What is the reality in banking today? The reality in banking is we moving toward to the next normal. The banking business model of the past is clearly not the business model of the future. We are now living in the era of customer’s choice where client is king. Consumer’s choice that lead to value creation is the hottest tech industry theme right now and it’s getting more and more attention. It is what everyone is talking about in this digital age.
Technology has massively transformed industries such as entertainment, accommodation, music, and transportation. In this modern society, ‘using’ is the new owning. Companies don’t have any stock. They only have users, clients, and people.
In banking, we clearly need to see this improvement because let me tell you something: People hate banks. Data shows that seven out of ten millennial would rather visit their dentist than their local bank. The biggest weakness of banks right now is that they were built for the Industrial Revolution, they were built around paper, checks, cash, and those things are of the last century. What they need is a reality check to completely change their business to be digital and that is why we have this massive rise of a new industry called FinTech.
Integrating finance with technology– rather than finance versus technology– is starting to come together because money is just data. Think of FinTech as being the marriage of the parent-child relationship where financial services resembles the parent that just wants technologies to be resilience, stable, and secure, whereas the child is simply those who wants to challenge everything and argue everything.
They want to change the future and design a whole new world the way they like it and the way it should be.
For over a decade or so, we’ve seen thousands of startup companies doing interesting things around financial services and what’s interesting is that the breakout companies that are unicorns are founded by people who are really young, typically Gen Y or Gen X, under the age of 40.
Gen Z of teenagers are even creating new organizations and new ideas around financial services. It is just like they don’t like the system or anything but it is more about how to build a platforms that can accommodate us with the world we live in today. Take John and Patrick Collinson for instance. These two brothers from Ireland started a business called stripe in 2010 when they were 21 and 19 years old. Today, they run one of the biggest fin tech unicorns in the world valued at twenty billion dollars. Not bad for a couple of kids.
Disruption in banking is happening. It disrupt through the process. Banking is now paperless. It is contactless. The future of banking will be mobile and we all starting to sense this: how simple but how powerful number of branches have been reduced significantly at a global level.
That is why it is the technology company that does banking and it’s changing its model and is structured to be digital because they don’t want to be disrupted by the FinTech community. They want to be the disrupter and that’s a big attitude change. To sum up, to be the real disruptor as a bank, when you are a two hundred and twenty years old institution, you have got to start to change the mindset right away.
AL