Money20/20 Europe: is banking a dead cat?
What is the future of banking? Is it a giant menu from which customers (individuals and businesses) choose who is to provide what contingent upon well-informed choice and best value.
Or is it a model where banks still rule from the centre, providing customers the simplicity of a range of products through a single provider. Putting aside whether or not this highly competitive state is possible, which is the future direction of banking?
Money20/20 Europe 2017
At a lively debate at Money20/20 Europe, led by the always engaging Ghela Boskovich, during which participants switched sides midway through, the unbundling vs re-bundling of financial services was discussed, based on which model scores best on the measure of customer centricity.
In a broad sense, as noted by Ricky Knox of Tandem, the most straight-forward choice for customers, most of whom have no interest or inclination to manage their suite of financial services in a particularly engaged way, is to get it all from the same bank. Simply put: managing your money is boring so why not opt for route one.
However, the universal model doesn’t have a great track record when it comes to customer centricity and, as noted by, Dan Maslaveckas from Bud, when everyone is on the same bunch of services, many customers end up with a bad deal. The need for choice, personalization and greater transparency that fintech has tried to address has not been characteristic of the uncompetitive bundled landscape.
Bearing in the mind the regulatory changes on the horizon (such as PSD2) and the trend toward an open banking model even in the absence of regulatory drivers, is this binary choice even valid? As accepted by all of the speakers, the structure of banking is evolving and collaboration is a key part of that evolution.
Banking-as-a-Platform, akin to the Amazon marketplace, where customers choose from a range of vetted providers without the burden of having to take a perhaps ill-considered gamble on an unknown fintech is the white-labelled third way.
That vision for the future of banking was shared across the panel and the real question is who sits at the middle, owning the customer experience – the incumbent banks that we see today, one of the new challenger banks or perhaps an unforeseen competitor on the horizon.
Like Shrodingers cat, whether or not banking is alive or dead, the future will remain uncertain until that openness is embraced. Choices about future direction and strategy have to be made at financial institutions and remaining a closed loop is not an option.
Time to open the box.
By Lisa Moyle, director of strategy, fintech, FinTech Futures Series (Banking Technology’s sister company)
