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David versus Goliaths

A new age banker almost like a messiah made an announcement today about "brushing aside" the dinosaurs. Sure most people see the traditional banks as slow, lumbering giants and who are further encumbered by the weight of compliance and regulation all of which are surely brought upon by themselves. Can one digital bank or several of these take them down? Is there a meteor event lurking in the corner that can wipe out traditional banks like the way a Kodak has been take out or what a once industry leading Nokia is facing up to? Most observers would say that there is room for nimble agile players in every industry today such as the fin tech disruptors (lending cub, Kabbage, wealthfront and many more)? But what is more important is to focus the debate on the customer and what he or she would look for as they start out a new banking relationship or look to switch? Definitely it won’t be a shiny app on its own or fancy campaigns or dog biscuits or iPad trotting sales folks. While a user friendly technology is hygiene and would only level set things, what could encourage folks is being served intelligently and having the option to self serve with confidence. Even today customers of traditional banks face a barrage of irrelevant product pitches, inconsiderate fees and charges, painful call centre or chat experiences where right hand does not know about left and so on. Here are a few amusing personal experiences: A global bank send me a letter advising me to check the statements often recently. I am sure this is following some regulatory guideline but little do they know that I have been regularly using their mobile app to check my account and so I don’t need to be told to check statements that have come in by logging onto their website. For 3 years, I have been receiving every month a letter asking to apply for a credit card when I already have one from the same provider. A leading British bank where I hold multiple relationships still cannot offer me a view into the BTL I held with them. A friend of mine sold a property a month ago and has about £250,000 now lying in his current account for about 3 weeks as he mulls new options. Not a soul has contacted him from his bank and suggested that it can be better invested. Clearly the house is not in order. 

Sheer complexity in both processes and legacy tech built up over time plus disproportionate amount of time spent on compliance and looking over the shoulder activities mean negative energy and dissipation of focus away from the customer. A start up bank can however be free of all this and can focus on delivering value and can ensure that the customer is treated with respect, simplicity and intelligence. 

So in essence, there is immense room for traditional banks to move to a more insightful and considerate banking service and slowly but steadily become a trusted and reliable provider. At the same time, the new age banks too have a tremendous opportunity to attract new customers but it has to be on the basis of a sound business model and not be a fleeting operator for a few years with headline grabbing rates. Many have come and gone in the guise of a "digital bank" or a "challenger bank" or a niche player. That said we are still not at an "Uberesque" moment that is staring at the black cabs and alike around the world. The reason for that is the trust factor associated with something that has been around for ages and is symbolised with a strong edifice appeals to the sensibilities of many. Further the sheer inertia of switching given customers don’t feel the pain day in and day out with their bank unlike for instance a broad band service provider's poor service whihch can cause serious dissonance. Finally the lack of any compelling new product propositions from a new player alone can mean very little reason to shift.

Hopefully like with any new competition and in this case of D V/s G, let the consumer be the eventual winner and let there be more choice for sure..



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