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The future of Banking

I just received confirmation that the world is moving very, very fast. So fast that if you don't say, do or start what you have in mind, someone else will do it for you .... and you'll be left wihtout the honour of being the first.  And that hurts! :)

Therefore, if you do not act, you become a follower a second-rater.  So say what you think or do whatever you want to do right now.  CARPE DIEM.

I just read the blog of a young man called Simon Dixon in which he writes about the "end" of banking as we know it today.  Funny thing is, he sees it exactly the same way I do and exposes virtually the same reasons which I think will sooner or later be causing a deep change in the banking system and approach to customers.  There went my chance of being the first one writing about that.

Although I have to clarify that being a second-rater is not bad. (I always like to see the bottle half full!!) No, seriously, Google was a follower, a second-rater, but they saw things that others did not see. They knew that what existed could be improved and boy, did they improve it.  The truth is that if I have to be honest, as Mr. Emilio Duro said in his lecture last May in Palma, I am not smarter than any of you and should emphasise on copying the good ideas out there and either try to do the same or improve them a little, (with a lot of luck!!).

I have been planning this blog entry for some time. I'm so convinced that the banking model will change and will tend to be simplified, because as Simon says on his blog: "we are living ... a free economy."  And that is the basis of our theories. The situation and trend of the world is changing. We are facing possibly the most important technological revolution if not the most important one. The era of free economy and freedom of speech that Simon and I had already thought, refers to the tendency of everything being available to everyone, open, free and that the companies will achiev revenues derived from advertising, through visitors traffic. The number of people attracted by the sites is the basis of future business.  We, the customers, will have the power: the power to choose and decide.

I dare to even say more. (here adopt a very professional and intelectual posture, as some of my old professors used to do at University...).  My theory assumes fixed costs banks pay for personnel, material, property, assets ... go directly against their margin. Are we not heading towards a world of smaller margins and higher competition?  How many of you believe that an bank branch could have half of the employees and still be as efficient or should I say inefficient? The Bank itself has noticed. But he has realized the old fashioned way. 

Their mistakes are based on the old rules of the game and that is the way they are trying to solve their problems. If not, why are they closing and getting rid of so many offices? Why have they forced early retirement and fired so many employees? There are too many costs.  Excess expenses in a mature industry which is desperately working with reduced margins. There is more competition. Banks seek to capture new customers with offers of the month, week, day. Then they try to retain their new customers, the wrong way.  They make two mistakes. First of all they do not realise that people are increasingly, looking for what suits them the most and secondly, they discriminate their old clients by saying, "Oh, sorry, if you are already a customer we can not offer you the new super-deposit, it is only for new customers" sound familiar?. And does the following story sound familiar? A friend, friend of a friend, family member .... who is in trouble with the mortgage, cannot be helped by the branch manager, because he or she no longer has the possibility to take decissions.  Banking has become at the time, more impersonal and  even more static.  Everything is supervised by a central department in Madrid or Barcelona or any other place that is far away and where they will never understand someone's specific problem. 

So if banks tend to cut jobs, where will they get their workforce? Who will bring customers? At first, I think we will adopt the US model. Financial Advisors, will take over. They will provide banks customers, they are cheap salary-wise and are well prepared professionals with a high degree of knowledge. The next step, will be for Financial advisors who position themselves well on the web.  They will be the future "bankers."  

What will happen, is what Simon wrote in his blog: internet, web pages, technology, etc., will be the answer that you seek in the future.  They will provide the new consumer financial services. In my opinion, there is one generation left and then we will all be completely" homus-conectus". The phone will be our working tool and businesses will be online. I do not know if you will have to wait one year or for one hundred and twenty, I am not able to predict it. What I do see is that many traditional business are going to disappear over the time and it is time for us to go online and position ourselves.

What would a bank created by us, customers, with our rules and having us both as a client and a customer, look like?  To me that is Google applied to banks. It is Facebook (here with a series of exceptions which I will not comment) for mortgages. The power is in the hands of the consumer. The power is no longer in the hands of the traditional social strata. Correction, it will be in the hands of the traditional hands, provided they adapt and realize that people are tired of having to obey and do what they say. 

I recommend two books: The Long Tail, by Chris Anderson and What Would Google do it?, by Jeff Jarvis.  The latter can give you ideas for your own business and how to promote it on the web. Jeff is responsible for Dell changing its policy of customer service.  He by himself almost caused the company to collapse.

I am waiting for your opinions!

 

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