I just had a really interesting, off-the-record, discussion with a banker. Can’t give too much detail therefore, but here’s how the conversation went:
“So, what’s it like working for MegaRetailBank?”
“Shocking”, he said. “They are completely branch focused. Here’s an illustration. They launched a new retail bank subsidiary in a country in 2008. That country now has lots of branches, because the management were rewarded based upon branch openings. They spent millions on this country, growing their retail footprint, and opened branches in really stupid places. The edge of the town, where no-one worked, or even in places that were lucky to see a dog being chased by tumbleweed. They just didn’t understand the country. Seven years later, they had to sell the bank for almost nothing, having opened lots of physical stores and gained virtually no customers. Their online services were awful – just transaction statements on a mobile app – and there was no compelling offer.”
I was surprised to hear this as MegaRetailBank is known as an innovator in other markets, but it reminded me of another conversation I had a few months ago with another banker. That conversation went:
“I see you bank is doing a Hackathon. Does that mean the leadership gets digital?”
“Hell no”, he said. “The Hackathon is run by marketing and it’s purely to get our name out there in this new, cool Fintech space. Based upon your question, it sounds like it’s working.”
He went on to tell me how each event they were running – this is a global bank – had a budget of around $5 million and was encouraged to get innovation showcases in front of the executive team.
“So does the executive team then take the winners on board to internalise their innovations?” I naively asked.
“Hell no”, he said again. “We wouldn’t dare internalise external innovations. Far too risky.”
I know that the dialogue I have on a regular occasion is an indictment of the lack of technology and vision in most banks. It reminded me of another conversation years ago, when innovation was the top mantra of all the banks and CIO, as in Chief Innovation Officer, was the cool new title in the Executive Team.
“So you’re the Chief Innovation Officer. What does that mean?” I asked one friendly CIO.
“It means that I have a funky outfit” – he was wearing a lime green suit and dark green t-shirt – “and can go around the bank making people smile, as long as I don’t try to change anything.” Unfortunately, being Chief Innovation Officer for many of the guys who got that job meant looking for incremental change and developing cool sandbox ideas to show the staid bankers in the boardroom that they had ticked the innovation box. As a result, most Chief Innovation Officers disappeared within a couple of years of getting the job.
Now we have Chief Digital Officers who fall into the same trap.
“So you’re the Chief Digital Officer. What does that mean?”
“That I develop our mobile app and make the bank look nice to the customer. We have a project and a team, and our objective is to ensure that when customers see cool new things like Moven, Number26 and Atom, that they see no reason to switch as our apps are functional.”
“So being Digital doesn’t mean changing the bank or its core systems?” I inquired.
“Are you from the Planet Zog?” he replied.
So OK, I might be taking a little extreme view here, but there is a consistent theme in all four conversations – banks like the status quo and have executives who understand that to retail digital services you need to open physical stores because that’s what we’ve always done.
My view? If you always do what you always do, then you make a pile of doo-doos.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, 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...