Changing your banking instinct

Without thinking consciously about it, over time core behaviors change producing different instinctive reactions. When a phone rings today, we go to our pocket or purse, not running to a device on a desk or on the wall. When we are interacting with a mobile phone that is not our own or an ATM machine, [...]

6 Things you Never Want to Hear Your Banker say…

Banking is changing forever. Organizations like Britannica, Blockbuster, Borders, and even Bank of America (hint: don’t start a business with ‘B’) all suffer from the same collective challenge. When your business is built around a specific distribution model, how can you adapt when that distribution model is no longer relevant? The inertia behind existing processes [...]

Online Privacy and Fraud is not that big a deal…eventually

Fraud, Privacy, Social Networking, Online Phishing Attacks – it all sounds high risk. If that’s so – why aren’t these issues preventing people from using the digital medium, buying online and interaction with less privacy than ever before?

SME Banking in the Cloud

By better integrating customer learning and moving SME accounts management to the cloud, a bank could provide a range of great services that really help SMEs manage their businesses and cash-flow more economically, but to do so they are going to have to think differently about SME customer engagement…

Pervasive Banking or Irrelevance? You choose… (Huff Post)

Why do we use cash? Why do we use banks? The basic premise is that banks are necessary to create a flow of cash and enable commerce, with built in protections. Secondly, they can hang on to our money securely, and although we don’t get much interest these days, we do generally have the protection of the FDIC or some other mechanism to ensure we never lose our deposit. However, these days when we deposit money it just generally sits on some computer as ones and zeros, we don’t physically (or vary rarely) go down the the bank and actually deposit cash over the counter. In fact, I can’t remember the last time I ever deposited or withdrew cash from a bank branch. I know I go to the ATM to get cash out, but all my deposits these days are generally electronic.

The problem with pervasive mobile payments is that the value proposition for my bank just got cut in half. In a very short period of time, I may never even have to use my bank’s ATM at all. I certainly won’t be using checks. In fact, the last check I wrote was more than a year ago – so I won’t miss them…

The wrong type of innovation

The financial crisis of recent times was arguably triggered by innovation in the financial services sector around creative financial instruments. These so-called CDOs and ABS’ ended being unhinged from the underlying ‘assets’ that defined them and as such allowed a bubble of securities and subsequent contractual trades by professionals and institutions creating ‘value’. The fact is that this innovation probably started with the various rounds of deregulation of financial services, including the repeal of the Glass-Steagall Act in 1999. While some argue that this deregulation actually prevented a worse meltdown of the financial system, I would argue that regardless it allowed the creation of innovative financial instruments that ultimately led to the creation of a new class of speculative bubble – as if we need more excuses for those…

Innovation in financial instruments, in trading platforms and in margin creation is the wrong sort of innovation for banks to be focusing on. They need to be focused on organizational reform that rebuilds banks around customer engagement and interaction. Unless we see this sort of innovation it won’t matter how advanced the financial mathematics and instruments get – in the end if your customers are finding ways to work around your inadequacies you might just find you have no business…