Earlier this week ACI Worldwide published the findings of a YouGov survey asking ~2000 UK consumers about their attitudes towards banking and new entrants, their payments patterns and behavior. We presented our findings to the media, with the headline “Digital
disruption in the UK banking sector is still moving at a slow pace” and concluded the following:
- Majority of UK consumers have no intention of switching bank accounts, but will quickly adopt new services that are convenient and easy to use
- Opportunities to disrupt status quo exist and banks must be ready to grasp them
- History of adoption of new services shows there is likely to be a ‘tipping point,’ especially for younger customers who will follow where their peers leads
How media companies choose to present press releases is ultimately their choice. And it has been interesting to see journalism in effect with articles varying to different degrees from the story we provided. Two varying media reports spring to mind; one
Finextra and one from
FSTech. For me the story on FSTech was closer to the ACI interpretation of the survey findings. Finextra took a slightly different angle, but the comments posted on their website, as well as Twitter feeds from other media posts, did a great job of highlighting
an ongoing debate in our industry that I will summarize as this: Is FinTech disruption just a bubble?
As far as my opinion goes, I think FinTech is a bit of a bubble, yes, but it’s is a crucially important bubble to the positive transformation of this industry. The industry is disrupting. It’s a fact. Yes, it may be going at a leisurely pace from a consumer’s
perspective, but what did we expect? How many years did it take for the Internet to truly become mainstream? Consumer behavior is something that Apple clearly understood when they brought out the iPad, bringing to market something that no-one felt was needed
until it was there, and then suddenly people realized they couldn’t live without it. And as one guy in the comments stream at Finextra pointed out, how can the UK population know they don’t like something when they haven’t even seen some of it yet?
If we take a different look at the YouGov results we can clearly see change is taking hold in the UK. For example 12% of consumers
will change their bank in the next year; 22% of consumers would use banking services from Google / Apple / Facebook; and 41% of consumers
do use mobile banking. As a percent of the UK population these numbers are huge. Not only that, the results depict a trend towards digital disruption showing that consumers are actually in the early days of embracing and encouraging this change. This
is an impressive segment that is emerging, and the growth of this “digital segment” will only get bigger as Gen Y / Millennials become more the norm. The fact then that 88% of UK consumers will stay put with their current bank is probably good for the incumbent
banking provider in the next year, but what about the year after? Of the year after that? It is now that the banks needs to differentiate themselves from their competition and find ways to better attract and retain their customers.
We are still in the early stages of transforming this industry. We are seeing some absolutely phenomenal innovations in our industry right now. In transforming the way we interact with our banking providers, some of the start-ups we are hearing about will
succeed. Most will not. But the sheer strength of influence being driven into the industry by these pioneers is undeniable.
I think next year is the year to watch. Against a backdrop of continued regulatory pressure to open the market to more nimble, "value chain cherry-picker" start-ups, in a world where FinTech still equals "cool" (not to mention sky high valuations), Retail
Banks will continue, and in some cases speed up, their focus on embedding flex, innovation and value back into their aging platforms. As part of this transformation, we will see continued disruption as Retail Banks look for ways to compete with (or utilise)
heightened customer experience from FinTech start-ups. I'd also expect a few industry reshuffles as Retail Banks trade cards (excuse the pun) to sell underperforming business units whilst investing strategically and buying up businesses up for sale by some
of their industry brethren.
So each story has a balance to it; glass half full or glass half empty; yin and yang. But the one thing we can all agree on is that the status quo is evolving, whether fast by one person’s standard or slow by another’s, disruption is happening all around
us. The only question that really remains is if you are a Financial Services Provider, how do you best harness the disruption to effectively compete in this new reality?