Why The iPhone Isn't Going To Revolutionize Banking

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In banking, it seems that every time a technology development comes along, the prevailing mentality is: “We need to be on the forefront of this new development, and lead the way instead of follow.”

The “we” in that sentence, of course, is the bank that that person works at. Rarely (if ever) do you hear, “Let;s wait and see what impact this development has, and it’s rate of adoption — after all, we still have issues deploying the last generation of technology.”

And so it’s hardly surprising that with the release of the new version of the iPhone, comes the claims that the iPhone will revolutionize banking. (Sidenote: Is there anybody on Twitter that isn’t an iPhonatic?)

My take: The iPhone isn’t going to revolutionize banking.

Why not? For one simple reason: More convenient access to getting account information and conducting account transactions is evolutionary, not revolutionary.

The industry has seen one form of account access improvement after another — ATMs, phone banking, home banking, online banking, mobile banking — and not one of them has produced a revolution. Sure, new players like ING Direct have upset the apple cart, but they did so through product (or perhaps more accurately, pricing) innovation (i.e., online high yield savings accounts).

Real revolution in banking isn’t going to come from technology devices. Revolution will come from business model innovation. While I don’t believe that P2P lending or auctions are going to produce that revolution, these models are at least more in line with what will cause (yes, Colin) disruptive changes.

While you might argue that these new models are fueled by technology developments, remember this: Technology enables change — it doesn’t cause it. For any technology development to be an enabler of change, however, it takes either new industry entrants to make some big bets to cause change, or existing firms to make some radical changes to their existing way of business.

Will the iPhone be at the center of either of those scenarios? No way.

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