Banking Is Not A Technology Business

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It’s an interesting paradox. On one hand, a bank is dead in the water, not only if its technology isn’t working properly, but if it doesn’t have great technology-supported processes and services.

If you don’t believe this, get Bank of America to shut down all of its systems for ONE hour. Panic, the likes of which you’ve never seen, would ensue.

But banking isn’t a technology business. It’s a service business. A business whose services are often packaged as technology-enabled and technology-delivered “products”, but a service business nonetheless.

This might be patently obvious to you.

But it’s not uncommon to find articles about Mint.com or — more recently — about BankSimple on sites like TechCrunch. I never understand why TechCrunch writes about firms that are fundamentally financial services firms, not technology firms.

Wait, that’s a lie. I do understand why: It’s because 1) TechCrunch doesn’t know the difference between a technology company and a technology-enabled financial services company, and 2) Mint and BankSimple have a coolness factor that play into the site’s audience.

In the larger scheme of things, it’s no big deal that TechCrunch doesn’t get the difference. But it is a big deal if a Mint.com or BankSimple doesn’t get it.

I’m not worried about Mint. Its part of Intuit now, and they get it.

BankSimple I’m not too sure about it. I have to admit, though, that it’s a bit unfair of me to share that concern, since I haven’t spoken to anyone at BankSimple.

I don’t harbor any delusions that only someone with experience in a particular industry could start a successful business in that industry, but judging from what BankSimple has posted on its website….

“BankSimple is an easy, intuitive, and social bank for people who appreciate simple online services. Unlike other banks, we don’t trap you with confusing products nor do we charge any hidden fees. No overdraft fees. We use sophisticated analytics to help you better manage your finances by providing you a individualized service, catered to your needs and goals.”

….and from what ex-Twitter exec Alex Payne has written on his blog….

“A bank that doesn’t gouge you with fees.
A bank that doesn’t treat you like crap.
A bank that cares about design, but gets out of your way.
A bank that puts your money to work automatically.
A bank that’s building a platform for the future of personal finance.”

….then I can only wonder: Do these guys really get how hard it is to be a good “bank”?

I put bank in quotes, because credit unions aren’t banks. And they don’t “treat you like crap.” And they know DAMN WELL how hard it is to compete in the financial services industry.

Technology that’s well-designed, gets out of your way, yada yada yada is all well and fine. But banking is a service business, folks.

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