We’re all obsessed with tools – and the one that revolutionizes the banking industry is likely to be just around the corner, argues Wayne Guthrie in this week’s FF blog.
Technology’s potential to make retail banking simpler, safer, more accessible or at the very least, more useful, is widely acknowledged.
So why isn’t it happening?
Just over ten years on from the biggest financial meltdown since…well, since the last one, we’re all still waiting for change to happen.
However, all we’ve really witnessed so far is the world’s longest and most expensive apology, in the form of a seemingly shared strategy of austerity. Let’s call it the ‘we care about you, we really do’ line of communication.
Trouble is, in the wake of such difficult times, talk – however sincere – just isn’t enough.
The only thing that can atone for past mistakes, restore public confidence or have any hope of fostering lost loyalty, is action. A clear and powerful demonstration that lessons have been learned and everything possible is being done to ensure history doesn’t repeat itself.
‘New’ products and services with catchy names won’t do. Flexible opening hours, instant access to emergency cash for lost or stolen cards, cash-back schemes and online support are not innovative ideas based on relevant insight. They’re merely examples of adequate customer service.
The people demand change. And if traditional retail banks don’t innovate to deliver it, others will. In fact, they already are.
Amazon, eBay and Spotify didn’t come out of nowhere. They were built quickly on opportunities that retailers and record companies didn’t recognize. Or did, but didn’t take seriously enough to invest in.
With PayPal, Square, Adyen, Monzo and various cryptocurrencies already offering us new ways to pay, businesses like Lending Club and Funding Circle are providing new models for peer to peer lending. And with fees redefining the current account, change isn’t so much on the horizon as it is in the room and looking a lot like an uncomfortable elephant.
Right now, someone who’ll be a household name by 2021 is working on something that will evolve the current landscape of retail banking and change the way people behave in the process.
Not because this as-yet-unknown has access to a crystal ball, but simply because they – whoever they are – have taken the time to think about the present, mine for insights and re-imagine the way we live with money.
So, what are the people working on alternatives and solutions thinking about?
Probably big data and mobile for starters – two of the most potent drivers of the innovation we’re about to see, and the two that are inextricably linked. And you can throw in AI as well, which has the potential to hugely impact the way we spend, save, invest, and think about our cash.
Our obsession with tools is what makes us human. And whether it’s a chisel that releases an angel from marble or a gun that reinforces foreign policy, our favourite tools are those that help us make things happen.
So it should come as no surprise that data became one of the world’s most valuable commodities the moment most of us achieved constant fingertip access to a smart phone.
A deep knowledge of your customers’ habits and the fact many of them are now equipped with the most powerful communication tool in history must surely mean banking is about to become a highly efficient and almost invisible presence.
A kind of rational fiscal intuition fuelled by our own behaviour that will help us spend more wisely, travel more safely and consistently get better value.
In simple terms, another version of ourselves that is really, really good with money.
The importance of this happening, and fast, is crucial as we know that in the post-digital present, only companies capable of ‘communing’ as well as ‘communicating’ with their customers will survive, meet market expectations and prosper.
Let’s consider some relevant examples. Our banks know if we travel abroad frequently and where we go when we do.
So how refreshing would it be to receive a message informing you that due to your native currency hitting a six-month high against the Euro/Dollar/Peso your bank has purchased a sum on your behalf for use on your next trip?
They could call it ‘Funny Money’ because every time you hit reply to accept the transaction, you’re laughing.
Likewise, when faced with the ultimate sweater, the only thing we should be thinking about his how magnificent we’ll look in it at the next party, job interview or X-Factor audition, not worrying over whether or not we are paying too much.
Our banks could and should come shopping with us, advise us on how to afford what we want and supply an instant analysis of the effect each purchase will have on our personal bottom line.
All while seeking better deals based on an instant knowledge of our location or more favourable prices online.
Banks could also be the first marketers to really harness social media as an enabler of innovation.
Imagine a social media platform – let’s call it Goal – that lets friends and family team up to access group savings deals, funding everything from vacations to weddings or even higher education.
Or take it a step further. Imagine connecting anonymously with other bank customers who have similar purchase or investment ‘Goals’. Suddenly, you’d no longer have to settle for the TV you can afford, because you’ve joined with hundreds or thousands of others to demand a better price on the one you want.
These thumbnail sketches and thought bubbles are merely a taste – a peek through the curtains into the bright light of what is possible and necessary if our banks are to not just make their retail offering reliable, sincere and personal again, but more nuanced, more intimate and essential than we ever imagined possible.
To be sure, the challenges involved with realizing the potential of technology and the Internet (now that we are finally starting to understand both and their consequences) are numerous and often steep, but we must never believe them to be insurmountable.
The talent, energy and enthusiasm are all there.
It’s just a matter of the sector encouraging and empowering talented people to develop innovative ideas, and in the process, allowing themselves as organisations to embrace the natural levels of risk involved with testing and executing these ideas for the benefit of their customers.
Only then will we be able to rely on an established name, as opposed to a radical and fleet of foot newcomer, to set the standard in what must surely be the most exciting period for development and growth the sector has seen for generations.
Wayne Guthrie is co-founder of Fearlessly Frank – an innovation consultancy that helps businesses develop and take to market ideas that drive revenue and growth.