In the last of my explorations of building a new bank, here's why the new bank will win.
One of the biggest things that constrains existing banks is their past. They were created over a century ago to manage retail transactions in branches over the counter with human tellers and, to a large extent, this is pretty much how most branch-based banks look and behave today.
Yes, these banks have added new functionality over the years, and new channels, but it has never really overcome this branch-centric view in that time.
It is for these reasons that mainstream banks do everything outside the branch pretty badly, because everything outside the branch is an adjunct to that branch-centric view.
You may think this is an extreme critique but I cannot think of many traditional banks that do the non-branch channels well. The few that do are global banks that are defocusing upon branches, which is perhaps why their online and telephone channels are improved and enhanced when compared to their domestic rivals.
If you take UK for example, banks have never replaced their core systems in my memory, except through mergers such as those of HBOS and Lloyds today, or RBS and NatWest a decade ago. In both instances, the banks are migrating one banks’ legacy system to another, rather than a wholesale replacement of core systems.
Wholesale replacement of core systems is difficult you see. Everyone refers to it as being like changing the engines on an aircraft whilst flying at 40,000 feet, and they’re right. This is amply demonstrated by the migration of Abbey and Alliance & Leicester to Santander’s core systems over the past few years, and by the Australian bank debacle of NAB and others who are in migration mode as we speak.
Therefore banks avoid migration to new core systems, and are handcuffed into legacy operations through their legacy systems.
We talk about front ending such systems with single customer view through middleware integration, but it’s all sticking plasters on the open wound.
What is that wound?
It is the slowly beating heart of the branch which, over time, will be extinguished and replaced by mobile internet but, whilst it is still beating, it is crushing the life out of progress.
It is this handcuff to the slowly beating heart of branch-centricity that constrains many banks from breaking free into low cost, remote, self-service delivery that is seamless, enjoyable and cool.
Now there’s that word again: cool.
I’ve used it deliberately this week to describe a bank that people want to be with.
That’s what ‘cool’ is all about.
I jokingly referred to it as the bank where the staff don’t wear suits, which was actually more pertinent than I thought.
After all, UBS has a dress code for their staff that is very exacting.
It would be smart casual every day.
It would define a brand around cool values of fairness with transparency through the mobile internet.
It would have branches, but only a few Apple store style branches where the Genius bar would be with people who really get the numbers of finance.
And they wouldn’t have to wear suits, but could wear whatever they wanted as long as it was designer label.
Maybe I am just being dreamy, but the bank that is cool has to be one that people aspire to be with.
It is an aspirational brand, and I cannot name any bank right now that is aspirational for the masses.
For the private banking crew, sure, but for the general populous I cannot think of one, aspirational, cool brand out there.
Don’t get me wrong, there are cool brands out there.
Dependent upon your age, Harley-Davidson is a cool brand and, as everyone says every few minutes, Apple’s cool.
Apple always has been.
They have a fan base.
Yet Microsoft is nerdy.
Because Apple is for consumers and Microsoft is for suits.
Microsoft is business; Apple is creativity
So to be a cool bank, you have to be different, creative, aspirational and accessible, and very consumer focused.
And, in this century of mobile broadband, you have to be techno.
Maybe it is for these reasons that there is no ‘cool’ bank out there, because banks are handcuffed to legacy.
So this is my conclusion in this debate about creating the new bank.
The new bank will differentiate by being in the customers’ interest whilst making money by gaining their loyalty and advocacy.
It will appeal to a demographic that is not defined, apart from its psychology.
So it is defined by a psychographic rather than a demographic.
The psychographic is to appeal to those who love Apple and technology.
The customer wants to be with the bank.
They think the bank is working with their interests.
They don’t want branch-based banking, where mobile internet is an adjunct.
Instead, they want a bank built just for them based upon a mobile internet focus, where branch is an adjunct.
So my bank would be built from the ground up, with a customer view based upon the mobile generation and how they behave and interact.
Once that outside-in view is defined, I would build the infrastructure to deliver apps of functionality across mobile internet devices.
The bank would be a digital bank first and foremost, with humanity augmenting that reality.
Humanity would pervade the bank through our fun and cool approach to interactivity via the mobile internet.
And, as we grew into branches, our branches would be Genius Bars for finance with a cool and fun approach that breathes our humanity and fairness into the pores of our human operations.
Something like that anyway.
Either way, it would be better than living on a century-old system of branch centricity that handcuffs us to that past.