Brett King dropped a tweet the other day. It was followed up with a further list from Matthew Van Buskirk:
For those who read my blog, you will know that I agree and disagree with some of these points.
Point 1: FinTechs will collapse when they face a real crisis
Some FinTechs will collapse in a crisis. For example:
- Growth Street
- Orca Money
But the movement overall is unstoppable. There are over 25,000 FinTech start-ups out there, with many worth more than traditional banks. FinTech is tectonic change, not just a movement. In fact, the FinTech ecosystem is building tomorrow’s global digital financial platform.
Point 1: Agreed
Point 2: Customers always prefer human interactions to apps
Most customers hate having to visit a branch and, when they do, it’s often for a transactional service. But there is a role for a branch and a human. People need people, not just apps.
Point 2: Neutral - sometimes customers want apps and sometimes they don't
Point 3: Bitcoin is a Ponzi scheme
It’s weird how more and more people are getting behind bitcoin, and it’s 2,500 brothers and sisters (yes, there are a lot of cryptocurrencies out there, not just bitcoin and Dogecoin!). But what’s really happening, aligned with the points above, is the building of the digital world, which is different from the industrial world. The digital world needs digital banks, not industrial banks. That's the deal. The Metaverse illustrates this well. Jemima Kelly at the Financial Times said that it’s just a Ponzi scheme. It’s not. It’s building our new digital future. Get the agenda.
Point 3: Agreed
Point 4: Smartphones won't shift market share
The smartphone and cloud have been the foundations of our new world of digital connectivity. I said this over a decade ago, and no-one believed me. I’ve kept saying it. Do you believe me now?
Point 4: Agreed
Point 5: People want advice, not tech
This links to Brett’s point 2. People don’t want advice. They want a security blanket. We all might use apps but, like Linus in Peanuts …
… most of us want a security blanket to hold on to for when we feel insecure. As money and finance are our second-most important things in life (can you guess #1), if we don’t have a security blanket, it leaves us nervous. So yes, we don’t need advice. We need security. That's why people and branches, not just apps, will always be key when it comes to money.
Point 5: It's complicated
Now to Matthew’s points.
Point 6: Transaction speed isn't important
Urmmm? Faster Payments? Real-time settlement? Most of the things banks have done in the last decade or two have been all about making transaction speed faster, so I don’t agree with this point Matthew. Banks got this one.
Point 6: Disagreed
Point 7: Cloud-based fintechs are inherently less secure
That’s a fear of bank management and bank customers, but Open Banking and PSD2 prove this is not true. The regulators have spoken and told banks to embrace cloud and APIs. Having said that, it’s all about the due diligence. That’s what the banking regulators say. Their point is that a bank should use cloud-based services … as long as they use them right. Do the due diligence.
Point 7: Not now
Point 8: Face to face or phone interactions are necessary for effective fraud control
See Linus’s security blanket above.
Point 8: Neutral
Point 9: People want all of their financial products from one provider
This is the biggest change we are seeing. People used to use one bank. Now they might use a few or even many (I personally have more bank accounts than I need, but I’m unusual). No one needs one bank anymore. But what they need is bank that does what they need. This is why many are moving from one bank to a few banks. One for day-to-day transactions; another for more complex things like loans and mortgages; and maybe a third as backup to the first two. No one should rely on one bank anymore.
Point 9: Agreed
Brett’s tweet got a few more replies, several picking up on point 2, but if I look back at bank fallacies then my main one would be?
I’ve always advocated that customers need humans with branches for the reason of Linus’s security blanket. It’s about trust and beliefs, nothing more and nothing less. So many can predict the end of such structures but don’t believe them. Believe in what you believe in … and I believe in the fact that human contact around money is forever. Those who say it’s not important could just as easily make the comment that the next most important thing in life, our number one - relationships, love and sex - can be done over the internet. Maybe … but it’s not the same
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...