After yesterday's blog sparring session between Messrs Skinner and Goldman, I thought I'd add my own 2p worth to the debate and risk being accused of not reading or understanding either gentleman properly!
Those who have followed my blogs on the subject of innovation in banking will not be surprised to learn that I fall more into the corner of Chris Skinner than Michael Goldman, especially when it comes to retail banking.
Having spent 10 years, roughly half my career to-date, working in private banking and wealth management, I can see where Michael is coming from. But, I believe the needs of those seeking investment advice are separate and almost irrelevant to core retail
banking products and services.
As I alluded to in a previous blog about
10 year olds, banks need to ask themselves whether the next generation of customers will want to do their retail banking in a branch, or by flicking open their Nintendo DS Lite or Sony PSP equivalent device?
It will take banks at least a generation to change, so they better start now!
A former colleague of mine, John Slater, has already successfully launched a solution in this space. Some of you may even have watched
his interview on Finextra.
Now, I am not advocating the technology adopted or
his company (as that would be against our community rules), but I do think it worth pointing readers in the right direction for their own education as to what is possible and where trends are taking our industry.
Back in June 2006, John's initiative was apparently lauded by TowerGroup Analyst Robert Hunt at the firm’s client conference in Boston...
“Most European banks are using core banking systems designed in the 1980s. These systems could not anticipate changes such as the internet, 24/7 banking, and cross-border mergers,” said Robert Hunt, research director in the Retail Banking Practice at TowerGroup.
“To effectively compete in this new environment, banks will need to replace their core systems. Further, it makes little sense for these banks to develop a new core system in-house when vendors are able to deliver functionally rich and flexible real-time systems
that operate on low-cost, scalable platforms.”
In May earlier this year SlaterLabs announced that Bank J.Van Breda & Co had joined The Etude Programme for Core Banking Applications - the world's first core banking application built entirely on Microsoft .NET.
And in July this year the Etude™ System established a number of new world records for banking application software performance. Etude achieved a staggering 7,129 business transactions per second throughput over a sustained business day period without dip
or failure; more than 69,000 database batches per second throughput over the same business day period; and less than .045 second response time for all transactions throughout all periods.
As we keep saying as vendors to banks (Yes, I crossed over to the dark side), the technology is out there to solve their challenges and secure their future - the real question is whether the banks will see the threat coming before it is too late.
To be honest, if I was a betting man, I would put my money on the major retail "banking" services providers of the future coming out of innovation by companies that are currently not banks (or at least were not, until recently making intelligent use of legislation
in places like Luxembourg).