For some time now, I’ve been reflecting on a conversation about Monzo. It relates to my write-up the other day on new bank thinking, and that Monzo are clever with data. Using Google Map APIs and other services, they enrich my transaction statement so I know when, where and what I was doing when I paid for that $1,000 bottle of champagne (let you guess that one!).
Anyways, because of this, I have moved more and more of my activities over to Monzo. This means that my bank statement from my primary account with Lloyds, which has historically had all of this transactional data, now just reads £200 Monzo, £200 Monzo, £200 Monzo and so on, based on the auto top-up of my Monzo account prepaid card, as it was then. Today, it is many people’s primary account (94% of its prepaid card users switched), as its total customer base surges past 500,000 to almost 600,000, just three years after launch. Amazingly Revolut has two million users and many others, like N26, are growing at this speed or scale.
One of the big things about this movement is that if the battle of the future is over customer data, as I keep saying, then the big banks are losing that battle big time already. A big bank with legacy architecture can only tell customers what they’ve spent. Their back-office systems are pure transactional ledgers of past payments. There is no intelligence, forecasting, predictive analytics or machine learning about customer behaviours, because the data is all fragmented across multiple, legacy, product-focused, silo-structured systems. This is the big banks soft underbelly and a weakness that the young start-ups are clearly focused upon exploiting.
As customers find data enrichment of their transactions and lifestyles from new banks, what starts to happen is that you use them more and more. Soon, all your lifestyle transactions are with an intelligent new bank and all the old bank sees is regular payments to your new financial relationship.
Lloyds know you’re using Monzo non-stop, but have no idea what you’re spending money on; Monzo know everything about your financial lifestyle and tell Lloyds nothing.
Extending this idea further out, what happens if there are many intelligent data aggregators out there? Apple knows all of my downloads, music and film preferences; Amazon knows all of my regular buying needs; Google knows what I’m thinking before I finish entering my question; and so on.
Before you know it, the big banks will just see statements that say:
Amazon (auto top-up) £500.00
Monzo (auto top-up) £200.00
Apple (auto top-up) £300.00
TfL (auto top-up) £40.00
You know that I am buying things on Amazon, doing things on Monzo, downloading things on Apple and travelling on the London Underground; but you have no idea what, why or where I’m buying, doing, downloading or travelling.
In other words, the financial intermediary who never believed they would be disintermediated, have been disintermediated by a new intermediator. A data intermediary. The lifeblood of the banks future – customer data – has been stolen by a new middleman: the intelligent intermediator.
Sure, banks can say that this is no problem but if all a bank ever sees is the data from the intelligent intermediator, then they know absolutely nothing about the customer. Nothing. Nada. Zero. And that means they have zero chance of creating, leveraging or making a digital relationship with the customer.
This is the third in triptych or blog posts: