I was asked this question today and, after thinking about it a while, I think banks are moving towards being lifestyle choices rather than payments processors.
There’s a great email leaked to the world just 13 days ago on Reddit.
The email is from a Wells Fargo employee to CEO John Stumpf, and reads as follows:
With the increasing focus on income inequality in the United States. Wells Fargo has an opportunity to be at the forefront of helping to reduce this by setting the bar, leading by example, and showing the other large corporations that it is very possible to maintain a profitable company that not only looks out for its consumers and shareholders, but its employees as well.
For some time, I’ve banged on about banks must redesign for a digital core. It’s no longer a world that can live in a batch overnight update, when real-time everything is here.
This has been shown again and again by outages, and all of the incumbent banks are struggling to move from old world to new. In particular, this world is illustrated by the channel debate. As I keep saying, the use of the word channel is a last century hangover, that describes ‘adding to the branch-based core’.
Channel is from the old world, where we built a bank for the physical distribution of paper in a localised network. Now, we are transforming to the digital distribution of data in a globalised world, we have to redesign that core. Channels are replaced by access points, and the totality underlying these access points is a single, consistent, real-time digital core.
That is the huge challenge for banks: how to move from old core to new core, and how to move from a physical infrastructure to one that is digitalised.
We’re talking wallets.
They’ve been talked about for a long time.
Google Wallet was perhaps the first big launch but, since then, there have been many.
Two years ago, I showed this slide from O2 on the state of mobile wallets, and said let the wallet wars begin:
Talking of how fast things change, here are a few Friday facts to make you smile (or feel ill).
The UK Office of Communications (Ofcom) run regular surveys on our digital lifestyles.
This year the impact of smartphone and tablet computing hits the radar and shows how things have changed fast.
For example, this year’s survey finds that that the average UK adult now spends more time using media or communications (8 hours 41 minutes) than they do sleeping (8 hours 21 minutes - the UK average).
I've blogged before about twitter fails, specifically JPMorgan's disaster last November, and it illustrates how companies are finding it challenging to adapt to the new connected world.
Another great example of such behaviour was sent to me by a friend this week.
A little known chappie with the twitter handle UKDazza (me suspects he's called Darren, mate) made an innocent tweet:
I was watching this great advert documentary about Amazon on the BBC this week.
It’s a rocking organisation that most of us mere mortals watch with wonder.
From packing and selling books in a garage over the internet, it’s become a global behemoth (although Alibaba is bigger in China). Amazon generated almost $75 billion in revenues in 2013, up 22% on the prior year. Just here in good old blighty, every person in Britain spends over £70 a year on Amazon. And with Amazon Prime, Instant Video, Kindle Fire, Amazon Web Services, Cloud Player, Mayday and more, the innovations and growth seem to just keep on going.
How did it happen?
Building on yesterday’s debate about Google and co coming into banking, and the previous discussions of such:
Another presentation that surprised me in Oslo came from Tor Jacobsen, CEO of TSM Nordic.
It surprised me as I had no idea about TSM, a mobile wallet provider owned by Telenor and DNB – Norway’s biggest mobile network operator (MNO) and biggest bank – and will launch in the Norwegian market later this year under the brand name ValYou.
This video provides a brief overview of how it’s being promoted:
This month’s Banker magazine has its star feature focused upon the best banking brands in the world http://www.thebanker.com/Banker-Data/Banker-Rankings/The-Top-500-Banking-Brands-2014 . This is an annual report produced by The Banker with Brand Finance,
At the end of this blog entry, you will find The Banker’s analysis of the results this year, but here’s my brief view first.
The top 10 bank brands show an even spread across Europe (3 of the top 10 banks), America (4) and Asia (3).
I recently had an epiphany. It was not painful, but it was enlightening.
The realisation occurred to me as I looked at this chart from Zopa:
It’s an interesting chart, especially the hockey stick rise in funds transferred as the financial crisis hit, and relates to a recent headline in the Financial Times: “P2P group Zopa secures £15m investment from Arrowgrass Capital”.
The article included the following line:
Like everyone, I was shocked by the news of the Westgate Shopping Mall shootings in Nairobi, Kenya.
The real shock is how they determined who to shoot, singling out individuals and asking whether they could name the Prophet Muhammad’s mother:
I gave a presentation the other day and, as usual, concluded that banks should position themselves as data vaults. One person then asked: what data should a bank make secure? which is a good question to ask, as it led to a healthy debate and improvement of clarity of view.
Today, we produce exabytes of data every hour. How much data? Well, it’s hard to quantify as the data explosion of the last decade is so immense, but this slide gives you a good idea:
I got a copy of a fascinating survey by ING yesterday on mobile social banking. The survey asked 12,000 people in 12 countries in Europe about banking in the digital age, and here’s their summary of the main conclusions:
1. More than a third – or 37% – of consumers already use mobile banking. The Netherlands is the most developed mobile banking spot, based upon the measure that takes internet penetration into account. Turkey is the mobile banking hotspot, with the largest share of internet users who use mobile banking.
One of the themes of my presentations of recent times is how technology has bridged the divide between work life and social life.
This came up in force again, as we talked about the role of social media in finance at the Club this week.
For the older generation, work was always a place you went to and, when you left, you closed the door and relaxed.
There was no cross-over.
Gradually thanks to email, the telephone and now the whole world of social media, these two separated planets have collided, merged and melded.
It is the reason why we have social capitalism and the ability of anyone, anywhere to change anything.
I realise this merged world of social and work often as I see business acquaintances on Facebook sharing their newborn child, family holiday or drunken birthday parties with me.
Do I really want to see you with your tongue hanging out, wearing a vampire outfit and biting your good lady’s neck or something even worse.
Reinforcing the idea that traders in the City have no diplomacy or tact, here's two adverts from online trading firm AvaTrade.
Their newest ad obviously forgot about something called 9/11 ...
... whilst their previous ad got banned for sexual inequality.
I was going to move away from further debate about branch and omnichannel today, as there’s far more interesting stuff about Google giving payments away for free with Gmail and PayPal doing the same with mobile, but that will have to wait until next week as yesterday’s post created quite a stir.
I guess it was the mention of Apple (whose glossy rosy tint has reduced of late).
Or maybe it is that core message about designing for humans rather than money.
In fact, I did toy with the idea of Banks designed for humans, not geeks as a title, as the techno crowd fall into the same fervent misnomer as the branch crowd.
Equally, most get this wrong because they built their operations for one point of emphasis – branch, call centre, internet – and now are struggling because no longer do we deal with channels, we deal with a human at their point of need or want or desire or thought.
This is what the data geeks are really drilling down for: to get to the customer 24*7 as they have financial needs, wants, desires and thoughts, and that is why today's title is Banks designed for humans by geeks.
The hardy perennial discussion of whether we need branches or not comes up again this week. It’s a regular debate on the blog and in the Financial Services Club, with various entries that are relevant to contribute towards the debate:
It is a discussion that never goes away because no-one knows the answer.
After my discussion about the augmented economy which focused upon customer service, I thought about it from the other side: transactiosns.
Many years ago, my technology firm made a play for banks to deploy data warehouses to perform predictive analytics based upon consumer propensity models of their data-based behaviours.
It may sound a little complex, but basically it was meant to use data patterns to predict what the customer would do next and whether they might need some new financial service.