Bank branches - going, going, gone

Whilst I agree with the comments to a certain extent, the largest amount of friction comes from moving banks or transfering money from your main bank account into a sperate 'mobile wallet'.  That is the issue new players will need to work around.

P.S And I know account switching enhancements are coming.

You're absolutely right about the friction in moving value from a current account to a wallet - this is where the banks have a great opportunity.  Seamless, immediate account-to-account transfer, if executed well, would go a large way towards neutralising the threat from new entrants.

Let's take a new entrant like GoBank. Its website makes it very clear that it's a "brand of Green Dot Bank, Member FDIC". It's somewhat similar with Simple also. So, they're agents of traditional banks. Even if they become very successful, they won't pose any existential threats to traditional banks. In fact, they'd only advance their cause.

The Amazon versus highstreet bookstore analogy is not valid since Amazon is neither owned by nor is a reseller of any highstreet bookstore. A more appropriate analogy in this context is the principle-reseller relationship that exists in IT, FMCG, telecom and many other industries viz. Just because I buy a Lenovo laptop from an Amazon or a Flipkart or a BestBuy than from Lenovo directly doesn't mean Lenovo will be dead. Ditto for a Dove soap or Crest toothpaste bought at Target or Asda or via Ocado - Unilever and P&G are very much alive and kicking, thank you. 

Looking beneath the hood, instead of positioning GoBank and Simple as the mobile banking apps they are, their respective owner banks have done a very smart thing by elevating the "branch is dead" hype to the "bank is dead" positioning and using the "mobile-only" approach. It will resonate well with the GenY and any others who purportedly hate banks and love mobile, eventually enticing them back to, ahem, the same old traditional banks, except via mobile and not branch. If it were not for this, traditional banks might have lost this segment to prepaid cards, many of which are not owned by them. So, whether the new crop of am-I-a-bank-or-am-I-not-a-bank upstarts succeed or fail, it will be banks who'll eventually go laughing all the way to the, er, bank. Won't be the first time this happened.

Hi Chris

Good blog, and always good to quote Brett King! I was with the deputy CEO of one of the UK's biggest banks recently and spotted Bank3.0 sitting on his desk - so it's not a lack of vision that's holding banks back.

Our view endorses yours - that there are some fundamental paradoxes which risk undermining the growth of banks in the digital domain. Our recent breakfast briefing highlighted 4:

Paradox 1: Assets which once protected Bank’s position now risk destroying them (or put more succinctly, banks branch, tech and brand legacy don't prepare them for the future)

Paradox 2: Digitally default ways of working directly challenge the existing operating model (consumers will always vote for improved customer experience & MVP over bank 'never fail' mindset)

Paradox 3: 
The regulator wants banks to treat all customers the same, yet be profitable at the same time (I wonder if the new Post Office offering will give the big banks license to exit the cash-card market once and for all)

Paradox 4: 
The best way to drive out cost in the future is to spend today (if banks don't use data to optimise channels, they'll just end up layering cost)

Finally, it's worth saying that all is not lost! There are individuals in most of the big banks (and to some extent schemes) with a real determination to drag their organisations into the next generation.

It's in all our interests that they succeed.