Consumer banking is facing a plethora of challenges from Digital and FinTech startups. Here is my take on one example of a salary account, the various aspects of customer's relationship with a bank around it, and how digital is creating opportunities in this space

1. Story of a Humble
Salary Account
…and opportunities for DIGITAL disruption
by Umer Iqbal
24-Jun-2016

2. Meet Jamal.
He works at SalesCo LLC in Dubai as a
sales representative.
Every month, his employer transfers
salary to Jamal’s bank account, at
Save&Spend Bank (S&S).
Jamal uses his salary to pay his rent,
his children’s school fees & for
shopping with his family at Mall of the
Emirates.
Story for illustration purposes only
Note
Jamal has credit cards and loans
for some of his needs, that we
will discuss another day
https://flic.kr/p/9jvCF4

3. 1. Get Salary
2. Spend 3. Save
Story of Jamal’s
Salary Account
Jamal is conscious about his
family’s future financial needs,
and every month he tries to save
some money for a rainy day
Jamal spends funds from account
for life’s needs like rent & shopping
➔ Funds are either withdrawn as
cash, or
➔ Spent directly from S&S
transaction means like debit
card, online & mobile banking
https://flic.kr/p/aFAjM6https://flic.kr/p/aFDet2
➔ Jamal earns salary by working
very hard for SalesCo
➔ Once a month, SalesCo
transfers a fixed amount to
Jamal’s S&S account, through
bank transfer
https://flic.kr/p/5j3XgJ

4. Jamal and S&S bank maintain this life-
long relationship.
While Jamal’s focus is on fulfilling his
life’s needs through the money he earns,
S&S bank has a very different
expectation from this relationship.
S&S views Jamal as a source of funds that
can be invested elsewhere. The services
offered to Jamal are a cost overhead for
the bank. However, the bank perceives
Jamal as a potential buyer of other
products like credit cards and loans in
future
Varying
Perspectives
https://flic.kr/p/aFAnPM

5. MONEY
INTO
ACCT.
Jamal’s
Perspective
➔ Regular receipt of salary to spend on life’s
needs
➔ First spend, then save
S&S Bank’s
Perspective
➔ Regular receipt of funds to invest elsewhere
➔ Cost overheads of receiving and maintaining
funds
➔ First save, then spend
Digital’s
Opportunity
➔ Provide convenience to employer and
bank for transmitting salaries
➔ Avoid receiving salary, and just provide
rest of the services

6. MONEY
OUT OF
ACCT.
CASH
Jamal’s
Perspective
➔ Branch: Very inconvenient
➔ ATM: Slightly better
S&S Bank’s
Perspective
➔ Branch: Most expensive channel
➔ ATM: Higher location & time coverage; still
expensive
Digital’s
Opportunity
➔ Get rid of cash
➔ Make all transactions DIGITAL

7. MONEY
OUT OF
ACCT.
CARD
Jamal’s
Perspective
➔ Convenient way to transact at POS
➔ Avoids carrying cash
S&S Bank’s
Perspective
➔ Cheaper than branch and ATM
➔ Charge merchant
Digital’s
Opportunity
➔ More convenience to consumer
➔ More convenience and cheaper for
merchant

8. MONEY
OUT OF
ACCT.
PYMTS
/
REMIT
Jamal’s
Perspective
➔ Convenient
➔ Might have cost
➔ Might have delay
S&S Bank’s
Perspective
➔ Online super cheap
➔ Make profit on forex and transaction fee
➔ Make profit on transaction fee from consumer
or biller
Digital’s
Opportunity
Provide BETTER
➔ Convenience
➔ Speed
➔ Cost

9. DIGITAL
STARTUPS CAN
EMBARK ON ANY
OF THESE
OPPORTUNITIES
AS AN
INDEPENDENT
VENTURE
INCUMBENT
BANKS NEED TO
UNDERSTAND
THESE
OPPORTUNITIES
AND COMPETE
WITH DIGITAL
STARTUPS ON
EACH OF THESE
FRONTS
https://youtu.be/0aV66DncFBU
THANK YOU