Open Letter to the Challenger Bank – Reloaded

Dear Challenger Bank,

Me again. Clench away.

I know you didn’t like this last one I wrote for you. I also know that while you’ve tried to ignore it because let’s face it, “FCA meetings”, some of those principles of how important the technology is, did hit home and while your product meetings were as cheerful and unaffected, in your heart of hearts you now know that there is no chance of existence long term while ignoring aggregation and weak or no categorisation. Which is a win in my book. Happy to be the bad guy if it makes you better.

Back then I was saying:

“The quality of the Experience (…) I am not worried about – you can deliver that. It’s only here that you can count on the Social fun, the Gamification, the Telepathic Authentification, the new Free-2-Spends, the Causes, the Offers, the Notifications, the Trading Simulations, the Savings Ladderboards and all the other exciting, hopefully addictive features you dreamt that will grab them by the heart. If you sorted the Tech or the Product and you managed to get Adoption, you’ll get your Retention, you’ll be awesome and make them fall in love and want to stick around, that will be easy and magical.”

Except it won’t be that easy and magical, will it? A couple of months have passed since I wrote that and you’re starting to worry me on the proposition side as well. The above only stands if your bar was to surpass the experience of the incumbents. What is on the offer on the market right now for everyone. But you’re not building for everyone, are you? You’re building for a particular niche and that’s the kicker.

First off, I understand why you think you need a niche, I do. For one thing the regulator himself pushed you into believing you need one with the incessant discussion on your business plan and KYC. I myself invested in an Experience Challenger Bank that launched the other day and one of the main reasons why I was seduced by the proposition of Loot is that they have a clear niche, in their case, students.

With that said, the more clear you are on who your segment is, and in a way, the smaller it is, the more you have to hit the nail square on the round head. There’s no room for error. If you’re building for Milenials, Y-ers, for SMEs, for farmers or expectant mothers, you’d best intimately know their every single Money Moment Need and dedicate yourself to understanding how to truly serve it with gusto.

I don’t believe you’re doing that.

Am I wrong? Before you started on product, on building the front-end experience, when you chose your niche – how much honest-to-goodness research have you done? Did you spare no expense to KYN (sic) or did you pay an agency to run a focus group for you? Is there a side-by-side comparison you’ve made of all the incumbents and what they Do and Do not give your lucky segment? Are there any behavioural scientists who can attest you so intimately know your future customers that you’ve been chatting to them about how to proactively change their negatives and improve their positives to make their lives better?

I didn’t think so… What about now that your proposition is nearly baked and you’re only putting finishing touches?

Are there extensive heated debates well into the night about how a stamp collector in his 40s never ever bids on eBay after 11 pm so if you see activity on the card you should send them a notification to minimize fraud? Have you ever examined the common definition of SMEs and rang the alarm over how the corner shop owner, the gas station franchiser and H&M have very different needs? Have you ever stormed out of a product meeting because the team insists on the “YES/NO” Tinder swipe on a smart watch notification connected to a 1000 loan and you think that level of ease would tip your young professional into too much debt to handle?

So yes, I admit, not only do I doubt you can hit it on the backend technology but now I’m starting to think you’re not trying hard enough on the proposition side either. You worry me. What can I say, I’m a worrier, I was about to cry last week about Invisible Banking and you still haven’t answered me about that niche premise.

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Fancy marketing talk -sometimes “baffling” is a better word-, press releases on the Silicon-Valley-cca-1994 story of the founder, crowdsourcing cool ideas for apps and all the FCA meetings in the universe won’t save you if you’ve told Gemma the nail technician that you’re building a bank FOR HER and she gets in there and it turns out to be a shinier version of her Metro Bank account. Although maybe one with larger boxes in the forms.

Incumbents don’t have to pick niches. Whatever they say or like to believe, they cater to the lowest common denominator of all segments and the reasons they do so are many. They can rely on branches and extensive call centres to attempt to repair relationships when subpar experiences drive their consumers up the wall. You can’t. They can accuse their big corporate machineries for being slow to offer new and truly useful things. You can’t. They can rely on many years of irrational loyalty and trust investment from the consumers. You can’t.

Here’s one for you – you can prove me wrong. Of the 26 Challengers I must be the segment for at least half or more. Give me ONE example of how you’ll utterly change one of my Money Moments in ways my Metro or my Santander can’t and I’ll be happy to publicly eat my grumpy, jaded, old FinTech-er hat. ONE. I dare you. No, I plead with you. Please, prove me wrong, I need a banking experience to blow me away and I’m too old to be a student again.


Still (barely) hopeful Future Customer

Invisible Banking – Which superpower would Tom choose?

To me “Invisible Banking” is what we all deserve and would be ecstatic to have. It’s the concept of banking happening in the background, empowering your Money Moments (TM) and ensuring your life is flowing smoothly.

A few years back while still with Meniga we put together a feature for Finovate called Peace of Mind Banking. After showing off our very awesome PFM solution and winning Best of show the year before, we were now wanting to go the extra mile, design and execute on the future of digital banking – automation for the benefit of the consumer.

It was very simple – only manage your finances by exception. Unless something new and unpredicted happens, your bank knows what Money Moments await once you get paid – paying bills, regular transfers to savings accounts, etc and there is no reason not to do those things for you, automatically leaving you free to only manage disposable income while looking at yet another guilt inducing pie chart showing you how much Starbucks you shouldn’t have had (yes, a pie chart -this was 2012!).

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Furthermore and maybe most interestingly – a bunch of the underlying banking services could be redefined – why ever be overdrawn if the bank can ensure you are not and move money between accounts on your behalf to avoid it? Why keep funds blocked in a savings account with a lesser yield when your bank launches a better offer and not ensure it is always dynamically moved between accounts so you get the best rate?

Never have to perform tedious banking tasks, only keep an eye on expenses depending on what’s Free to Spend, never be penalised for late payments and ensure your Savings are “the best they can be”. All of that magic. All perfectly and easily doable on top of the back-end of any bank. Sublime, Invisible Banking.

You’d think this revolutionary idea isn ow common place in banks around the world, right? That surely banks found a way around the fact that this will assassinate their traditional profit venues (maybe by charging for this service, heaven knows some of us would pay for it!) and are offering it as an alternative to the traditional online bank, right? Wrong. This went to FinTech Good Idea Heaven (same place where you’ll find ToBuyOrNotToBuy for example).

Today, 3 years later, some of the challenger banks will attempt this model (such as Secco Bank) and we get almost as giddy hearing “Invisible banking” and “Robo-advisory” as we do when we talk Blockchain but I worry. I worry for two reasons.

First of all I worry that while incumbents didn’t execute on this because they are slow and sluggish and terminally afraid of attacking existent trailed and tested business models, challenger banks have a very different hurdle – technology. Even if they haven’t ignored my Open Letter to the Challenger Banks (and sadly most have done so) the likelihood of them becoming a primary bank to their consumers is nearly zero, they will be a secondary or tertiary addition. This, coupled with the lack of automatic account aggregation means they won’t have anyone’s full life picture – they won’t know enough about Tom to Invisibly Bank for him and don’t even started on how they won’t be able to set up his direct debits.

Lastly I have a very different kind of worry. I worry this Invisible Banking super power is something us FinTech geeks get excited about and not something that Tom really wants. Tom may very well, conceivably, want the very opposite: control. Clearly presented, informational, easy to interact with, very present, very visible banking.

Let us hope, for the love of all that’s FinTech holy that I worry for nothing.

This is dedicated to the otherwise amazing Yann Rancher and in particular the one and only David Brear and all the other dreamers who believe in intrinsic FinTech Invisible Banking goodness and light and believe every Tom to be just like them.

Cash and Money Moments – Nobody cares about (B)itCoin


Let’s get something clear. People don’t think of banking. If you’re reading this and frowning, chances are you’re in Financial Services. They don’t.

They don’t even think of their banks leave alone the act of banking, unless of course, it gets in the way of life. The only time people think of their bank is when it fails them. When it fails to empower or enable a respective Money Moment (TM) in their every day life.

Same goes for Payments. People never think of payments, they may think of the act of paying and they only do that intently if something goes wrong.

Whether it’s by cash, card, itCoins or hypnosis, people just want to remove the barrier between themselves and the good or service they desire.

What they use to accomplish that, is intensely unimportant to anyone but the tens of thousands of us in Financial Technology. What is regrettable, is how focused we in the industry are on the “what” instead of the “how”. There are synapses being fired every time we use a payment method and while our rationality may only make a brief appearance to (attempt to) keep us out of debt or help us do the bank’s job by the mental Free-to-Spend we perform in our heads every time we pay, our emotions may play a bigger part in how we perceive a Money Moment and that is worth exploring.

Cash Money Moments

Brits finally spend more on cards (just about) so cash is still everywhere. Even thinking about cash seems such a strange topic to even bring up in this FinTech bubble of ours where all we talk about is the rails of contactless and the experience of paying with a wearable (which is the next instalment in this series) but outside of it, in the real world, people carry cash, offer and take cash and in the case of taxi drivers in most cities, even demandit to the point that it caused the appearance of a new economical model.

While preoccupied on a conference call the other day, I entered a trendy Shoreditch coffee shop I like and read the bolded, red “CASH ONLY” sign as I simultaneously wondered if they are taking Apple Pay and reached into my wallet for my card. It just didn’t compute to me that they could have meant it, that cash would be what they require, or even that it’s an acceptable means of payment and when it sunk in I was mighty peeved but did I turn around and leave? No, I didn’t. I fished enough coins for a cup out of the corners of my bag – the shop is happening, hipster grey overtones on their very tall plush chairs, chargers on tables and plugs in every wall. It was worth the literal coin.

But it did make me think about how much of our attitude to money is tribal and how heavy is brand association in all its forms, accounting for what we are willing to have as a Money Moment.

23228vaticancashI think cash in particular is interesting in the way us, in the overly digital world use it. Exploring who still does and why, would be interesting because I suspect it pours right into the exploration of brand. My suspicion is that the stronger the brand association, the more likely it is we are willing to change our Money Moments for it, that we would have our payments behaviour driven by intense brand association and if I’m correct, that has potentially heavy implications in how banks could encourage behavioural changes maybe even healthy group attitudes around money such as perhaps common saving goals and more.

It is neither outrageous nor conceited to imagine a future in which banks will be both smart enough and brand enough to change customer behaviours for the better. But to get there, we need banks who will build labs to understand, enable and empower Money Moments not count (B)itCoins.

Come back to read Part 2 on Money Moments and Apple Pay.