The Financial Brand published an interesting piece challenging the use of the word bank in a brand.
It got me thinking, and agreeing with their summation, which is yes. Sure, you can have Chime, Chase, Citizens and Truist, but is that the right thing. In fact, on the last point, the use of the word bank means trust.
Now, I know I’ve argued this to and fro over the last decade, and the point of those discussions is that consumers trust banks because they’re regulated and offer insurance of funds; people don’t trust companies that are not regulated and offer no insurance cover.
Yet that only develops through experience. On the one hand, you have many customers who probably have no idea about insurance compensation cover of their bank accounts or government regulations. They just know that they have a bank account and use it. On the other, you have many these days who are experimenting ideas, investing in crypto, opening accounts with FinTechs and not really giving a damn.
I know I’m showing my age, but there are so many scams that I have seen out there that you only learn through experience. Examples? Losing thousands in a property development where I used the developers’ recommended lawyer – always use your own; losing thousands on an unregulated exchange dealing in crypto; losing thousands because I trusted my partner and she ripped me off.
On the other hand, I’ve also gained a lot. Making thousands in property investments; making thousands in crypto; making thousands in having a new partner who inspires me to do new things.
It’s swings and roundabouts.
What this demonstrates is that you cannot regulate trust and security … but you can try. At the end of the day, the customer will decide what risk exposure they’re happy with. And there you have the crux of the argument about whether the term bank matters: it’s the balance between trust in securing your assets versus the risk of losing them.
This is why so many banks are starting to creep into crypto.
The Wall Street Journal reports that mainstream banks like BBVA and Commonwealth Bank of Australia are allowing customers to now hold, buy and sell bitcoin and ether through a digital account. What’s interesting about that statement is the term allow. Banks don’t allow anything. Customers demand it.
Again, I’ve blogged about this before, but banks are moving into trading cryptocurrencies because customers demand it. The bigger question is: do they demand it being done through a bank?
All banks are trying to become hip and cool traders of cryptocurrencies, DeFi, NFTs and more, because customers are finding it hip and cool (even Melania Trump), but do customers want to deal with a bank that they see as anything but hip and cool?
Maybe that’s a good reason to change the brand of the bank to be not a bank, but more like a FinTech. So, the net:net of this discussion is yes, expect more and more banks to launch hip and cool brands that drop the moniker of bank but, end of day, they’re still banks and they’re not hip and cool.
Finn, Bó, BPCE’s Fidor …