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Recently I’ve had to turn down a couple of interviews and requests to be involved in write-ups or speak because the theme started to severely irk me – the “future of banking”.

It’s not even close to Christmas and everyone wants a run down of the trends, of what we think is coming next, of the next shinny ETH. It’s like picking a new fondant from the box while placing a half-eaten one back in.

Here’s a trend evolution analysis if we must have one. Last year at this time it seemed our world was finally waking up to design. There was lots of buzz over what it can do so that it helps banks quickly take hold of a crucial part of the defense against being obsolete – the relationship with the consumer. That of course involved looking at the proposition and at least sketching a new one. I hear less and less about that. We moved on to the next thing. That is a trend and it’s not a good one.

Now, I’m as much of a SciFi fan as the rest of us and I get it’s infinitely more fun to spend 3 hours imagining in detail what the battle between humans and machines will be like than 30 minutes describing what a current account today.

Our collective imagination in the industry can’t help but shiver with the anticipation of an imaginary future where a chatbot will read our mind and extend our wealth while we build or implement one for the sole purpose of firing the 236 people who only ever tell a client what their balance is over the phone.

I’ve said this many times – ours is an industry like no other. We need to know a lot but can do little. We need to run at the dizzifying speed of technology in theory while crawling at the frustrating speed of banking systems and culture in practice. It creates vast amounts of tension in all of us involved whether we think of it or not.

In a way, this obsession with trends we seem to have as of late, this appetite for completely new propositions coming into the market are a form of escapism from this tension. As long as we keep thinking about the next best thing we can’t be accused of being stuck in the difficult now.

This doesn’t apply to bankers only. While they have painful and real constraints that shackle them to the art of the immediate possible, on the other side of the equation, in start-up world valuations sore every day on futuristic approaches to a business proposition. No one sells a business model anymore, everyone turned into Phillip K. Dick and paints a picture of how electric sheep will access the blockchained banking matrix.

It’s tempting to explain this by referring to how society is moving at the speed of light in every aspect but the difference there, is the gap between status quo and the next best thing is being bridged with every sizeable change science or technology brings in all other industries, whereas in FinTech the gap only grows wider.

Ours is an industry where the gap between what the consumer wants and what the consumer gets is so wide, it doesn’t bear thinking about what they are forced to make do with “now”, so we take refuge into thinking what we could give them “later”. Except, unless we stop wasting time escaping reality and become brutally honest about what is there “today”, what systems or mentalities need to change, that “later” won’t be “tomorrow” but “too late”.

Some of you may have seen a bit about my leap back in the provider world so I wanted to write and tell you about my reasoning. While this mentions Temenos, Marketplace and my book, it’s honestly not intended as a plug fest so I have tried to keep them to a minimum and focus on the overall picture of the industry and why I believe this to be game changing.

The “Why now?”

When I left the “doing” world of FinTech a couple of years ago it was to focus on the concept of Emotional Banking – design methods that work to help banks succeed and write the book.

Having accomplished that – the methods that work to cause profound cultural change are defined and ready for a bigger consultancy to implement, the book is nearly complete-, and having finally arrived at the title I believed in – “Emotional Banking ™: How to Fix Culture and Use FinTech to Make Banks into Brands” it was clearly time to go back to the “use FinTech” bit.

I knew I wanted to stay at the intersection of CX, UX, Tech and Finance and that I needed to be sure I’ll be using my “a-ha” cultural and industry moments while seeing rapid change at scale as banks are running out of time.

I also knew I couldn’t have dealt with the cognitive dissonance of being an actual banker and having to be patient about change, and anyhow, the offers from them were few and far between, I’m not exactly an evident, politically correct and culturally comfortable hire for any bank.

Lastly, I knew that having been very lucky thus far in my career, I’m forever spoiled and couldn’t work for any company I don’t believe in and respect, which ruled out a lot of the offers from some big names.

The “Why them?”

And then the idea of Temenos came along and it all made perfect sense. First of all it’s a product company – that automatically makes them “doers” (a highly IQed bunch of them at that!)

Then their main offering is so pivotal and core to any bank’s DNA that courage to tackle big themes like new business models, real transformation, etc is built into every interaction Temenos has.

It’s a FinTech success story in its own right – no need to quote numbers but it’s a relatively young company that did nothing but software for banks and absolutely won at every imaginable KPI while staying focused on still being start-uppy in culture and fanatic about brand.

It’s honest and ready to admit it can’t do all the things so they let other providers focus on some of the stuff they won’t build themselves on the middle and front-end.

The “Why it rocks”

Cool as Temenos is, I jumped on board because Marketplace is a game changer. It’s more than a cool idea 1-2 amazingly smart people came up with, it’s an execution path to give their banks a fighting chance to react incredibly fast and still compete.

The premise is clear: there’s no more time to waste – between PSD2 opening the opportunity to all kinds of challengers new and old, and the big brand giants muscling in on financial services, banks need a solid, modern back-end and on the front-end a way to grab at the relationship with the consumer by redesigning the experience if they are to remain in the B2C game.

Temenos’ specialty is of course the solid, modern, back-end while there are hundreds of smaller FinTech providers that have built products for the relationship building front-end. Each of these elements is as urgent as each other and there simply is no more time for banks to be half-pregnant with the idea of innovation and the appetite for checking what FinTech providers fits into their vision through half baked POCs at the end of an accelerator cohort or on the back of an innovation-lab-ran RFP.

Marketplace gives Temenos banks this crucially needed speed (at the click of a button they can see precisely what that respective provider does and how it would fit and that same day they could be playing with it in their own sandbox and it would be days of painless plug-and-play integration away from having that functionality live to their consumers should it be desired!) but also gives them the legal, procurement or technical confidence that this provider was tested, certified and integrated by Temenos.

The beauty of Marketplace is that it’s not only a game changer for the banks but for the FinTech providers (aka the obnoxiously grammatically incorrect “the FinTechs”). Over the past few years, I met hundreds of providers whether at Finovate or while I mentored for StartUpBootCamp, Techstars and others and with a handful I got very much stuck in either as a founder, an employee or an investor so I’ve “been there” when it comes to finding partners to help small start-ups with exceptional products get to scale fast and it’s not an easy ask.

Interestingly, in true FinTech poetic justice fashion, I was once one of these vey providers trying to become a Temenos partner years ago when I was running Meniga’s sales. Let me tell you I would have killed for the opportunity as it is today – become integrated to the back-end, get in front of their 2000 banks and have all the legal, technical and commercial ducks in a row within weeks in lieu of the heavy lifting of a near-endorsement that didn’t end with much in the way of sales.

So I’m beyond excited and I believe this to be revolutionary. Temenos and Marketplace won’t be the only ones smart and brave enough to clearly spell out the time crunch banks are in and offer a clear path to fix that and so realize on the promise of partnership in FinTech, many others will do the same and this is therefore the beginning of the end for the chaos of the FinTech inflation.

The consolidation around value in the industry that I’ve long been speaking about starts here and with it, banks that now have the appetite to become a brand, the methods to culturally adapt around accepting that change has to be profound and fast and an execution path to make that change stand a fighting chance.

Disclaimer: this will sound obnoxious to a greater extent than my articles usually do, so let this be a warning.

Incumbent banks are in a bind and need to undergo rapid change. I don’t think anyone who knows anything about the ways in which the financial industry is going to be challenged thanks to technology, who would argue otherwise.

I am not going to re-list the threats here – the list is not extensive but sufficiently powerful and compelling.

I am not even going to bemoan the pace with which banks react to these very serious enemy-at-the-gate signals, which is indeed, alarmingly dismal.

What I am going to do is break down who it is that is in charge of this change.

Banks are complex organisations with indescribably many (and occasionally highly nonsensical and useless) departments. At the core of them, like in any other company, you will have on the one hand, the business side and on the other, the technology/ “IT”/operational side.

For the purpose of this exercise we should leave the “IT side” out of it. While they certainly can help by sharing into the big ideas they are typically already further ahead in understanding what could be done but have little in the way of power to make it happen. The myth of the solution architect (or even the compliance guy for that matter) sat in the corner of the meeting rooms where exciting ideas fill the air only to shoot them all down at the end because “that’s not possible with our technology/regulatory framework” – has been dismantled by the past few years when he is often the guy suggesting big changes.

Another side of the bank to leave out of this, is the BOD/Strategy/Big Wigs layer. Not because they should not be responsible for change obviously, but because the horse of how old, stuck and inflexible the board members of banks are, has been flogged to its unsavoury demise and it’s now a truism that brings nothing to the discourse. Do I believe the voices calling for new or at least improoved blood are wrong? Not necessarily – but I believe change can ripple towards our existing structures if it starts in the middle layer.

This leaves us with the following players who need to roll up their sleeves:

1. Digital
2. Innovation
3. H.R.
4. Marketing and Sales

When it comes to Digital whether it’s Product and Service design, Experience, Strategy or any other name of any other department and team that offers the consumer a bank product in any other way than by phone, ATM or branch, they have been shouldering the brunt of the need to change burden of every bank for the past 8-10 years and while yes, they are the future, and a bank’s best bet in winning any of this, theirs is a tough role too busy responding to rapid change while trying to balance sheets to ask them to do more in changing the culture of the organisation.

The Innovation teams – the Hubs, the Labs, the Funds and so on they have their sleeves rolled. Whether their efforts trickled down to consumers and their existence should continue in a bubble or be firmly woven within the fabric of the bank’s organisation is another story for another day but it’s undeniable that they have been trying hard to show that the ship is sailing straight for the iceberg of sudden, devastatingly powerful competition over the last few years. Sadly, when they now warn the powers-that-be, in even stronger terms, of the imminent nature of these changes and how banks will become pipes if they ignore the need, theirs sounds like a “Boy-who-cried-wolf” moment.

H.R. in my opinion firmly holds the key to meaningful and lasting change and to my delight, some banks now recognise this and are starting to make the moves to show that “it’s all about the people and the culture and not the technology” is more than just a nice slogan. Personally, little excites me more than my work with one of Europe’s leading banks who not only empowered H.R. to lead fundamental organisational change but allows them to explore topics that cut deep such as language, knowledge, courage and passion. As much as I love what they are doing and how I think it’s future proof work, it’s a long arduous road to seeing it aid the other players in immediate shake-ups.

Which brings me to Marketing. I’ll come right out and say it: the marketing departments of banks are the weakest link and they need to wake up now. While there are good explanations as to why they are de-facto stuck in 2002 in terms of practices and output and while we can blame the Big Wigs for confining them to a corner where they manage budgets and create ads while thinking of the colours- plenty and of the core of what they’re doing – none; we can not excuse it forever.

It’s no secret I am militant about the fact that Banks are the only consumer industry unconcerned about being a beloved brand and unless that radically changes it will be the reason for their demise.

A true brand creates powerful connections to the people who believe in it. A brand lives and breathes. It’s introspective and organically innovative. It spurs ideas and change and aims to ensnarl its customers with yet more expected awesomeness at every opportunity. A real brand is addictive.

Who should be the creators and guardians of the brand? You guessed it – the Marketing department. The gap between that fundamental job and the job they are performing today is staggering. The mere fact that Marketing departments of banks call a document which details what fonts and what shades of colours should be used when talking about their company “Brand Assets” is ironic no less because it shows the full contents of the notion of “brand” as they use it.

In other industries Marketing and Product are fusing. Customer Experience and Design have become the hub of strategy. Retail is recognising that surprising and delighting consumers is an every day imperative in this new reality of rapid innovation through technology, and they’ve long known that having an extremely strong brand is the only way to hold a relationship with the consumer enough to have the opportunity to continue to surprise and please them.

None of this is happening in banking and much of it is the Marketing’s department’s fault.

There are pockets of better where a bank has marketeers avidly inquisitive about their consumers and intensely interested in creating and upholding a brand but these banks are the mBanks, the CheBanca!s, the INGs and not the big heavy incumbents that need it the most.

So dear Marketing – you must know that your job as it is today, stripped of the human element, devoid of creation of lasting value, will be one of the first ones to go as soon as machines take over in the not to distant future. You must also know that you could be the key to this intensely needed change if only you imagined this was Ugg not RBS you work for, so please, for all our sakes’ – put down the Press Release and grab the Brand.

 

I posted this yesterday and got a lot of response. Interestingly, most of it non-public in emails and DMs but why that is, warrants another analysis.

My tweet refers to this article I wrote many moons ago warning that brands will become banks if banks won’t become brands themselves in light of this Techcrunch article highlighting Facebook’s newly awarded European Payment License and the comment belongs to Christoffer who works for a bank I know intimately – Skandiabanken, which is the original challenger bank of the Nordics. -By the way, when these guys say “digital ecosystem” and “disintermediate” they are not using empty jargon like others may, they have been through the rings trying to understand engagement – consider they started as part of the group who did all the other components of long term investment and none of the day-to-day banking before they created them.-

FACEBOOK *IS* A BANK

First of all let’s get this out of the way – there is no “will be” or “intends to be” about this. They have acquired an eMoney license, PSD2 is happening and they are already doing in-app transfers in the US. Between these factors there are no “if”s and “but”s to be considered – that is a bank. Many FinTech-years ago we could afford to play naive and doubt it, but I trust these days anyone reading this knows that a banking license is superfluous if you combine those elements.

Secondly, over the past few years, they made no secret about this being their next step. Take this article about the then newly acquired PayPal superstar David Marcus

“It’s the job of Marcus, a gently spoken 42-year-old French-born fintech guy, to turn a proprietary messaging app into this all-encompassing platform – essentially, an operating system on which third-party apps, and entire businesses, can be built in ways that lock them into the Facebook ecosystem. The Chinese have already shown what’s possible: social media giant Tencent enables 600 million people each month to book taxis, check in for flights, play games, buy cinema tickets, manage banking, reserve doctors’ appointments, donate to charity and video-conference all without leaving Weixin, the Chinese version of its WeChat app.”

With that said, just because Facebook is a bank it doesn’t automatically follow that it will succeed. As any other new entrant in any market what they need is:

• An audience
• A product
• Trust
• Brand

THE AUDIENCE

There is little to dissect about this. They have the audience. Facebook’s numbers in terms of adoption and usage are unquotable, theirs is now a model of customer acquisition used in business schools as an example of successful platform building and relationship creation.

It is also only from hereon that they are starting to get serious about monetising on their huge numbers. Let’s face it, no one buys nearly 2Bn users if they don’t intend to make money off them, although of course, becoming a bank is not the way to do so.

THE PRODUCT

Facebook’s is not the most beautiful digital product we use today. Or the easiest to navigate. Or the most surprisingly delightful. It doesn’t win in any of those categories but it is certainly in the top echelon of all of them.

Not only that, but Facebook constantly and -some would claim unlike Google- constantly upping its own game product development wise, and features that we all would have bet would be a flop end up polished and widely adopted. Just look at the ease of integration of Facebook Messenger into Slack. Do you know why that is? Because teams use it for work communication over serious/secure/etc competition such as Skype for Business. And if their features don’t win the consumer over they are certainly not afraid to go out and buy them ready-made from elsewhere as they have done with Whatsapp although they claim they need them both.

Just because they haven’t yet made a big fuss about adding a “show me my balance and a few ideas of how to do better next month please, M” feature or you can’t see the “MyMoney” tab in your Facebook app’s menu it doesn’t mean it isn’t being cooked. If one looks at UK’s many heralded challengers, most are missing an evident offering as well so far and only time will tell who has come a longer way in designing the end product behind closed doors.

In fact, if we are to judge by the obscenely easy-to-use money transfer feature US clients are already enjoying, it is one worth waiting for.

THE TRUST

In 2010 this was the tune to which we hated FB – today all or at least most of those have been either sorted, or the perception changed, so the trust capital Facebook is building is on the increase. Not to mention they have the money and patience to wait out an entire generation of disbelievers if need be.

There is an interesting dissonance between how much people believe they trust Facebook when polled (not at all) and how much information they freely deposit into it through daily usage (GB of intensely sensitive data). The theories as to why this occurs all come back to how a cerebral privacy concern will not stand in the way of instant social gratification. In a way, it is a subconscious identity value exchange. We are aware our personal information is valuable and potentially misplaced but the risk is worth it as the emotional reward is great enough.

Privacy concerns are nonetheless, the main reason quoted as to why the Facebook Bank may not succeed. Who in the industry has not heard the following reaction of incumbents when discussing this topic? “Oh c’mon, who wants to bank with Facebook?!? I never even post photos of my kids!”

Generalisations aside, people do trust Facebook. Maybe not “your people” or “my people” -whatever segment you identify with-, but enough people of the total to make up one of the word’s largest bank. Overnight.

We choose to read the above as “94% of users do NOT trust Facebook”! but look at the first segment. 3%.

What’s 3% of 2Bn? Two Lloyds banks is what.

THE BRAND

On the plus side, bank already have by comparison an immense trust capital even if according to EY’s latest findings it is diminishing.

Also on the plus side, banks could buy 2 Bn users. Not with ease and not likely, but conceivably, a few of them could poll their resources and do so. Similarly, enough common conviction to spur that could also, hypothetically, power them to build a product that people truly wanted and enjoyed using. Hypothetically.

What can’t be easily matched and what all banks -new or old- should fear is this: Banks are not brands. Facebook is a real brand – deeply life embedded and intensely emotionally relevant.

23% of world’s total population has it today as the hub of their social lives. 1 in every 5 humans use it as a primary communication method, a photo repository, a news outlet, a virtual shopping mall. An intrinsic part of our everyday lives that highly matters to us and is inserting itself deeper and deeper into our subconscious. Take the effect of the sentimental value that Facebook Memories announced in 2015 is exerting over its users – it is nothing short of monumental and it will prove itself a cornerstone in Facebook’s unbelievably scintillating engagement strategy.

What could banks bring to the table to match that when they will not even take a close look at the customer’s data?

“BUT WHY?!?”

A common reassuring mantra about the Bank of Facebook one can hear in the industry is the old – “Why would they even want to be a retail bank? There’s no money on it!“adagio, as if the social media giant has ever been instant ROI driven.

Facebook knows being a retail bank doesn’t pay off in itself, but they also know how intensely personal one’s relationship with their finances is and how powerful of an engagement play this is, and while they may not want to be our cashier they certainly want to be our life management console.

Will my child be using this life console when he grows up and implicitly be banking with Facebook? No doubt in my mind. The only question is “Will he be banking with HSBC as well?” Maybe. Whether it will be “with” HSBC or “on top of” HSBC – a relationship partner or the invisible mechanism powering Facebook Bank’s experience is what is at stake.

This is it, the year that a real brand becomes a bank. There’s no more time to waste to stay in the game.