Newspapers are getting disrupted by online resources. These same web destinations are becoming less relevant as people simply lift and filter the information they want using RSS feeds. The music CD is being unbundled as customers buy individual tracks online.
Power has shifted to customers: it’s no longer about the products that marketers want to sell but about the content components that users want to consume & mash up together.
The new battlefield lies in the control of the user interface and the customer intelligence system that supports it. Companies that build highly equipped Customer intelligence units will win in the coming days.
The internet is disrupting retail & I am sure Retail banking is also waiting to be disrupted. According to Capgemini’s 2014 World Retail Banking Report, less than 40% of customers globally reported positive customer experiences with their financial institution. But banks still push products on their own terms. Take a term deposit for at least 6 months? Well, why can’t I have it due on April 24th, which happens to be my birthday?
Google is launching its own mortgage calculator, and imagine what an Amazon Bank would look like,wish they launch soon!
But who are the startups disrupting banking today?
Check out the infographic below from CBInsights to learn more about the startups that are disrupting every part of bank business models:
Rajesh Kandaswamy of Gartner has this interesting take:
The checking account solves many of the needs of customers in personal finance –to keep money safe, to be able to pay others, and the need for a place to receive money on their behalf. It bundles a few things – a uniquely identifiable account, check writing, ATM privileges, interest payment (very less nowadays) and wire transfer to name a few. Product bundling made sense for these services as it makes it easier for the consumer, while offering economies of both scale & scope to the bank. Moreover, the marginal cost of bundling is low.
Now, internet and mobile make new services possible for some of these needs, either in isolation or bundling with others. For instance, the T-Mobile’s service offers an account, debit card, bill payment and a few other features, but it does not offer check writing privileges. Square Cash is a service only to send money to others. Internet and mobile make it easy to reach a larger market, while it reduces fixed costs need for costly branches. Such technologies are available for banks as well, but as incumbents, they have to worry about cannibalization.
So a lot of the banking disruption will really be about how banks adopt Digital & simplify processes for customers.In fact,in the new digital world, banking & creativity may not be oxymorons!Adaptive Path, a design and user experience consultancy has been acquired by Capitol One. And just before that Daniel Makoski, founder of Google’s modular Project Ara phone project joined Capital One.
New banks in India have a unique opportunity to embed “digital” in the fabric of how they do business. But banks are complex with structures that don’t allow for speed. In many cases, eBusiness teams own the mobile banking strategy, but few eBusiness teams have an exclusive mandate over their firm’s mobile banking initiatives. This division of responsibility creates silos and adds significant complexity to the coordination and optimization of Digital efforts.
As the infrastructure of digital technology — the chips, network connections, computing — becomes ever cheaper, they’re becoming commodities, and the value of tech products is shifting to the design and the user experience. But the real value starts to flow when companies orchestrate the User experience with Personalisation.
Personalization, it seems, is really about gathering exactly the data that’s needed in order to perform a particular task. Think about how Amazon asks users whether purchases were for themselves or as gifts, or how streaming services like Netflix and Pandora ask users to rate content. But personalization is a complex process involving multiple components & it takes a lot of effort to get it right.
Some areas to ponder about:
- What do you think about the internet & mobile disrupting banks? Which areas can the banks defend and which are vulnerable to disruption?
- What do banks need to do to modernise their architectures to compete against the new wave of startups?
- What is the new age Customer intelligence unit that can be the nerve centre for competing in this landscape? How do they capture unique customer data & create a competitive differentiator by mapping the Customer DNA & building Digital analytics capability.
- How will banks completely transform their digital experience? “Mobile apps will go beyond banking … and banks will offer different flavors,” says Jeanne Capachin, principal of Capachin Research. “For example, an app for people buying a home will have home prices, mortgage rates, and advise from specialists. It’s all about selling mortgages, but selling with an experience that offers advisory services – not just low rates.”