I’ve been thinking about the new providers of bank services a lot lately. The guys who are innovating using mobile. The Breeze’s of this world from StanChart, the mBank’s, the Simple’s and more. One thing that is common to all is the turnaround of thinking. All of them work with a different view of the customer. All of them believe that other banks get things wrong, and need to change.
It is a fundamentally different business model to every other bank and one that sets them apart.
What is it?
What is this elusive thing that is hard for so many others to achieve?
It is a very simple thing.
Some would call it transparency and others would call it real-time, but I would call it making invisible banking visible.
Y’see, half a century ago, all bank transactions were on paper and we all had a visible view as to how each transaction hit our balance sheet.
Each debit and credit was logged visibly in front of us in a branch, and we knew our exact balances at any given moment.
Then, thanks to automation, balances became invisible as they moved on to computers.
This meant that banks could charge us whatever they wanted as we went overdrawn.
Whether we were overdrawn on purpose or by accident, it didn’t matter.
With free banking, the banks had to work on charging us more and more fees for overdrafts, and find more and more ways to get us overdrawn.
A great example is processing all the debits to an account before applying any credit, a practice widely scorned amongst the American banks.
When banking is invisible, the easiest thing to do is to charge us for making mistakes, and that is the practice of most banks over the past half century.
But that practice will disappear.
Slowly but surely, the punitive charging of customers for making mistakes will go away.
Because mobile is making invisible banking visible.
Customers get real-time balances and can know their purchasing behaviours and balances at the point of sale.
They can use mobile apps to predict behaviour, and even have the app tell them if they can afford to buy the item they are considering.
This is why the #1 activity on mobile today is balance checks, because the mobile is making invisible banking visible.
Soon, it will go beyond this to predictive and intelligent purchasing, where the consumer does not even have to think about the mobile and the payment service, as the two will work together in harmony to tell them what they can and cannot buy or afford to buy.
Making invisible banking visible removes the revenue stream from charging customers for mistakes, so how will banks make money?
Maybe by telling the customer how to spend and save and live smarter?
Sounds like the strapline for a new bank.