MONETIZATION AND KEY LEARNINGS

It’s one thing to make an app attractive to users and another to turn it into a profitable business. How do you hope to make money from Robinhood?

In food delivery, we took it on ourselves to be a loss leader, trying to engage people with the platform. But we can get a commission from other services such as the mart, ride hailing and so on.

As a digital platform, today we are building scale. Next step is collecting the data and the so-called monetization of the data. For example, data analysis can tell us about the possibility of the subscriber or merchant wanting a loan. We can try to leverage the data, understand the ecosystem we already have, and try to predict, to personalize and to cross sell.

Another next step might be to help the platform users to do some investment saving through a small mutual fund or similar, that a delivery rider could afford daily. It would become a product program that can fit with the segment we already have within the platform.

That’s the beautiful thing about platform data – it can help turn our legacy banking company into a data-driven company.

Almost uniquely, you are building this super app from within an existing banking group. What key advantages have arisen from being part of a bank?

A big upside is that we already have close connections with big corporate clients and firms such as supermarkets, and also with tech firms – if we want to do ecommerce, we are not going to build it by ourselves. That’s totally different from a tech start up that may not have any relationship with the big players, and it’s why it is relatively easy for us to expand into different categories in our ecosystem.

Another advantage is that we already have the bank network, so we can use our bank staff to acquire the riders and acquire the smaller merchants – 30,000 bank staff across many bank branches. So we leverage our muscle.

Also, we understand about payments, so we can offer a good payments experience, totally seamless to the end consumer, and we can settle very quickly with the merchant and transfer them the money. That’s a beautiful thing for them!

Those good things come with a challenge point. We are regulated by the Bank of Thailand and must follow the rules and regulations of the Bank of Thailand, as a subsidiary of the SCBX. If we want to charge commission for certain of our services, they will want to ask us about any downside impacts. However, that’s not necessarily any kind of a showstopper.

Are the banking app and the Robinhood platform technologies closely related?

We used some of the API from the legacy payments system of the bank. But as a framework, the core functions of Robinhood are totally different. We are using micro services to allow us to scale.

Bankers around the world have been looking at super apps and wondering if they can build their own, rather than treating them as external strategic competitors or ecosystem partners. What are your three key learnings at Robinhood as you’ve built the food delivery and other super app ecosystem businesses?

First of all, it’s difficult! Because it was something we had never done before. So the key learning is that you have to fix it every day. You cannot give up.

Second, you are dealing with a human operation. The digital platform doesn’t involve humans at all. But you have to deal, for example, with the rider who delivers food to the end consumer. So this was a big challenge for us.

Third, there’s a common belief that with digital platforms, the winner takes all – and that the big player takes on the small guy. But we don’t aim to take over the smaller guy. We think differently – we try to be a friend. We try to partner. It’s not a winner takes all concept for us.

What does the tale of Robinhood tell us about the bank of the future?

Chulayuth Lochotinan: I think the retail bank of the future is going to be embedded in everyday life, through apps such as Robinhood. Financial needs and transactions are not that interesting to consumers. But you do want to fill your stomach! So the transaction behind that food delivery is still a necessity.

Upfront, though, you will see the things that are immediately relevant to your lifestyle. Meanwhile the bank itself will be seamlessly embedded within these daily-life apps, helping you address your everyday needs. That’s the way to make financial services fun.

Srihanath Lamsam: The bank of the future is going to be an app, and that seems to be true everywhere from the UK and Singapore to Hong Kong and China. And from what we can see, those leveraging different kinds of digital platforms – tech platforms, social platforms, messaging platforms, e-commerce platforms, food delivery platforms – would all love to bring in financial services at a certain point. That’s because one of the biggest portions of the stream of platform monetization is financing, and in today’s economy, investors love to see the P&L!

What could this mean for the shape of the banking industry, and for virtual banks?

Srihanath: In the near future you might see banks unbundle their services, and those who become virtual banks may provide only one service and focus on one target segment such as investment products for the mass consumer.

So in the near future, maybe a virtual bank just provides the deposit for the rider, or only the lending for nano-SMEs. They won’t also lend to big corporations or retail. They are going to focus.

Chulayuth: The bank might well grow into being a specialist by getting really good at one thing, at nano-lending for example. Today there are thousands of fintech and insurtech companies that focus on doing a few things well so, alternatively, once you get a virtual banking licence, a bank could become the curator of the ‘best of the best’ fintech or insurtech. The retail bank becomes a platform that selects the best of the breed, via partnerships, to personalize services to their customers’ lifestyles.

That way, the bank does not have to build everything from scratch anymore, and if the partner is not the best they can switch to another provider of that particular solution. The bank that can do that the best will be a winner in the future.

What is the key to embedding banking into lifestyles – is it the right platform technology?

Chulayuth: Technology is an enabler, but what needs to happen is personalization. The bank needs to know, when you are standing in front of a car showroom, is it because you have already purchased a car and you need car insurance, or because you need a car loan to buy the car? The personalization must be that smart – to offer the right product, at the right time, in line with your personal needs.

Source: Capco, Bank of the Future, 25 November 2022

Or you are driving home one day and an app like Robinhood notifies you that you can order a pizza from your favorite place and have it delivered by the time you arrive back at a click of a button. At the same time, the app should know not to annoy the user with such a notification if the journey is outside their mealtime or they have just been to a restaurant. That kind of super-easy personalization must be completely tailored to the customer’s lifestyle.

To achieve this, you need data and a way to execute your data analytics properly, including an AI engine for personalization. So the technology behind this is very important but it is really an enabler to address the customer and business’s more fundamental needs.

Srihanath: Yes, one of the things I really try to highlight is that the banking service is not actually going to be the one that you try to provide upfront, or that drives engagement. Each financial service is going to be in the background of the platform, so seamless that you don’t really feel that it is a financial service.

However, another key thing for us, is that you have to build up customer engagement not only using technology, but also using the human touch. Not every consumer service can be provided entirely digitally – maybe half of them, but the other half, especially in Thailand, will still use the human touch, to operate the relationship between the platform and the end consumer. It will still be really compelling to have that kind of connectivity and to bond with the customer.