Published: 7th Feb 2018

Confessions of a FinTech Innovator #2

In the 20th Century, Banks managed to expand their presence from the secure vault where rich people keep their money safe to the universal providers of credit and payment instruments.

- true team

Redefining Banking

Charles Radclyffe, The Data Philosopher, was one of True’s guest speakers at our Open Finance: Breaking Inertia event at The Gherkin in January. In this 5 part guest blog, he shares his insight, experience and often provocative views of banking and fintech in 2018.

In the 20th Century, Banks managed to expand their presence from the secure vault where rich people keep their money safe to the universal providers of credit and payment instruments.

Our relationship with our Banks was direct. When we had a problem, we would walk into a branch, or call their call-centre. When we wanted to check something, we would look on their website, or on their app. When we wanted to make a payment, it’d be the piece of plastic bearing their logo that we would hand over. And when things went wrong, it was their logo we would curse at – and their competitor that we would switch to.

And then the process would start again.

This is all changing.

Now, I don’t carry their plastic in my pocket. The logo I choose to make almost all my payments is the same one I use to make phone calls and check my emails. Very soon the call centre will be a thing of the past and it will be Siri, Cortana, or Alexa who will answer my questions and show me solutions.

The app and website will also diminish in prominence. It’ll be Alexa or one of her competitors I interact with, or because of changes such as Open Banking, I’ll use a start-up banking aggregator to analysis my expenses and set up transfers.

While the provision of credit is likely to be one of the last services disrupted, many other services that Banks offer will soon be cannibalised.

And yet, Banks remain deeply inefficient organisations. They function despite almost mediaeval bureaucracies, and tolerate levels of incompetence and failure that make British Leyland look like the poster child of well-run efficiency.

In an age where technological capability defines winners and losers, they are vulnerable to attack at even their core competencies.

For example, a key function for a Bank is to protect against Money Laundering. The penalties for failure are high, and rightly so. The reputational risks are even greater than the financial costs of mistake. Yet Banks continue to operate largely the same business processes they did ten, twenty, thirty years ago.

Yes, there might be a computer in the loop – maybe much of the process is electronic, but when it breaks (and it does) – it’s the same business process that retirees would recognise.

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If you would like to find out how True is helping break inertia in the banking sector, please get in touch with Sam.

- true team