There have been several themes I’ve explored on the blog lately that are the foundations of my latest presentations:
- Mobile is irrelevant, it’s the behaviours that are key
- Money is meaningless, it’s the data that is important
- Capitalism is dead, we are now ruled by social capitalism
- Privacy has gone and security is our greatest risk
The themes of all of these blog entries are that banks need to think about how they reconstruct themselves for the 21st century.
What this really comes down to is that banks are becoming pure managers of bits and bytes of data.
It is the data that has the value today and it is the data that is the basis of competitive battles in the future.
Data is our greatest asset and raw material, not capital or people.
That is what the internet and computing has done for 21st century society and for 21st century banking.
I would be at far more of a loss if I lost access to my online accounts, had my usernames and passwords changed, had my identity copied and compromised online, or similar challenges.
For some, they would feel their lives were lost if their Facebook or Twitter accounts were blocked or deleted whilst, for others, their World Of Warcraft gold is more valuable to them than their total real world asset base.
The core of all of these discussion is data and data leverage.
By the same token, the data is where we have our greatest opportunity and threat. We talk about Apple, Amazon, Google and Facebook with admiration, but the core of these companies is not music, books, search and social networking.
It’s data management.
That is what Apple, Amazon, Google and Facebook have made of these businesses: massive data mining drones that allow us all to dump, tag, find, update and manage our online experience.
So then I come back to my core memes of data being more important than money; that the internet of things will have us all drowning in even more data; that data access is our greatest vulnerability; and I realised that the bank of the 21st century is not a bank as we would recognise it at all.
It’s just a secure data vault.
The vulnerability of data, and hence the secure management of data, is where banks can truly leverage their capabilities.
If data is more important than money, then the bank that securely manages my data is the bank I will deposit with.
If Facebook is leakier than a pair of woollen underpants, then why should I trust Facebook to manage my privacy?
They don’t. Instead, I should place my most sentimental photo albums in my bank vault.
If the internet of things means that my digital footprint can be predicted in real-time with proactive proximity based servicing, then why shouldn’t I trust my bank to be my predictive, proactive partner?
This is where the radical departure takes place from last century banking.
Last century banking was predicated on money, paper and the physical transfer of goods.
21st century banking is predicated on data, context and the electronic transfer of goods.
It is why the branch has no place in 21st century banking and why many of the so-called visionaries and innovators are dissing old world banking as being dead as a dodo.
It is, but not yet.
For there is that transition time between the old world and the new.
But, if you look at the new world visionary financial services providers – Moven, Simple, Gobank, Bluebird, Fidor, Jibun et al – they are all pushing the envelope of being vaults for secure data. Their premise is that the leverage of data and the knowledge they can gather from your data, allows these firms to improve the value you receive from your shared electronic relationship.
It’s context, proximity, location-based proactive servicing of data value that these banks offer, and that is how they will flourish and grow.
Meantime, you have new models of finance emerging – Zopa, Friendsurance, eToro and more – that will change the game again, as we see new niche opportunities emerging for managing data value exchange.
Finally, we see a few hybrid banks emerging – Alior being the most recent case in point – who offer the mixed old and new world capabilities to reach the broadest audience with the deepest relationships.
Whichever model you believe is right is up to you.
However, as a commercial strategist looking for the opportunities three to five years ahead, I would far rather bet on the secure data vault banks than the branch-based monetary banks.
The latter were built for the industrial revolution.
We now need more banks built for the information revolution.
p.s. I know I’ve blogged about this many times before. Here are a few of the better blogs on the subject:
- Data is a currency … we just haven’t realised its value yet
- Data not only measures progress, it inspires it
- The future competitive battleground
- Why banks should worry about Google, Apple, Facebook ...
- Bank's biggest weakness: drowning in data
- Banks should follow Google's approach to privacy
- A big know know