For the last few years, smaller, more agile and, admittedly, more innovative players — like Monzo, Revolut and Starling — have taken the banking sector by storm. Retail banking giants have struggled to square up to these new challengers and continue to be bogged down by their brick-and-mortar legacy.
But with its new multicurrency app, Zing, HSBC has opened the door for other banks to evolve — and muscle their way into the payments sector.
Zing is HSBC's answer to the foreign exchange (FX) dominance of Revolut and Wise. But, from an initial view, it doesn't look like it will be a more appealing service. After all, Zing only holds 10 currencies, compared to Revolut's 36 and Wise's count of over 40. And, more than that, Zing's conversion fee — of 0.6-0.75% — isn't markedly competitive, either.
But Zing has not been developed to provide a better, slicker and more efficient service, and I'd like to imagine that HSBC knows that they haven't developed the best FX platform on the market. Nonetheless, its launch signals a significant change in attitude from the bank. HSBC clearly wants to digitize and expand their services.
Zing is the bank's leap of faith. As an attempt to compete with the FX titans currently dominating the market, Zing is simply there to put an end to their run of dominance. Unlike HSBC's other foray into international payments, their Global Money service, the app is open for all and will — I think — serve to usher new faces toward HSBC's doors. After all, you don't need to be an HSBC customer to use the app.
That's exactly its purpose. The app is a gateway drug for more of HSBC's financial services, like mortgages and other loans. More banks should take a leaf out of its book.
To compete with modern fintech innovation, retail banks need to expand their services — and make them as convenient as possible. Banks are no longer just lenders and balance updaters, and the recent flurry of branch closures — over 1,500 bank branches across the U.S. closed in 2023 — proves that point entirely.
Banks need to prioritize their digitization. Face-to-face services are clearly not in demand as they once were, and customers would rather bank from the warmth and comfort of their own homes. Digital offerings should be the sole focus of the retail banking sector in the years to come.
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But they need to develop their digital services quickly, or else they'll risk gifting a greater market share to the neo- and challenger banks. In 2021, the neo- and challenger bank market was worth USD $45 billion and is
Banks need to pivot toward what makes neobanks and fintechs — like Monzo and Revolut — so appealing to their users. The seamless, easily navigable interfaces; targeted budgeting tools; demystified investment options. These aspects are hyper-geared toward the customer — and, while banks have made good headway in developing their mobile banking apps, there's still so much more they can do.
To compete, large banks need to build out their ecosystems. Like HSBC, they need to step into areas that they haven't previously explored, expand their customer services and open their doors to new potential customers. Beyond developing payments apps, for example, banks could even explore hosting telecommunications offers, entertainment discounts and travel services. They could explore completely unknown territories — and, as shown through the successes of WeChat in China, that's not totally beyond the realms of possibility.
But, for all banks, the business of payments is the first obvious port of call. Banks already have experience facilitating transactions, and FX services are only a small leap from that. Payments apps — like Zing — still rest firmly in a bank's comfort zone.
If other banks follow HSBC's footsteps, they will have firmly moved beyond their physical branches — and transitioned toward a new era of retail banking. Banking will be offering so much more than it used to, and they will have become multifaceted, hyper-convenient entities. This will surely drive up their customer bases and — following
At the end of the day, a retail bank's success is dictated by its customer base — and, through Zing, HSBC has clearly understood that. Like I said, Zing's true purpose is to incentivize people to join HSBC — and explore more of the services they have to offer.
Of course, as it is only initially going to be available in the U.K., Zing's true potential won't be realized until its global rollout. But it's certainly an interesting strategic move from the global banking giant and one that other banks need to copy.
