12 December 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?

Go forth young'uns and get me some 'innovation!'

26 May 2015  |  3267 views  |  0

I had dinner on Sunday night with three 13 year old girls. They were the daughter and two friends, of a close friend of mine I hadn't seen in a while. In addition to catching up on old times over a bottle of wine (with the mother, of course) I took the dinner table opportunity to ask the girls a few questions. 

You see, they were all born in 2001. I had in front of me three mythical creatures, so often brought up in roundtables, white papers and conference panels.

They were 'millennials'. (or post-millenials or, or, or...oh fuck it, they were young people, awright!) 

Me: Do you girls all have phones? 

Girl(s): Yes

Me: How do you talk to your friends?

Girl(s): WhatsApp, Facebook messenger (but not Facebook, you understand)

Me: How do you buy music?

Girl(s): Buy? We just download it. 

Me: Quick question, when you get older and get a job. What will you do with your pay check?

Girl(s): Put in in a bank. Definitely get a savings account. 

Me: How will you do that?

Girl(s): Well, either online or I'd go down to the, ya know, branch.

Me: Wait, what? Did you say, you'd open an account in a 'branch'? What about, ya know, on your phone?

Girl(s): No, I think I'd open the account at a branch. It's safer that way.

Me: Do you think you will have a credit card when you get older?

Girl(s): Yes, definitely. It's (wait for it) safer to have a credit card.

OK - this is not a blog about the future of the branch - but more about the way us old folks think about 'innovation'.

Prior to this dinner by the coast in Broadstairs, I was a judge at the Deloitte Digital hackathon - Gone Hacking - and I hosted Finextra's second Banking Byte event looking at the 21st Century Bank Branch. (Ok, so maybe this is a bit about bank branches)

Both events, as well as my impromptu conversation with the young teenagers in Kent, highlighted a serious difference between embracing new, shiny, digital technology and actually listening to the customer. 

The two winners of the Gone Hacking event were a pensions tool from a team that called itself and its product Silver Fox and an ethical investment trading tool called Sustainable. (I fought for a team that eventually got fourth place that started the hackathon with zero ideas and ended up with an invoice sharing app for SMEs - SMEs are the future, I tell you) 

Anyway, what made these two teams standout were two specific qualities that both have everything to do with customer experience. Silver Fox (which came in first) was solving a real-world problem - what do you do, as an average person, to make sense and manage your pension in light of the upcoming changes in pension regulations in the UK. 

Sustainable tackled the worthy cause of presenting useful information about the nature of various public companies you might want to invest in. What impressed me more about Sustainable, was the simple, elegant and easy to use (the demo worked) mobile app they designed (in 36 hours) to accompany the application. The team didn't design the app 'for the device' using all the bells and whistles at their disposal (no camera and/or QR code was used in the demo'ing of this product). But instead, designed an easy to use and read app that 'did what it said on the tin.' I wish more bank mobile apps were designed that way. 

Which leads us to the 21st Century Bank Branch. The idea for this event came from an application developed by EPAM for the US leg of the Citi Mobile Challenge. They developed a branch concierge service that won 'best branch transformative experience'.

It was designed by Yevgeniy Galper of EPAM. Before the demo, he told the audience the story of the app's development - which started with him walking into his local Citibank branch near Boston. While there, he spoke with the branch manager, with the relationship managers, bank customers and tellers - for hours. (He walked out the proud owner of a Citi gold card and several other bank products - Yev mentioned he was met with flowers the next time he walked into this branch). 

When Yev decided he was going to build a mobile banking app, he didn't start with iOS or Android or any other way he could design for the device. He started by talking with people. The people that would, theoretically, be using this application. 

By contrast, back at Gone Hacking, one team built a 'financial education' app that used the Oculus Rift virtual reality headset. The application made no sense, was hard to use, and seemed to be set in some deleted scene from Game of Thrones (because everyone wants to see information written in blood when reading through mortgage terms and conditions). The goal of the app was not 'financial information' or even a banking version of Dungeons and Dragons - it was to use the virtual reality headset - cool at that may be.

Using 'cool, shiny things' for the sake of using 'cool, shiny things' is not innovation. 

Those on the conference circuit are fond of showing pictures of present day children or teenagers - enjoying touchscreen devices or living in a virtual reality world - as a way to predict how these soon-to-be adults will behave in the future. 

Let’s look at the future, by going back to the past.

In 1983 I received what has to be the best Christmas present I have ever been given. A brand new, mobile music playing device. This device was the only thing standing between me, along with my friend Sheri (who was very cool and knew about these things) and being able to attract the boys who hung out outside the Woolworths in downtown Melrose. (I was all class back then).

This device had two speakers, one radio, a handle (for mobile carrying) required eight D-cell batteries and could play up to one cassette at a time. It was the height of mobile music sophistication in 1983 (don't believe me - watch any 1980s era John Hughes film). And it bears no resemblance to how I buy and play music in 2015.

The only thing that is similar between that picture of me, 11 years old on Christmas morning, and a picture of me with my Samsung Galaxy S4 is me (with a better haircut and dress sense) 

The only thing that is mobile is you. 

When you start fixating on the device and the technology of the day you miss the needs of the customer standing in front of you. I have no idea whether the 13 year olds of this world will re-embrace the branch (my guess is, they won't). But if I worked developing systems for the retail branch I would listen to the 13 year old who says 'the branch is safer'. Why do they think that? What is the reasoning? What are their experiences? And I would design an app - which may be in a branch, on a phone, in a kiosk, in aisle 3 of your local Tesco, wherever - that addresses that behaviour and designs for it. 

TagsRetail bankingInnovation

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job title Global FinTech Commentator
location Crayford
member since 2009
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Global FinTech commentator. Author of the Girl, Disrupted blog

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