This post could have any of these tag lines and neither: Change. Organisations. Mammouth structures. Culture. Inertia. Banks. Extinction.
“Banks won’t cease to exist but the banking experience of today will.” – the newest sweetheart quote from the one and only Brett King.
How very true and evident it sounds to us all whether FinTech pundits or Fortran developers in the backend of a regional bank. We all know this instinctively, don’t we? The mantra of every BarCampBank since 2009 – “Banks will become nothing but rails, pipelines, like Telcos and Music giants because others are so much better and more agile at the experience”. And in banking these days we quote the mPesa’s, the Dowalla’s or Paypals and the LendingClubs to show that it’s precisely what’s happening. And that the tens, no, hundreds of accelerators and incubators are a response to how the only natural winners in this are the startups.
Last week an amazing debate happened in some occult corner of the internet between two great names that have shaped Digital Banking. It was sometimes spurred upon by a Titan – Chris Skinner and was curated and posted by yet another great name Jim Marous.
To many it felt like it was mBank vs. Moven. If we accept that’s the case was it according to the argument above also Rails vs. Experience? Not at all, mBank is experience, new distribution model and understanding-change-from-the-backend-out and it is not the kind of dinosaur bank who would be first condemned to become a mere pipe either, but for the sake of the debate that was the position that each player seemed to assume or land into most times.
First of all I will say that this entire debate, to me, focuses too frustratingly little on the backend’s role (although Michal Panowicz refers to it at times) and it does because for the most part, it isn’t where the battle will be done and the winners will be announced. While I am no fan of the regulation, security or IT infrastructure and culture scaremongering, they are the odds stacked up against the big banks winning anything and real lasting change should encompass both front and backend as it has done in mBank who can only achieve that greatness in digital because they’ve rebuilt their guts, but realistically, the change doesn’t any longer have to be sequential and start at the foundation, that is the beautiful truth of it.
The overly simplistic gist of the premise of the debate as it read to me, was “no big bank can get and act on experience-as-a-freeing-distribution-model as fast and as effective as the plethora of startups out there hence they will loose the race while start-ups will win.”
I like it. I’d like to believe that’s true as an advisor to some amazing start-ups and as an entrepreneur myself and because heaven knows, the banks can use the scare. I like it but I’m not sold.
I’m not sold because of two simple reasons – I know for a fact they “geddit” and I’ve seen what it takes to act on it being gotten – a strong advocate. A courageous doer. An Experience Superman. Nothing more.
While I’m a huge fan of Brett’s, I don’t subscribe to one word from this entire phrase in his debate on the future of banking article today “Banks as a whole can’t get past products, processes, features and channels. While a handful will survive because they have bred a culture of adaptability, they won’t thrive until they voluntarily break apart their current structures to build compelling experiences, and that is the rub – there’s not a bank in the world today that is thinking about investing in the future in that way – independently branded experiences.”
Yes they can get past that structure of thought in my experience, far past it, while little trickles down to the consumer for now, this would have been true in 2012, it isn’t so any longer – the thinking in many of the big banks today is fresh, in-the-know, ready for courageous things. And it’s not about a culture of adaptability (although it definitely helps) some times (most times) in the absence of a true culture of innovation and change what it takes is one or two Supermen who have the courage of vision to move things forward enabling their teams and sometimes their boards to rely on common sense and see consumer needs as they should. Lastly there are at least two banks I wish I could quote who are ready to forget all they knew and reinvent any of the parts of their process or their delivery and make it extraordinary.
This feels a bit like the “Buy vs Build” 2.0. Do banks fundamentally get what it takes to be really loved by consumers? Yes, they do in fact. Reinvented models of distribution built on utterly addictive context that satisfy needs. It ain’t no Illuminati secret. Are they as fast as a start-up building those? Of course not but there are exceptions. Are they open to buy/partner/experiment with said start-ups? Absolutely. Does it take 50% of the board being replaced to see them build those paths quicker? No but it would be nice. They can and will compete. The stuck HSBC, the ever stumbling Citi and RBS, the ambivalent credit unions and building societies, they each need only one element to compete against Moven, LendingClub, and mBank – courage, they get the vision.
With the right Experience Supermen banking mountains can and will be moved in time frames that will surprise us all.
P.S. This better be right and you’d best show us your mBank 3.0 experiences in the next 12 months oh Tier 1 banks worldwide or you’d owe me the bottle of fine scotch I have ridding on this and Brett King will be laughing all the way to the… post office’s virtual branch in Starbucks.