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Bank dinosaurs are bank’s worst enemy

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I was talking about technology the other day and continue to be amazed by the speed, breadth and depth of how it is changing our world.

The amazement is for people of my generation who grew up with technology being expensive and slow to change.  For example, in 1991 I sold a system to one insurance firm that included a processor with 128KB of memory and 16MB of storage.  That cost over £100,000!  Today ... about £5 as this would be a three-year old mobile smartphone or less.

The Moore's law of doubling power and halving costs every 18 months continues.

Today, the focus is much more about the impact this has on our lives, loves and relationships, than business accounting services and systems.

By way of example, here are two examples of dramatic change.

Google and Apple.

Google published their founder's letter last week and reviewed a little bit of the history of net and search.  Here's my summary:

In 1990, the very first web page was created.

By late 1992, there were only 26 websites in the world.

When NCSA Mosaic (the first widely used web browser) came out in 1993, every new website that was created would get posted to its "What's New" page at a rate of about one a day.

In 1994 there were around 10,000 internet users websites and 3 million internet users.

In December 1995, Altavista launched a search engine which had indexed 16 million documents.

By the end of 1996, it had 19 million searches daily and, by 1997, there were 100 million internet users.

In 1998 Google launched with an index of 26 million pages.

By 2000, this number increased to 500 million pages and just over 360 million internet users.

Today, there are 1.3 billion internet users, and 3.5 billion mobile subscribers and Google indexes over 20 billion internet pages.

Google search and index a terabyte of information in just 68 seconds over 1,000 computer servers and run over a billion searches every day!


Great advert for Google.

The point is that this demonstrates the inexorable change to our world the internet has made in less than two decades.

Particularly in the last five years as broadband and smartphones with internet access have grown into ubiquity in many developed and, to a large extent, emerging economies.

Now here's the killer.

The killer App that is.

Like many, I noticed the Apple adverts for their billionth app download the other day.

The stunning thing about this figure is that it took only nine months to reach a billion downloads.

Here are a few more stunning figures:

There are an estimated 30 million combined iPhone and iPod touch users around the world and yet the iPhone generates 33% of all smartphone traffic worldwide.

The Apple App Store had more than 35,000 applications at the end of April 2009.

iPhone owners download an average number of 37 apps in total to their devices, while G1 (Google phone) owners download an average of 40.

The sheer dominance of Google and Apple is the reason why Google's CEO Eric Schmidt is being investigated for anti-competitive activities, as he sits on both boards.

But that's not the point.

The point is that the slow but inexorable change of the internet world combined with the massive and fast change of today's technologies (think Susan Boyle, 186 million video views in under a month; think Facebook with over 200 million users; think Twitter growing at a speed of over 3 million new users a month) is why this stuff is important to financial services, as it is fundamentally changing our products, services and reach.

However, for many banks, the people who make decisions about these areas are probably of the generation who remember 128KB with 16MB of storage costing £100,000 and that technology is expensive and difficult to change.

They therefore block changes that could be transformational because of this view.

They block the ability to move the bank into simple, low-cost 21st century technologies because of this view.

They tie the bank to legacy architectures that date back to the 1980s.

These technologies are expensive and difficult to change because of the very nature of the technologies being used, and upon which they were designed and built.

In other words, these crocks of boardroom decision-making tie the bank to the 1980s or before, and stop the bank becoming a 21st century iPhone App or Google Gadget.

If the predominance of your Board falls into this category ... kick 'em out as they're dinosaurs.

Ah well, I'm off to play with my iFart app*.

* iFart Mobile is #20 in the paid-for downloads on the all time Apple App Top 20 according to the latest research report from Contagious magazine.

Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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