18 October 2017
Elizabeth Lumley
Elizabeth Lumley

Elizabeth Lumley

Elizabeth Lumley - Girl, Disrupted

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Disruption in Retail Banking

Growth in internet and mobile technologies has transformed many industries and economies. The market forces and competitive landscape has completely changed in many sectors. iTunes has fundamentally changed music industry, Amazon has driven most big brick and mortar book sellers out of business, Expedia is one of the worlds' biggest travel company….. the list goes on. Internet and mobile technologies are big disrupters for most industries. What started (and tapered a bit!) with the dot com boom of 2000 has become a lethal threat to most business models today. Powered by mass adoption in mobiles phones, proliferation of smart phones and cheaper band-width, internet and mobile technology have changed many industries. The banking industry in has been dominated by a handful of big global or regional banks for 100s of years. While the credit crisis has shaken this industry, the core market forces for the industry have not changed. Will Innovation in Internet and Mobile technologies disrupt retail banking? Will there be 5 new names in global top 10 retail banks in 2020?

I had a bank in Indonesia

05 February 2015  |  3629 views  |  1

It has long been my personal feeling, based on over 20 years writing about banks (or banking or financial services or FinTech, what have you) that anyone who thinks it would be a good idea to start a bank should have their heads examined. However, as of January 2015, 26 banks were in discussion with the Bank of England’s Financial Conduct Authority to gain a banking licence, with four banks actively going through the application processes.

But I'm not here to write about the UK. Want to start a new bank in FinTech Capital of the World - London? OK ...*snooze*... Want to start up a new bank on a beach in Bali? *Hello!*

A few weeks ago, ex-Treasury Innovation Co-Lead at Investec and Startupbootcamp FinTech Mentor (and Bali resident) Andy McLean published this blog about an idea he had about 'starting a bank, from scratch in Bali'. I Re-Tweeted it with the, slightly snarky 'What fresh adventure [read:Hell] is this?' 

Considering next week is Finovate Europe, otherwise known as that event where we 'watch two guys in hoodies play with a cheque imaging app on their iPhone for 10 minutes' :-|, I thought a FinTech story, just b'cuz, would liven up your day. 

I sat down for a quick Skype call with Andy this afternoon and he talked through his concept of 'thinking about how banks should be'. However, I should warn you, my belief that as I was chatting to Andy from a cold London office in February while he sat on a beach in Bali (probably watching the sunset while sipping a Mai  Tai), is sadly "a myth." Oh well.

Me: I’m of the mind that anyone who would start a bank needs to have their heads examined. That to me is the wackiest part of this, not that fact that it is in Bali.

Andy: To get brutal about what I am getting at. It is not so much that I want to start a bank. I want to us to start thinking about how banking should be. 

Me: So, are you starting a bank in Bali or are you, sort of, putting together a concept or is it some sort of FinTech performance art? What are you doing?

Andy: What I am interested to do is bring together a group of people, there are many of them out there as you know, who think things should be different. I want to bring them together in a place that is nowhere near a bank, nowhere near a big city, where all this stuff happens. Ok, what does it actually mean? I’m not talking about a conference or a FinTech Hot 50 or some sort of retreat over a weekend. I am talking about putting a group of people together to say ‘how should [a bank] actually be?’

Once we worked out the concept of what we think it should be – hopefully we can rush it through quickly enough to show at Startupbootcamp FinTech in Singapore. (Ed note: deadline for submission is March 15!)

That’s the idea.

Having worked in the City of London for a long time. Having worked at banks – everyone’s starting point is: ‘oh well – this is the problem and that’s the problem and we can’t do it because of this and we can’t do it because of that.' But actually they don’t think about what banks are actually doing. That to me is the biggest problem.

[Ed note: Andy points to the Bank of Dave project in the UK as one such inspiration]

So, for instance – looking at this Bank of Dave series. Hold on, my job is to be of service to my community, right? So what I am going to do is I am going to take in money at a good rate or take in deposits at a good rate and I am going to lend it to businesses that can’t get it from somewhere else. But I am not just going to give them the money – I am going to see what they do and help how they should be doing it.

He uses this line, where he says ‘It should not be that complicated.’

The other dimension is there are so many different components changing at the moment, from a technology standpoint. Look at something like Fidor Bank. Look at major changes in the way things are structured – the blockchain, for instance. A blockchain at a bank is an interesting idea.

I see this as a mess of brainstorms of people with really really good ideas and then coming up with a compelling concept that a bank itself would never be able to work out. And FinTech isn’t going to work out because they are just taking advantage of, primary, inefficiencies in the banking system.

Me: What would your vison for the best outcome for this be, then?

Andy: I want it to be a physical think tank, where they are phycially present. Not where they are rushing off to some meeting. The outcome would be to build a core team – five/six maybe - with a mix of skills. So I would need people who can code. I would need some great researchers. 

My real dream is to come up with a compelling concept that I can go and pitch at SBC FinTech in Singapore. 

Me: What is the advantage of Bali?

Andy:  My belief comes from having worked at a bank at Investec. If you change the environment completely, you have a huge advantage, because you don’t have the other distractions and you have a far more enjoyable working environment. And most importantly – you have a lot of clever people here. It is no coincidence that you have a lot of entrepreneurs starting up bases here. Because they know they need a new environment. And there is a cost advantage, definitely.

The environment is the crucial thing. A new environment to free you from the distractions and shackles you normally face.

Me: Does Bali need a new bank?

Andy: No, no reason at all. But, Bali is that perfect place, if you are still in early stage where you don’t need access to partnerships and capital or that sort of thing. To make your start.

Start here – then get into something like SCB FinTech. Then when you’ve got various banks involved, then [the startup] could really happen.

Me: Are you looking to build a full back to front, full service bank?

Andy: I couldn’t say. Someone like Moven [in the US] is taking a small aspects of the banking system. Fidor Bank is tackling the whole system. I’m not saying that I want to be Fidor, but I want to be more than Moven.

I don’t see the technical bit as being the problem. The difficult bit is getting the concept, right. Obviously that is ambitious for a such a short period of time. Fidor really tested their concept hard at the start. They spent hours on Facebook testing what they wanted to do.

This is also a test of what people are prepared to do on a subject where there is so much talk about.

TagsRetail bankingInnovation

Comments: (1)

Brett King
Brett King - Moven - New York | 06 February, 2015, 00:55

There's nothing more than Moven Andy :)

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job title Global FinTech Commentator
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Global FinTech commentator. Author of the Girl, Disrupted blog

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