Ctrl-Alt-FinServ: Rebooting Retail Banking

I’ve decided to write a book about the financial services industry. Surely, Brett King must be tired of traveling around the world every week, speaking at conferences about Bank 2.0. The poor man has small children, for g*d’s sake. I just nominated myself to take his place.

Here’s a sneak preview of the book:

Ctrl-Alt-FinServ: Rebooting the Financial Services Industry for the 21st Century
by Ron Shevlin

That’s all I’ve got so far. I’ve got no book, and it’s breaking my heart. But I’ve got a title, and that’s a start.

The book will be about three things: Economics, Technology, and Demographics — and most importantly, the intersection of those three forces.

Here’s why the intersection is so important: Technologies that could drive significant (I hate to use the word “fundamental”) change in financial services have been around, and in development for the past 15 years. Yet, the industry really hasn’t gone through any “fundamental” transformation (despite the years of blathering from technology vendors and consultants).

Why not? Because the other two forces weren’t in alignment. About nine years ago, I wrote a report asserting that FIs that were perceived as doing what’s right for their customers and not just their own bottom line–I called it customer advocacy, you can call it trust–would have the most loyal customers, and be the most successful in the market.

I got a fair degree of pushback from a lot of bankers at large banks, who asked–quite understandably–why they should change what they’re doing when they were making money hand over fist.

Advocating a shift away from branch and call center investments to online (and, heaven forbid, mobile) technologies just didn’t jive with the fact that in 2003, the oldest Gen Yers were barely in their 20s, and hardly a force driving demand for financial products and services.

In other words, although the technologies were in place (or could be in place with some investment), the economics of the industry, and the demographics of the consumer base forced the status quo.

—————

I’ve been a consultant for the better part of the past 25 years, and I’ve been fortunate to work with a lot of really good senior executives from a range of companies and industries. One of the things I’ve observed is that good ones are able to take a broader view (i.e. longer term, both in terms of looking back as well as looking ahead) of what’s happening in their market.

While the young hotshots all proclaim the death of this and the death of that, the seasoned execs know that business cycles go up and down. They also know that although technology is constantly changing, and that they have to keep up with those changes, that technology change in and of itself does not mean fundamental structural change to their industry.

Sometimes it does. I wouldn’t have wanted to be an exec at Polaroid in the mid-80s.

But for the past 20 years, despite all the calls for the transformation of financial services, it hasn’t happened. And it hasn’t happened because the three forces weren’t aligned.

—————

Increasingly, a lot of the smart financial services people I talk to feel like maybe–just maybe–those three forces are becoming aligned.

The advent of mobile technologies, the assault on the economics of the industry on the part of government, and the emergence of a new, sufficiently-large generation (sorry, Gen Xers, you just weren’t that large of a generation) may be the impetus required to turn today’s banks into Polaroid.

—————

Here’s what I anticipate the premise of the book to be about: 1) Economics. It isn’t enough for FIs to be “more transparent” or “improve usability”, etc. It’s going to require new business models. The existing business model: Discrete deposit and credit products that generate revenue for FIs through “penalties” isn’t sustainable. The fees that consumers pay must be in line with the value they receive. 2) Technology. Maybe I’ll devote a page to social media. But the real story is mobile. Today, many people talk about mobile as a new channel. But it isn’t really a new, discrete channel. It combines voice, online, video, and wholly new capabilities. That’s the real story. 3) Demographics. I don’t know about you, but I’m feeling like Gen Yers are into the 20th minute of their 15 minutes of fame. Time to look past the Gen Yers to see what’s next.

—————

OK, I got a book to write. Nobody steal my title. And move over, Brett.

 

 

This article was originally published on . All content © 2022 by The Financial Brand and may not be reproduced by any means without permission.