Every now and again we have a friend provide a guest post. Today’s guest post is from Chris Dunne, Payment Services Director, VocaLink:
Many of us have been enthusiastic participants in the destruction of well-known businesses over the past few years as we move from buying physical goods in physical stores (books from Waterstones) to digital goods in digital stores (e-books from Amazon), and it doesn’t take a genius to see that banking is heading the same way.
The Campaign for Community Banking Services recently predicted the branch network in the UK would shrink from 9,500 branches to 7,000 by the end of 2018, as banks improve their online offerings and customers take this up in ever-greater numbers. Paragon recently announced their move into retail banking and they have no intention of opening branches; they can harvest deposits online, and the absence of branches leaves them free from a world of cost and operational challenges.
This is a seemingly one-way flow from physical to digital, but what about things coming the other way?
Angry Birds started off as simple video game from some clever guys in Finland that took off massively. It is the highest downloaded ‘freemium’ game of all time, and has had about 12 million paid-for downloads from iTunes. Impressive, but not game-changing.
The game-changing stuff followed from this success. They have done three things brilliantly well.
First of all, they took their brand and bolted it to another, Star Wars, to create a combined brand of phenomenal appeal across age groups and demographics.
Then they moved the game from digital (firing digital birds onto digital pigs) to the physical world. I am the proud owner of actual catapult that fires small plastic Angry Birds versions of Luke Skywalker towards a large plastic Death Star. Hours of fun.
Then they merged the digital and physical worlds. You can buy physical Angry Birds that ‘teleport’ into the iPad game through very clever use of a tiny QR code and the iPad camera; desperately impressive to both a five year old boy and a 46 year old bloke.
So what is the relevance to banking? A bank is a collection of different products, usually from one brand, which may or may not be delivered from a physical branch.
So what would happen if you could bring together disparate brands to compete with traditional banks, or bring the digital to the physical world? What would happen if you brought together a peer-to-peer lender, an online wallet and a mobile operator with a credit license? Or what if a digital bank like Holvi (another Finnish innovation) really took off and tied up with credit unions here in the UK?
There is huge regulatory and political pressure to make it easier to establish a bank, easier to access payment systems and easier for third party access to existing bank accounts. This won’t all happen overnight, but the stage is set for a host of creative new entrants. Welcome to the age of Angry Birds™ Star Wars® banking.