I got this headline today:
Within 12 years time, 80% of financial firms will either go out of business or be rendered irrelevant by new competition, changing customer behaviour and advancements in technology, according to forecasts by Gartner.
And it really made me mad because it’s complete rubbish. I cannot believe who authorised this to be released at Gartner, a company that makes lots of revenue from banks, as it’s like shooting yourself in the foot, cutting your nose off to spite your face and sticking your middle finger up at your boss all in one go. What idiot wrote this?
Oh, it’s David Furlonger, vice president and distinguished analyst. “Digital transformation is largely a myth as institutional mindsets, processes and structures stand firm,” he says. “Established financial services providers will have to move faster on digital business by building digital platforms or finding niche products and services to sell on others’ platforms.”
Yea, David, you’re so knowledgeable.
Let me start with the fact that I agree with his basic idea that a lot of banks are stuck in last century thinking, with last century leadership running last century systems from last century vendors. Yada, yada, yada.
But to claim that four out of five to them, 80%, will be replaced by new systems and new vendors and new players by 2030 is just huge claptrap. It ain’t gonna happen.
First, banks are a foundation of humanity and are trusted as they have licences to store value, which many start-ups do not have. This is a critical factor: who else has an ombudsman and insurance scheme that guarantees you will not lose your money?
Second, and here’s the real truth, most banks may have last century thinking but they are dealing with last century customers. Why would anyone move their bank account? When it comes to money, the last thing most people want to do is dick around with it with someone they don’t know, don’t trust and have little faith in.
Oh yea, it’s got a better widget, they know more about your money, their app is amazing and their cards are pink.
Guys, get over it. You’re living on another planet.
No one changes their bank unless their banks messes up or because they have to change due to an issue like an unauthorised overdraft.
Banking is a hygiene factor. It’s like water, electricity or gas. It’s a utility. Once you have an account with someone, you never change it unless you are disturbed into doing it.
So over the next twelve years, David and Gartner think that four out of five people are going to leave their banks and switch to challengers and new providers. Really????
To me, it’s just another of those sensationalist headlines that tries to beat the masochistic banker into waking up and shaking up but, to be truthful, I’m completely fed up with such headlines. I don’t believe them and it is not going to happen.
Instead, and this is a realisation I recently had, we should be congratulating the few banks that are doing things well and sharing their stories with everyone else. This is the theme of my next book: the banks that are doing digital well. What are their lessons? How did they do it? What can we learn from them?
In fact, it is my real bug-bear that everyone talks about banks being rubbish, stupid and ignorant. They’re not. Do you not realise that banks are led by intelligent people who are not stupid and recognise the world is changing?
Jeez, Gartner. Wake up and smell the coffee. If anything your sensationalist headlines and jaded research reports are where the issues lie, not with the banks. Just saying.