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Shaping the future of finance

Data personalisation strikes to the heart of bank disruption

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I’ve heard a lot of talk this morning about Big Data at a conference here in Barcelona, and had a realisation half way through.  The conversation was all about the move from mass markets and customer segmentation to the market of one and peer-to-peer personalisation.  In other words the deep data mining demanded by Don Peppers and Martha Rogers in 1:1 marketing in the 1990s is finally here.  It took twenty years, but here it is.  Yet this is the heart of the debate about digital disruption, fintech startups and bank responses. 

The reason why banks are being accused of being old and stale and slow, is that they are finding it very hard to adapt from product selling to mass markets through traditional media engaged via channels to offering contextual services to individuals via social media that provides digital access.  This is all part of the evolution, or revolution if you prefer, of banking and the heart of this is that the fintech startups are focusing upon putting control in the hands of one.

For example, at a recent US conference, there was a lot of talk about Venmo.  Venmo is a social payments app that acts as both a way of ensuring bills are paid between mates and also being a social share.  We all go out at the weekend and Dave pays so Chris, John and Erin send money via Venmo a few minutes/hours later.  The next time we go into Venmo, where’s Brett’s payment?  Hmmmm …

What’s Big Data got to do with that?

Not a lot.

What’s that got to do with the new market of one?

A lot.

The market of one is all about making the individual the centre of control and supporting them in controlling their lives.  The market of one can only be served by apps that leverage data and personalise it.  So Venmo’s secret is not deep data mining but allowing deep data sharing.

It’s also interesting that Venmo came through Braintree into PayPal, and PayPal now have one of the hottest apps out there.  For example, Venmo processed $141 in payments in 2013 increasing four0-fold to $700 million last year.  Could PayPal have created Venmo?  Not really.  PayPal are already being called an incumbent legacy, as they’re over a decade old.  Ten year old firms find it hard to stay fresh, as even Facebook demonstrated.  That’s why the new tech firms are acquiring and investing fast to keep up.  It is why Braintree acquired Venmo and PayPal acquired Braintree in a similar way to Facebook acquiring WhatsApp and Instagram. 

PayPal would not be able to create Venmo anyway as Venmo came out of an idea of two mates in their 20s who owed each other money after a long weekend.  A bit like Facebook, Tinder, Snapchat and more, these apps come from people seeing context and then looking at how to use new tools from Big Data through Cloud to Apps to provide real-time sharing and sourcing of needs.

And this is where we do see the banks struggle, as they cannot create these new apps as they don’t have the structure, capability or organisation to do so.  But what they can do is seed fund these apps, buy their companies, partner with the founders and more.  And that’s what Jamie Dimon is alluding to in his shareholder’s note, and it’s what banks need to wake up to in the new landscape.

The new landscape demands that banks work 1:1 with relevance to the individual’s needs.  If the bank cannot deliver this through their archaic systems and structures, then they have to rebuild the bank through working with the new systems and structures. 

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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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