Why dumb old banks can’t compete

an article written by Chris Skinner, the most influential person in technology in the UK, international best selling author, top worldwide speaker on fintech banking. Chris will give a keynote speech at Banking 4.0 – international fintech conference.

Now that’s a contentious title for a blog, but purposefully so. Old banks can compete in the new world if they’re smart … it’s just that so many of them are dumb. Dumb with data, as I’ve blogged before.

To illustrate this, I have three examples.

The first is that my old bank talks about how digital they are. They tell their shareholders they have the most successful digital mobile app in Britain, used on average 2.6 times a day by their customers. I am a mobile customer of this bank. I use their app several times a day. I’m only using it to find out my balance and see if any money has been received. My smart new bank never talks about digital app usage but more around customer engagement and experience. I never open their app, as most of the time they send me alerts of key things I need to know. Why can’t my old bank do that?

The second is that my dumb old bank has never told me anything about my financial lifestyle. I have no idea if I spend too large or too small on things. I get no transaction analysis and often wonder what the hell a transaction is. 22nd September I spent £22.50 at DUBL INT CH M … who?  I have no idea what the transactions are unless I remember them. Even worse, when I call the bank to ask about something on my card, they ask me where I last used it. I use it all the time but have no idea where I last used it. Rubbish.

My smart new bank not only shows me where I used the card or account, linking it to google maps APIs, so I can see the store if it was a physical payment, but they analyse my account non-stop. I know exactly how much I’m spending on entertainment, food, clothes, coffee, toilet rolls and more. And they not only tell me that, but they analyse it too and tell me how I can live smarter and cheaper by buying toilet rolls in bulk, getting a season ticket for travel and more. I love my smart new bank.

But the killer is account opening. I go to dumb old bank to open an account and get you have to make a branch visit as my answer. I have to go to the branch with two forms of ID and three forms of address verification, as well as a DNA test, urine sample and pint of blood. It then takes them days to get everything sorted out and done. My smart new bank? Take two selfies, send a pic of your ID and smile. Eight minutes.

Now most people probably don’t give jack shoot about this right now … except people opening new accounts. Who are they? The young, the i-Gen, the next wave of people you want as customers. In other words, the next two decades of new customer growth is going to morph to the smart new banks, whilst the dumb old banks wither on the vine.

Can we fix it? Yes , we can.

In some ways, dumb old banks can launch new smart banks just to appeal to those next generation customers. That’s what a lot of them are doing. Meantime, dumb old bank can deal with dumb old customers in the dumb old way.

The real issue is if the dumb old bank wants to deal with all customers in a smart new way. This requires the banks to refresh core systems, move to cloud, become agile and transform, as I’ve been saying for years.

You see, the reason why dumb old bank is dumb is that their mobile app and digital services are stuck on dumb old core. Their old back-end systems have no transaction analysis capabilities, no real-time services and the reason that they tell me that I spent money at DUBL INT CH M is purely because their old mainframe fields only allow for a 12-character max description.

Without that core refresh, the dumb old bank can never be smart … or intelligent … or worthy. Just saying.