with better experiences and personal finance tools has become an increasingly pivotal factor in deciding which bank the Indian consumer will choose.

$230 million in funding was raised by Niyo, FamPay, Jupiter and Fi in 2021 alone. These new banking solutions, along with many others to come soon, will serve the needs of more than 10 million Indian consumers by the end of this year (expected).

The Indian consumer is now surrounded by a variety of banking options, from existing players to trying new new banks. The checkout page of every India consumer app is filled with discounts and rewards from every new and old bank in India. This occurs at a time when the average consumer is looking for personalized and comprehensive financial management to improve financial habits and health.

We believe that building capacity around personal finance will be key to gaining market share as new job holders and banks compete for it. New banks, with technology as a core competency, are slowly building personal financial experiences that drive growth from acquisition to engagement and revenue.

But incumbents, who have a majority of the market share, cannot move quickly into personal finance as a strategy, due to poor technological capabilities. But the cost of that will come when customers swell, at a time when retention is key to incumbents.

Personal finance becomes a priority

With the social and political landscape pushing towards financial inclusion, and awareness raising among millennials and millennials, financial literacy is developing faster than ever. Indian consumers, who have made digital banking an option, are becoming more aware than ever of personal finance.

Consumers are looking to understand and control their expenditures, tools with which they can save and invest, and stay informed about their overall financial health. All of this was out of reach of consumers until recently, when the account aggregator framework made possible a range of possible personal finance experiences.

Since then, there has been a rise in investment finance for personal finance mandates and later a rise in the number of personal finance apps and downloads in India. The modern Indian consumer has made personal finance a priority.

Personal Finance as a Strategy

New banks are taking advantage of technology to build attractive personalized financing features, such as summary and analysis on spending, budgets, savings, recommendations on investment options, etc. This is in line with the core principle of new banks – customer happiness.

These experiences affect the entire customer life cycle of new banks:


● Acquisition by introducing new personal finance features such as spending limit and budget tracking.
● Share across financial journeys by offering features such as approximate savings at checkout.
● Generating income by tracking cash flow and financial behavior and recommending savings and investment tools.

The new banks have built rich experiences powered by multiple technologies like machine learning where users can search for insights like “How much money did you spend on food last month?”.

Technology – the Achilles heel of existing banks

In a world where most app store reviews are filled with complaints about poor user experience, current banks have a lot to catch up with in this battle of the banks. Banks have traditionally been slow-moving institutions and are far behind new banks in terms of digital expertise and offerings.

● It’s time to market with any new digital experience posing a major threat to incumbents.
● The inefficiency of financial technology makes banks unable to deploy advanced technologies and seamless experiences.

However, current banks have a huge moat in the form of historical data close to digital experiences. But unless they overcome technology’s Achilles heel, they won’t be able to extract value from their data.

Build embeddable personal finance

Backed by the industry’s leading Fintech players and some of the major investment funds in India, Fego, a Chennai-based startup, is building a solution for conventional banks. By pooling most of the engineering and technology overhead involved in offering personal finance experiences, they can significantly reduce the time to market for traditional banks.

While resolving technology dependence, Fego’s experiences can simply be incorporated by traditional banks into their existing digital presence. Through a suite of modular personal finance experiences that are optimized for customer satisfaction, these experiences can help existing businesses replicate growth across the funnel that is currently limited to new banks.

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