It’s time to rethink banking for the future

When we talk about business disruption, it’s all too easy for the overused and entirely vague nature of the term to turn what should be important conversations about change into a string of empty buzzwords amounting to counterproductive discourse. “Reimagined” airport lounges that just have new carpets, “disruptive” Instagram-first chinos with no perceivable difference — how quickly powerful words lose all meaning.

Business disruption is rooted in what happens when, for years, an industry behaves in the same way it always has. Learned behavior ends up reinforcing the past, and any accidental or casual collusion between market leaders means that innovation becomes incremental. And then, someone comes along and changes all the rules. Dyson makes it clear that electronics companies were wrong to assume that consumers wouldn’t spend $500 on such products. Uber shows that we are in fact willing to share a car with a stranger. Apple proves we’d happily pay $1000 for a phone. Nest reveals people do care about thermostats. Spotify undermines the idea that music needs to be bought and owned. 

And yet, the vast majority of businesses today still operate on assumptions. The insurance industry is based on the idea that claims must be hard to make. Banking is based on the idea that trust is earned through face-to-face time and elaborately expensive physicality. Long-term relationships with customers are taken for granted because we are more likely to get divorced than to change banks. The roles of these institutions in our lives are clear also. Banks are there to keep your money, lend you money, and pay you interest.

The current reality of your business is the aggregation of every decision ever made in the past. Which itself is defined by what your category competitors have done, and supported by data rooted in what you decided to measure and how it precisely reflects the past. Unfortunately, all data about the future is useless. 

The problem is that assumptions lead to vulnerability. Expertise holds us back. Having a deeply developed core competency is often what stops us from mastering anything outside of it. Right now, banks are perfectly formed vehicles for the banking needs of the 1970s. Payment companies are superb at dealing with the needs of merchants and card issuers of the 1990s. 

Slowly, as the internet affords us more opportunities, we’ve built apps, we’ve made self-serve websites, and we’ve accumulated more data. We can monetize our customers with advertising, we can cross-sell products better, we can reduce the cost of serving customers with offshoring and perhaps soon AI and voice technology.

But what if things really change?

What does a 10-year old from Shenzhen think of a bank? Is their relationship with money mediated by Apple as the access point, or by Alipay as their digital wallet? What does a 20-year old think of the finance layers in their life? What does Chase mean to them, if they use Venmo to pay friends, PayPal to pay invoices, and Google Pay to buy things? What if trust no longer came from marble Doric columns on Main street but from an incredible UI? What if value wasn’t measured by shorter wait times in a bank, but by being able to stop subscriptions with one click? What if a credit card with airport lounge access was less appealing than one that offers access to all newspapers in the world, or could store and organize every single receipt, or keep an inventory of all the clothes you buy with it in an online closet and suggest new items to buy based on it?

Large companies like banks are built on code from the 1950s, cultures from the 1800s, and assumptions reinforced year on year by each other. We need to be inspired by other categories and what the future makes possible, not reassured that others who are most like us have not changed either. You can’t run a city by building bridges only in areas where people swim across rivers. You can’t make a business case to create change that no data shows as necessary, because it does not yet exist. But in an era where threats come from outside categories, where consumer behaviors change fast, and where consumer expectations accelerate ever faster, we have to be proactive and excited, not merely hope that change may never come. 

Industries are riddled with gestures of innovation. The single bank with Pepper, the friendly humanoid robot, or the branch with the Hololens headset, or the out-of-this-world idea to have a coffee shop in a handful of “reimagined” banking locations. We invest so readily in the easy, fast, simple, and worthless, for the rush of some PR impressions and fleeting credibility within our industry. Meanwhile, startup banks are quick to appeal with brighter credit cards, better apps, no locations, and chatbots, having merely replicated the same value proposition of the past but with lower overheads and far less desirable customers and no discernible path to profit.

So why have we assumed that great digital interfaces are only for pizza-loving Gen Z’s to share the cost of their meal out with friends, or for 24-year olds to save for their first used car? Have we considered that wealthy people, more than anyone, need faster customer service, slicker apps, quicker ways to pay each other, and richer data stored for them to access?

Why have we assumed that advertising is an investment, but customer service is a cost? They are both forms of marketing. Why do we limit the benefit of premium accounts to be precisely the same unimaginative offering of our competitors? Why do we have so much incredible data about how our customers behave and offer them so little help, information, and assistance in return?

We have some incredibly interesting questions to ponder. For over a decade, we have had technology that can transform our industry. Technology that we now know is not going away, and that we know is bringing ever greater threats, even faster change, and ever more chaos but with it, more opportunity than ever. What a great time to work in our industry and what a great moment to rethink what we do and create our own future.

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