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How will Brexit Impact Banks and Fintech in the UK?


It may not have escaped your attention that the British Public voted to leave the EU. Although in the aftermath it’s still unclear quite what that actually means, this morning bank shares have taken a significant hit with Lloyds off 8%, Barclays 10% and RBS down 15% leading the LSE to halt trading in those stocks.

There are a number of theories about what happens next. Are people concerned about retail banking operations, corporate banking, investment banking or all of the above? Here are some ideas.

Theory 1: Rate Cut hits Bank Profits

The devaluation in the sterling and depressed economic activity immediately following Brexit will lead to a rate cut at the BoE. Rate cuts are bad for banks, since their business is predicated on lending against money held in deposit accounts. The higher rate they can lend at, the more money they make, and vice versa. Low interest rates = low profits.

Impact: There’s likely to be a short to medium term sell off of UK bank shares. Monetary policy response will be key, but banks are generally better capitalised than they were in 2008. Liquidity will likely remain strong, but the question now is contagion globally.

Response: Banks will need to weather this storm and look for profit centres away from net interest income.  Banks may also look to promote higher margin products in different geographies / sectors. The need for innovation in banking has never been stronger, especially in business model.

Theory 2: UK No Longer EU Gateway

UK banks position as a gateway to Europe for international banks and corporates will be threatened because they will be removed from various legislations or passporting agreements. This one is a little trickier. London has been a global finance and trade centre for centuries owing to its position in the world (time zone), talent pool and unique position as capital city, financial centre, tech hub with very strong universities (LSE, UCL, ICL). Specific legislations such as MIFID 2 and Basel III are still likely to apply to investment banks being already committed to them. Corporate banks are likely already and will continue to be SEPA compliant.

The question comes with, what happens next? What happens when the EU passes new legislation for which the UK banks had very little lobbying influence and are bad for London? A UK alternative would require a strong and articulate response from UK authorities, and what’s scaring markets is that at the moment there appears to be a vacuum of leadership. If there’s one thing markets hate its uncertainty.

Impact: Banks have a strategic option to consider, do they start hedging now, or do they focus on being compliant with all existing legislation and look at contingencies for staying in the UK. We will likely see a split depending where a bank is Headquartered. A number of global banks have R+D centres in Dublin which as Chris pointed out on CNBC, shares a language and is fully in the Eurozone.

Response: There may be different good answers for different banking divisions. My own view is that I wouldn’t bet against London coming back strong and whilst there is still a strong liklihood Britain negotiates a “Good Brexit” banks should take some time to consider these options.

Theory 3: Bad Loans and Tight Liquidity

Traditional Banking will be impacted as the UK Economy falters in the coming years. Higher unemployment, lower wages and more bad loans is a risk, albeit we will have to see what the impact is on the real economy outside of the banking sector. Some areas appear resilient (Pharma, consumer goods), although the weak pound will impact the UK as a net importer. The impact on small businesses and corporates in the coming quarters may well be reasonably significant. As significant as 2008? By the look of the FTSE and sterling yes, construction appears to be taking a hit but there is a question if this is the Brexit that broke the camels back rather than a direct result of Brexit.

The market may have been in need of a correction, after 8 years of low interest rates most UK corporate and Retail banks have remained strong, whilst the investment banking division has suffered.

Impact: Investors and banks will be looking at their loan books more tightly, with some RWAs no longer looking attractive

Response: It may be hard for banks to avoid tightening on lending, but this is an opportunity for a fintech approach. Identifying bad loans in banks is an exercise in drawing a line on a on a spreadsheet, below which everything is bad and above which everything is good. This is a poor response and will restrict growth in the real economy. Banks should consider how technology can help quickly identify performing loans vs non performing, regardless of rating. There are ways to ingest this data as spreadsheets or from core systems and quickly, rapidly respond to the change in market. An ability to show strength in a loan book will make a significant difference to market sentiment about bank stocks.

Theory 4: Fintech Leaves London

London loses it’s position as global fintech hub because of Brexit. If there’s one thing I think highly unlikely it’s this. There is a concentration of talent based in London that I believe is a mix of tech and former banking talent that chose London for more reasons than it being a good place at a point in time. The access to universities, to policy makers and to the local regulator (FCA) will all continue.

PSD2 is still likely to apply to UK Financial Services provided the UK stays in the single market (which nearly all indications suggest it will), and fintech continues to exist in a global market.

Impact: Whilst uncertainty looms about new legislation, a potential round of headcount reductions at banks will mean more talent flooding the Fintech market.

Response: I suspect Treasury and HM Govt will look at all policy options to keep Fintech stable in the UK. Whilst fintech broadly has cooled since last year, it’s here to stay and growing. PayPal is now larger than 3 of the big 4 banks in the UK. FX businesses will watch the Euro trading piece closely, and passporting licences will be critical (again, likely possible in the single market). However, Fintech businesses want to be where the buzz is, and for the foreseeable future, that’s London.

Summary: Fintech To The Rescue!

For those of us in Fintech Brexit has been seen as universally horrible, now it appears the task is shoring up the dam and avoiding it breaking. The opportunity for fintech in moments of urgency is often overlooked, but a volcano always lays furtile soil.

There’s a real opportunity to support banks by

  1. Identifying ways to shore up loan books
  2. Identifying new profit centres for banks that can be delivered quickly
  3. Regtech that can arbitrage old and new regulations between UK / Europe

Banks in the UK have a rocky few weeks ahead, but the rank and file within banks and those in the fintech community can start the fight back now. We need a good Brexit, Brexit light and we need to solve the real challenges banks face. Call me an optimist, but I think we can.

At 11:FS we see opportunities for banks and fintech across all three categories above.  Talk to me about how you can do this, we’re here and happy to help.

Why Banks Are Sleepwalking Into Extinction And What To Do About It


Earlier this week Michal Panowicz shared this stunning stat that demonstrates how much money banks are throwing away holding on to the past:

The top 25 global banks spend more on their branch network, than the top 25 global tech companies spend on R+D by 2:1.

To put a number to it, in ONE YEAR – $50Bn was spent by those 25 banks on branches alone.

Banks are spending a huge amount on “Technology” too -(just look at these headlines: Headline 1Headline 2  and Headline 3) . Not only are branches an albatross of cost, but the technology spend is enormous.  Banks are being disrupted by Fintech players who operate at orders of magnitude less technology cost, and require no branch network.

IDC Tech Spend


To compete banks have seen boom in technology costs, but this is not being off set by branch closures. Not even close.

Fools Gold: Digitising a Paper Process

When banks moved to computerise in the 1970s, having all of their core accounting come out of the branches seemed like a great way to reduce errors and remove cost. In fact, it was. It worked.

Naturally not all bank branches adopted computerisation at once. Banks kept account numbers and sort codes, so the branches (and other banks) that weren’t yet computerised could still talk to each other with cheques, cash and letters of credit. At the time this was the logical thing to do.

Layer on top of that the international nature of banking. Banks needed a way to move money around the world, and in the 1970s realised they needed to create standards to do so. Despite many new standards and updates, the core internal and external systems function much the same way as they did in the 1970s. Banks talk to their customers and each other in a digital representation of the paper world in the 1970s.

40 Years later, this technology is creaking at the seams, and forcing banks to keep their branch network alive.  High Street Bank technology is predicated on the existence of branches.

Worsening Service – Increasing Costs

By taking the decision making power out of the branch, but keeping backward compatibility with the paper banks now have the worst of both worlds. Banks still have the cost of paper processes and  now branches unable to give the type of community service and instant decision making they once could.

It would seem logical that banks are spending as much as they are on technology, recognising the need to get better at service and cut their own cost base to compete with Fintech and Tech companies (as well as each other).

So Where Does All of That Technology Spend Go?

Yet when you break out the £1Bn or so a Tier 1 bank claims to spend on technology more than 97% of this goes on keeping the lights on, or incremental product releases.

(Note: A lot of incremental products get called “Innovation” in banking – but keeping a mobile app running, or creating a new loyalty scheme is outside my definition of disruptive or R+D innovation.  I’m also not including “venture funds” inside of R+D.  I’m defining pure R+D as developing new products intended for launch in more than 24 months time)

When you look at pure R+D banks spend £970M to avoid having to replace core systems and £30M investing in their future in my estimation.

Now look at the amount of money the big tech players are spending on technology R+D, innovation and disrupting markets.

Somewhere between 5 to 20% of revenue. For Google with revenues of $15Bn in 2014, that’s $1.5Bn on pure R+D Innovation!

Now let’s look at the Big 4 UK Banks (and switch back to Sterling)

  • Lloyds 2014 revenue – £18.4Bn
  • Barclays 2014 revenue – £25.7Bn
  • HSBC 2014 revenue – £14.2Bn
  • RBS 2014 revenue – £15.2Bn

Average revenues of £18.3Bn – . If they were spending 5% of revenue on pure R+D that would be £918 Million, not £30 Million. To compete with a Google level of investment (at 10% of revenue), that would be £1.8Bn on innovation alone. Until banks:

  1. Close significantly more branches and
  2. Transform Culturally and Technologically
  3. Get Honest about the Definition of “Innovation”

they cannot compete in a fintech future. Top line will continue to erode and banks will cost cut “just enough” to make it to next week.

Banks are spending the right amount of money on the wrong things

Fintech could be the answer, but playing with Fintech whilst still trying to carry the burden of under performing branches and 1970s core technology is little more than PR. Innovation starts at the core and works out.

I imagine most banks would love to spend this amount on R+D but their budget is locked away for other things.

Innovation in banking is near impossible…

Because of two sins in HOW banks operate

  1. Everything is Based Locked in Paper
  2. Risk Is Managed With Tick Box Processes

Paper is Killing The Banking Industry

Stupid things happen when transactions live in paper. Stupid things charging the wrong fee to a customer because what was inputted to the charging system wasn’t the same as what was on the paper. Or when the market moves against the banks (like in 2008) banks scramble around looking for the piece of paper losing billions with each passing minute.

Perhaps the worst example is account opening.  To do this the bank has to find the paper that proves you are who you say you are. Most people and companies are incorporated in paper somewhere (either with a Government or Companies House equivalent). Giving a bank account or performing a very large transaction requires finding all of these pieces of paper, translating them and then understanding all of the rules written in paper. Translation errors, ambiguity in international law and having to rely on a network of other banks to have performed their own due diligence makes this a near impossible task for banks.

This stuff is NOT EASY, because banking is complex and relies on paper as the golden source of truth.  Paper + complexity of transaction = errors

Tick Box Approach to Risk Management is Killing Bank Profitability

The way a bank reacts to incredibly difficult regulatory and legal requirements is by creating a tick box process inside a spreadsheet. The way a bank meets its regulatory requirements is by creating a committee who “sign off” against a high risk transaction (either with email or paper) by checking that all the tick boxes were ticked.

If all the tick boxes are not ticked? Fill in another tick box, logging which tick box wasn’t ticked and get an email from someone senior
saying it’s ok to to go ahead, because the tick box about not ticking the box was ticked. This is the same process that has been followed for decades, yet the fines keep coming. Those regulatory fine numbers are far bigger than the innovation investment figures.

There is a real need to change HOW banks address their problems.

The vendors and the consultants all fall for this group think. When the supplier selling you digital solutions replicates your tick box
process, and the consultant recommends a new tick box process, the whole thing becomes a case study in the death grip of paper.

Surely – There are digital solutions to…

  1. Create a Digital Core (remove paper in operations)
  2. Create Digitally Savvy Control Functions (replace tick boxes with data, dashboards and decisions)

The Digital Core

There are three main options when looking at really rebuilding the internal technology stack (as David Brear points out)

  1. Stick with what you’ve got but update it
  2. Go for the latest version of SAP / some other vendor name here – and create incremental improvement
  3. Go for something much newer that may not even be on a Gartner magic quadrant

Option #3 is always the hardest to take. To make your core accounting and payments engine run on something you may have never heard of is a scary thought. Yet this is the key, if you ever want to grow the topline again as a banking CEO, compete with Fintech players and delight customers with digital. This is the best option. Chris Skinner has some great thoughts on What is a Digital Bank?

The Digitally Controlled Bank

The earlier example of onboarding a new customer demonstrates how banks being locked in paper really holds them back. If I look at your passport and a utility bill, maybe even your credit score, how much do I really know about you? You’re a real person and you’ve bought some credit products at some point in history. I’d argue that is far less than a branch manager in the 1950s knew about you. Yet this is how a bank is going to decide if it give you a mortgage. Because they’re locked into processes they built in the 1970s, predicated on paper.

What if instead we learned the real lessons of Big Data? Get past the marketing hype and the change here is cultural. Don’t believe the
paper, believe the data. How many people bought a coffee at the same place, at the same time as you this morning? Then paid for a new tube pass in the same place, at the same time as you did? And tweeted from the same location as you, with the same account at the same time?

With three data points I can be pretty sure you are who you say you are. The burden for those inside the bank is to prove this to their
internal compliance teams and to regulators, that it’s inside existing policy, regulation and legislation. It can be done, but the tick boxes
processes make it near impossible.

Regulation Makes This Hard but Not Impossible

The reason why it’s so hard to build a real competitor to banks is that managing regulation requires experience and cost. Trying to go around regulation when dealing with people’s money or their house is quite different to disrupting taxi services or retail shopping (e.g Uber vs Bitcoin).

Some regulatory regimes are purposefully not tough on new sectors to allow them to grow and self regulate to a degree. Ultimately there comes a point when building something new you have to interact with the regulator. Having the people with the experience to engage strategically with regulators, as well as come up with creative / automated regulation solutions is the key gap in fintech and banking.

Banks are used to going to the regulator and saying “this tick box process is how we’ve solved the problem”, regulators are used to hearing banks say “this is our tick box process”. The cycle repeats. Yet at the most senior levels, there is a disappointment on both sides of the lack of innovation here. There’s a chasm between people who write the rules and those who then enforce / follow the rules.

Fintech companies and challengers that are successful are good at approaching regulators and saying “this is how we meet your rules” often with a low cost, digital approach. It can be done. Banks can do it too.

Digital Isn’t Easy

A word on paper. There is an argument that if we relied purely on digital, the meltdown in 2008 would have continued without a check or balance. Sometimes slow technology is useful. There are also plenty of examples where spending money alone doesn’t deliver digital transformation.

A strong team that can deliver in banking requires experience in the tech sector and experience with financial regulators. There aren’t many with that skill set but I look at a company like Circle Internet Financial as a start-up disruptor who have built exactly that team. For the amount of Exec salary on offer, it must be possible for banks to create the environment for these people to succeed!

Perhaps the key here – is to *start* by changing HOW things are done.

Key Questions and Suggestions for Bank Execs

  • Is your business run in paper?
  • Do your compliance teams get digital?
  • Do your legal teams get digital?
  • Do your security teams get digital?
  • How are risks recorded?
  • How are programmes delivered?
  • How are cost decisions made?
  • Can you change the how?
  • How are you protecting innovation from tick boxes?
  • How do you then commercialise that innovation without tick boxes?
  • Does your culture rely on sign off from execs to get anything done?
  • How can you empower change with data and automation helping compliance?

Delivering change the same way you delivered change before is both a paradox and ironic. Much like everything in banking. I’ve seen far too many “Agile delivery programmes” become waterfall with monthly release cycles.

Actions To Take to Transform Banks to be R+D Capable

  • Study how technology companies deliver and create those small pockets of excellence.
  • Make sure the entire top team gets how paper is killing the company
  • Make sure they’re doing the same with their team
  • Get very close to the top 150 programmes by spend in the group and understand and change the how

When it comes to core system transformation – make sure once the “how” is fixed and digital, that the core digital transformation is the top of the agenda. Consider this. Newer bitcoin companies creating “bank like” products can run technology infrastructure to support Millions of customers for $130,000. For a bank to deliver a new product / UI, successful or not is often in the region of $30M to $100M successful or not.

Down to those same two reasons

  1. Being locked in paper (Paper at the core)
  2. Tick Box Risk processes (Not trusting data)

Banks are sitting on a gold mine of opportunity. They can give their customers the gift of advice, help and support to meet their ambitions, but to do this they must get out of their own way!

What are your thoughts? Do you work in a bank, around a bank or a fintech company and see it differently?

Think The Blockchain is Interesting But Bitcoin Isn’t? Think Again

Whilst the “Blockchain is interesting” narrative has merit, it created a dismissive approach to Bitcoin that misses a trick.  If you don’t want to miss that trick, read on.

Banks have gotten into this “Blockchain” thing like it’s the new snake oil,  a conversation about “Blockchain” will open any door and liberate a little budget.  As this Dilbert remix excellently sums up

dilbert chain

This isn’t the first post to explore “Bitcoin bad, Blockchain good”, but there are some things I felt still needed to be said. There is an excellent post by Richard Brown (which I recommend reading as pre-text to this) and another by Chris Skinner. Both make the point that saying “Blockchain not Bitcoin” is dangerous.

The subject has become too binary, either you believe Bitcoin will eat the world, or it is incompatible with current banking regulation and practices.

It may be helpful to understand why the banks instinctively warm to the Bitcoin bad narrative. There are three main misconceptions and one thing I agree with fuelling this:

  1. The Misconception: It’s easier to launder money with Bitcoin
  2. The Misconception: Bitcoin is not secure
  3. The Misconception: Bitcoin would not be profitable for banks
  • The Interesting Truth: There are valid, exciting and profitable use cases for the technology outside of Bitcoin’s architecture

I’ll tackle the misconceptions later in this post, but first it’s worth a quick refresher on what’s interesting about Bitcoin.

Bitcoin’s Got Talent

Perhaps the reason there are so many misconceptions because so few people understand Bitcoin. It has a number of unique properties that banks are seeing as a threat, rather than an opportunity.  Think about the problem of Cash for banks…

Cash Got Problems (yo)

When you have money in your bank account, it’s not actually yours legally. The bank owe’s it to you (as ever there’s an excellent Richard Brown post that goes into more detail on this). They’re using that money on the stock market to make a profit.

The more you use debit and credit cards, the more profitable you are. If you draw out your entire wage as cash every month you’re one of the least profitable customers.

Paper cash is expensive. There are an army of vans moving cash around the country, from supermarkets to vaults and back again.  A logistical nightmare that adds a ton of cost compared to digital money.

Paper cash is also risky, it’s near impossible to trace because it exists physically and carries its value as it moves. Do you know where the cash in your wallet came from or who had it last? What about before then? If you ran a drug cartel, it would be very helpful to have a network of chicken shops to take all of that cash and get it into the banking system.  In developed markets cash is slowly being displaced (not nearly as fast as you might think!)

cash is king

But in developing economies it’s a different story

Cash Can Reach Where Banks Can’t

220 Million Agricultural Workers are paid in cash. If you live on a remote farm, or are urban poor, there’s a good chance you’re not profitable as a current account customer. You wouldn’t put enough money in the account per month to make the cost of giving you an account make sense for the bank.  Banks have to maintain branches, servers, data centres… all of that cost makes you expensive unless you’re giving them a significant amount of money per month to profit from.

If you get paid in cash, you’re trapped in a cycle of cash.

Recent years have seen the emergence of mobile airtime being used in place of cash… this helps, but only solves part of the problem. You’re still getting paid in cash and you still can’t save or borrow. You’re still not financially included.

Bitcoin As Digital Cash

When I send you money from my bank account to yours, my bank owes me less, your bank owe’s you more.  I haven’t paid you, my bank paid your bank.

This isn’t a possibility for under 18s or billions of unprofitable potential customers. This is where Bitcoin has huge potential. As a digital token that holds value, it can transact as cash. When I send you a Bitcoin, you receive it, not your bank.

Can a Bank Make Bitcoins Make Sense?

Regulation aside (for a moment), the mechanics for a bank to accept Bitcoins instead of cash would be relatively trivial. They’d just need an exchange capability. As soon as the “Bitcoin cash” is collected, it wouldn’t have to be physically moved anywhere.  If you look at it purely as a cash replacement, it actually makes sense.

Sure Bitcoin is a bearer asset (your bank can’t use it on the stock market – yet), but it reaches where the bank can’t.  It’s also got another trick up its sleeve…

Bitcoin is Permissionless

Permissionless innovation was a phrased coined to explain how the internet changed the telecom industry and created opportunity. Before the internet, all of your communications had to be compatible with the telecoms operator you used. The internet created a new set of rules. In a different way, Apple did this with the “App Store”. Inviting the world in to build whatever they like with a set of lego bricks.

Bitcoin similarly is an open set of lego bricks, that will always work no matter who you are. This property does not apply to the bank use
cases of what they call “Blockchain”.

A closed distributed ledger system has many advantages over today’s technology, but it’s not permissionless. It will therefore, never reach the types of customers truly permissionless innovations can.

To use Bitcoin you needn’t go to a branch and provide a birth certificate (which is quite difficult if your nearest branch is 5 hours away and you don’t have a birth certificate!) A mobile network operator tomorrow could decide that their airtime will be tradable for Bitcoins on a Bitcoin exchange.

It would then simply require someone to wrap these two things into a proposition for remittances (like say BitPesa) to make it really easy for Ex-Pats to send money home to their family to be received as airtime.


Bitcoin As a Customer Acquisition Opportunity

Perhaps then Bitcoin is the technology equivalent to the student account. A loss leading outreach programme to win a new generation of customers because they’ll be valuable over their lifetime.  This might actually be feasible if local regulation allowed it.

Because the Bitcoin blockchain (ledger) is so very transparent,
you could actually watch Bitcoin wallet behaviour and use that to build risk models.

In other words, you’d be able to identify customers who may be low risk for a savings or loan product.

Granted, there’s a number of sizeable challenges before that could be possible, like consumer acceptance or the regulatory acceptance.

To make any of this a possibility will require a little imagination, a lot of opportunism and overcoming some key misconceptions…

Overcoming Misconceptions

Won’t People Launder Money With Bitcoin?

The recent Silk Road arrests suggest the FBI found it relatively trivial to collect evidence and arrest those involved. The issue is the network itself doesn’t require an identity. In itself, not having an identity to transact digitally is incompatible with existing regulation.

Yet if you see Bitcoin as cash-like, that doesn’t compute. I don’t need to identify myself to hold a small amount of cash. I just need to identify myself to put it in the bank. Which is why we’re seeing regulation focus on wallets and exchanges.

I think this is where regulators need some imagination, or to resist to the urge to look at new technology as if it is something existing
regulation can work with. It’s a hybrid of digital money and cash. So a risk based approach would say the regulation too should be a hybrid.

Regulation focussing more on what CAN be done with the technology, rather than what CANNOT be done will lead to the most innovation.

Is Bitcoin not Secure?

Mt Gox isn’t a Bitcoin problem, it’s a Mt Gox problem. The metaphor would be, if everyone in the room gave their cash to say – Chris Skinner – and Chris left the wallet outside in the street. That isn’t the fault of the bank, it’s the fault of Chris (or in Mt Gox in this case). Actually, Bitcoin has never been hacked. That is a remarkable achievement for a public utility and open source software.

Something that can’t be said for the very expensive Payment Card Industry (PCI) with all its regulation, pain and cost, we still see things like the TARGET hack.

Each day we build a higher wall and each day the attackers get closer. With Bitcoin there are no walls. The funds are so distributed it’s harder to find points to attack

If it’s Cash Surely It’s Not Profitable?

Because it’s digital cash, because it’s permissionless and because it’s transparent I think there are opportunities there. Those opportunities require imagination. They’re not based on the same business model the banks are comfortable with or used to.

If the banks have the imagination to see an internet like world of people who could be potential customers of savings or loan products.  Bitcoin could be very profitable as a customer acquisition tool.

The Alternatives to Bitcoin

The points above don’t suggest that what Ripple, Eris or Ethereum are doing is wrong. If anything some of these new entrants may have a better short term impact on traditional finance than Bitcoin does as regulators struggle to get their head around Bitcoin. There are huge potential cost savings and opportunities with distributed ledgers and smart contracts that don’t require Bitcoin.

However, just because a narrative is comfortable and fits your world view doesn’t mean it’s right. If the Telco’s had said “We like the
internet technology, but think it should be closed for just Telcos to use” – people would rightly think it’s crazy talk. Technologies that
treat value as a liability (an IOU), will never be able to displace cash in the same way Bitcoin does.

I don’t see why this argument has to be binary. Either you’re for Bitcoin or against it, it seems.  I’m for Bitcoin AND for it’s alternatives.  They’re both interesting.  Arguably the alternatives more so to traditional banks in the short term.

Prediction Time

We’re going to see banks adopt some permissioned distributed ledgers in the coming years and it will be largely invisible to the end customer.  Most of the action will be in those large contract movements between banks.  Banks will see major benefit from doing so, and doing so aggressively.

During that time we’ll also see non traditional wallet players and remittance companies gradually warm to the open / simplicity of Bitcoin (and / or it’s competitors / upgrades). For this long tail of airtime users and cash users having something that is interoperable and global will be a huge advantage.

The question then is how will PayPal react? Or Alibaba?

The Opportunity Cost for banks of not at least considering Bitcoin could be huge.

The 5 Myths Preventing Bank Fintech Innovation

Banks are now big complex machines that risk losing sight of why the existed in the first place.  Banks protect your money (take deposits) and in return are able to lend some of that to help the economy grow. Somehow we ended up with organisations employing 100s of thousands of people & riddled with complexity.

Time is passing these organisations by in their current form.  What should really worry you if you’re running a bank is how customers are trending to not recommend you and want to leave.


I read a great quote from Seth Godin this morning:

“…Jefferson, Edison, Ford… most of these radicals would not recognize the institutions that have been built over time.

The question each of us has to answer about the institution we care about is: Does this place exist to maintain and perpetuate the status quo, or am I here to do the work that the radical founder had in mind when we started?

First principles. The quest for growth, or for change, or for justice. The ability, perhaps the desire, to seek out things that feel risky.

All of us are part of organizations that were started by outliers, by radicals, by people who cared more about making a difference than fitting in.” – Seth Godin

There are 5 Myths Preventing Banks from embracing the Fintech revolution

I put it to you that there are a set of beliefs about banking that is holding back the entire industry.  Banks, consultants and their vendors…

  1. We Are Already Very Innovative
  2. We Can’t Use “new” Technology Because it’s Not Secure
  3. Our Future is an “Omni Channel” Strategy
  4. Regulation Prevents Innovation
  5. We Will Become a Tech Company

Let’s challenge some of these beliefs…

Myth 1: We Are Already Very Innovative

For some time bank efforts in innovation have been met with skepticism. David Brear pointed out recently that if you look at the headlines banks are all supposedly spending $1Bn+ each on technology and innovation.

For all of that money there isn’t much to show for it! We hear lots about a mobile app or a venture fund.  Yet when it comes to real measures of success, there is silence. Sure they’ll talk about how many users they have, but how engaged are those users? How profitable?

CapGemeni reported recently that banks digital products aren’t delivering cost savings and as an experience are well below customers expectations.  Fintech disruptors ready to hoover up customers with far better experiences.

In the start-up world there are two key metrics

  1. MAU (sometimes DAU) “Monthly Active Users”,
  2. ARPU “Average Revenue Per User”.

I’ve seen many mobile developments across the European banking sector since 2008 and in that near decade, never once heard these terms inside a bank or it’s vendor community.

Banks desperately want to appear innovative, but getting anything innovative done is very hard for them. As I pointed out in the previous post – Innovation by Committee is not effective. The open secret is that mobile services are table stakes, but to me they’re such a wasted opportunity. Brett King talks about Moven Bank’s mobile only customer acquisition being less than 10% the cost of a bank branch customer acquisition.  Yet banks cannot deliver on the experience customers want in these channels.

Banks are spending billions, not taking cost out and missing consumer expectations

  • What if banks had a mobile only product like Moven?
  • What could they learn about that experience?

Myth 2: We can’t use “new” technology because it’s not secure

Let’s be clear. Security is paramount in banking. The problem here is the perception of security vs the reality. Let’s say you try to
implement Apple TouchID so people can login with their finger print (purely hypothetical – and to prove a point)

Typical security consultant responses include “but Apple devices can be jailbroken” and “the finger prints aren’t stored securely” from people paid £600 a day to point out risks but not offer solutions. (This isn’t exclusively a security consultant concern no doubt there were an army of other risk teams who chimed in too). Raising an objection is seen as “job done” instead of finding a way to make the better experience work.


These objections typically take a possibility and turn that into a probability. Confusing these two is criminal.

Many years ago I once heard an executive for a European bank say “but what does analytics about product usage give me that I don’t already have? – It gives you evidence. Evidence you can use to make a decision. The lack of evidence not only prevents you from moving to TouchID, if you don’t accept that the CAP reader has to stay then your sponsor has to sign up to a £10M risk.


When £10M is more than the cost of the entire project by 10x, the security objections mean there’s no way to launch the product, because of a hypothetical paper based exercise.

… rinse and repeat – for every innovation.

Without evidence there is no way to see what small things can make a huge difference to product success. Amazon famously discovered a 0.1% page load time improvement had a significant impact on sales. Having used just about every digital banking product, I wonder how much of that thinking is being applied?

  • What if banks used A/B testing here?
  • Could they take a segment of customers and trial something, and then let the evidence decide if change is required?
  • How could vendors support this?
  • How could the consultants promote this idea?

Myth 3: Our Future is an “Omni Channel” Strategy

It’s well known bank systems are old and resemble spaghetti.

You can’t give a great customer experience on mobile if your core system can’t keep up with the mobile app. This is why innovators are able to offer a better experience. They’re starting from scratch and solving a need end to end.

Over the past decade adding an online “channel” has sort of worked. Online banking, mobile banking were delivered initial results. This lead to a perception that when innovation comes, banks should react by creating a new channel above the core service. Yet as the CapGemeni report states – this game is up.  Digital Channel use has stagnated, and is not delivering cost reductions or better experiences.  It is failing.

Innovation isn’t something you do at the edges. It start’s with the key platforms and works out.

Thinking in channels, suggests the customer experience can be carved off from the core product experience. They are the same thing. It’s the careful union of the core and the digital front end that creates an experience. The term Omni Channel would suggest more investment in the front ends, mobile apps etc.

Problem: That’s creating more spaghetti. Creating more complexity. Creating more cost. Creating a disjointed experience.

Re-architecting the core not only gives your front end so much more capability, it also unleashes innovations that have promised so much but delivered so little like “Big Data”.

  • What will it take to get bankers to accept that the core has to change?
  • Can the amounts bank spend on “tech” be put to better use?

Myth 4: Regulation Prevents Innovation

Banks have had a kicking from regulators in recent years. Approaching the regulator is a tricky thing to do for a bank, the
regulator will tell a bank what the rules are but not how to implement them.

When faced with a spiders web of different regulations the banks react by employing a small army of specialists and ensuring all those
specialists give advice. That advice is then logged in giant spreadsheets to be tracked and traced. Often this means when a new regulation comes out that is designed to support a particular type of customer (small businesses, innovators, money service businesses – take your pick), it actually has the opposite effect. The customer type becomes a “hot topic” and anything in that sector goes under the microscope and is poured over by specialists tracking things on spreadsheets.

The same happens with new products. Banks look at every new idea that crosses their radar as if it’s rolling out a new current account product to the entire customer base. The irony here is it’s not the regulation that’s prevented the innovation (although the lack of guidance from regulators about “how to implement” doesn’t help), it’s how banks react to it. With the only tool they have.


The irony is forcing everyone to do mandatory training, having committees, councils, Excos, Manco’s and Steerco’s hasn’t actually fixed many of the core problems they’re intended to fix. They make banks feel more effective and provide spreadsheets for the regulators to look at…

The definition of insanity is doing the same thing you did yesterday and expecting a different result.

I believe there is a recognition of this issue in some corners of the industry and regulator community, and some ideas about how to change it. If banks are going to innovate though, they’re going to have to internalise the idea of experimentation.

  • What if banks took ideas like A/B testing of new products to the regulator?
  • What if different ways of bringing new products to market were trialled in small / low risk areas?

Myth 5: We Will Become a Tech Company

This is a noble aim, but at the risk of going against previous advice, perhaps it’s better to embrace Tech in ways that focus on the core of
what banks are good at: banking. If any Tech company spent $1Bn on tech and had so little to show for it, investors would revolt.
Fortunately, banking is a profitable business if you have some scale.   Therefore the question is, how do you maximise that investment to benefit what already bank does?

My own view is banks should focus on being banks but come
into this century digitally.

I’ve been a proponent for a long time that banks need to focus on making their core platforms as easy to integrate with as possible and less on “bundling” value. The fear here is the 1990s thinking that being a “wholesale bank” is the same as being commoditised and will erode revenue and margins. The inverse is also true, this is the path to volume and precisely how banks can take advantage of the wave of Fintech Innovators.  Fintech innovators will migrate to the easiest to use bank platform.

BBVA and Credit Agricole have app stores now, but these are just scratching the surface of what’s possible. The bank as a platform allows the bank to focus on what’s really important: managing the liquidity. Innovators will do the front end far better than a bank can ever and take the banking sectors products to new markets and new verticals.

The icing on the cake of thinking as a wholesale platform business is that your retail (both to consumer and corporate) parts of the bank would have a much more flexible set of choices for how to build out the customer experience. Fintech is a giant opportunity not being taken advantage of. The fintech disruptors are now doing the individual products better than the banks can. I think this is a good thing. They all ultimately need a bank behind the scenes, but are able to offer better, more targeted customer experiences.

The game is attracting deposits and liquidity.  Learn from tech companies, but aspire to be a great bank.

  • What if banks focussed on their core and stopped trying to be Apple?
  • Is volume and opening up to 3rd party innovation a strategy banks are missing?

Take Away’s

  • Banks aren’t doing innovation right but they could if they just focus on what they’re good at
  • Challenging for usability has to come from the very top. It’s a board level issue.
  • There is no excuse, core platform investment is now mission critical.
  • Experimentation will help manage new customer segments
  • But don’t try to be a tech company – be a bank that embraces some good tech company ideas

I speculate that by investing in the core, many of the usability and security concerns would be eased. The key here is culture. Culture eats strategy. Knowing when to not use miles of spreadsheets and when to experiment is what will unblock the user experience woes they currently suffer from.

What are your thoughts?

Banks Can’t Have Innovation Because? False Certainty Kills It

I define the need for false certainty as trying to think through every possible issue before committing a change. It strikes me as being
like trying to predict the weather in 1 years time without any data, just a lot of people who’ve experienced different kinds of weather before.

Large institutions and especially Banks exist in a the 20th century world of false certainty. A bank reacts to things it doesn’t know or understand by setting up committees, and spreading responsibility to various experts who all have to weigh in. As a result nothing gets done without going to 5 different committees and involving hundreds of people. Everyone involved bemoans the bureaucracy, but there is no way around it. This leads to slow decision making and makes innovation look an awful lot like risk.

You Can’t Innovate by Committee

This isn’t unique to banking, regulation or any paper based exercise has the same issue  – Banks just happen to be the worst offenders I’ve seen…

Banks live in a world of complexity: RWAs, cybersecurity, and compliance are all highly specialised subjects that require people who really know their stuff to get right.  Whilst this is very effective for keeping the lights on, it’s killing innovation.

I believe this is because specialists only see a part of the big picture, and the generalists (management) don’t understand the detail enough to know who’s right in a given argument. Innovation as a paper exercise moves forward, usually by compromising the design of the user experience or getting an executive to sign off to some ludicrous sum of money in case a perceived risk becomes reality.

The output of this process is a painfully forged compromise. I imagine it like trying mould clay whilst the left hand is fighting with the right hand. What you finish with is the result of an argument, not what society or your customers want and need.

No Wonder That Delivering Anything is a Victory in a Bank

No matter how terrible it is, this forged compromise is then forced into the world with the might of a great machine. The one click login is gone, and now you’re posting out card readers to every customer. Nobody is using the product, but rather than kill it, the bank plows forward in the belief that once the 100% of functionality is available people will use it. “If we just had marketing”, “It’s rooted Android devices holding back adoption” 3 years and £50 Million later, you have yourself a zombie project and you can thank the need for false certainty. It just won’t die, and it will never deliver. Face it.

(It’s at about this point bank executives will point to impressive mobile app growth figures, but I’ll come to that later…)

VCs Smell Blood

Is it any wonder then, that disruptive innovation is coming to both the finance and legal professions? With finance it’s started to gain real momentum


The venture capitalists smell blood, and whilst generally I’m not expecting banks to disappear as rapidly as Kodak or Myspace did there is definitely an argument for death by 1000 cuts with two major headwinds hurting banks

  1. The pressure from regulators to increase capital ratios and competition in the market place, meaning that the days of easy profit are over
  2. Alibaba, Amazon, Tencent and Facebook all have banking licences. Alibaba offers lending, credit scoring (link) and insurance products and uses massive scale to do this with an entirely different pricing model.

The parallels are often made with the taxi industry where heavily regulated incumbents were able to keep prices and margins high. I doubt there will be an Amazon of banking, but there may be an Uber (in fact Mark Carney worries banks are facing an Uber moment). I’d define the Uber disruption as a large machine, willing to lobby to win that benefits from the economies of scale offered by technologies such as cloud, crowdfunding and p2p lending.

If large incumbents want to survive and thrive there are good alternatives to innovation by committee.

1. Buy Innovation


Funds, Incubators and Accelerators are all the rage these days. Every major bank or financial service vendor has something, which tells you at some level they take the threat of innovation seriously.

Buying innovation allows start-ups to innovate outside the organisation then buy them in the product, subjecting the product only to vendor processes or M+A which is far less painful than trying to give birth to something inside a large corporate. By the time a product is being considered for purchase by a corporate, it’s already escaped the death grip of false certainty and design by committee.

I look at IBM as being good at this strategy. Their internal R+D has historically given birth to many concepts we now take for granted only to have someone else commercialise them, yet inversely they have proven their ability to buy innovation makes a material difference to their balance sheet, with 8 acquisitions in 2013 alone

2. Acquire / Build Challenger Brands

There are numerous definitions of a Challenger Brand, but the one I like is that a Challenger Brand wins through mindshare rather than market or marketing spend share. Today the challenger brand is the rule rather than the exception. Airbnb, Uber and even the mighty Apple are all considered challenger brands by

The Fintech names on the chart earlier in this blog are all challenger brands, characterised by a strong core message that is backed up with product experience. Banks are hiring the same world class marketing consultants, but aren’t backing up the messaging with real culture and product experience change. You can see this in the net promoter scores with funding circle seeing +89% with banks running in the -10% to -30% region

The large incumbent banks know their core customer base will be around for a few years yet, but they’re simply not winning the next generation of customers. In doing so missing a large opportunity as a whole generation becomes aware of and starts to use challenger brands before needing or relying on a bank for all of their financial needs. Perhaps when buying innovation, banks could think about what external brands they keep alive and the value in separating that from their core brand. Typically products born inside the organisation will come out very on brand, because the brand police sit on one of the many committees…

There are however, some good examples of banks buying a challenger brand (e.g. BBVA Acquiring Simple), and keeping it’s brand alive. Would a Moven, or a Final Card gain traction with strong core capabilities underneath them? Can banks embrace this before they sleepwalk off a cliff?

3. Build an Engineering Culture

Even in 2005  “Agile” was a buzzword, and 10 years on inside large organisations there is still an epidemic of paying very detailed lip service to the idea of Lean / Agile without actually understanding it.  Going on a training course for Agile is doing it wrong. Just imagine replacing that with a 1 day Raspberry Pi hackathon for all your staff, and nobody is allowed to say the world Agile until they got something working.  Seem out of place or weird?  How about for Google, or Airbnb? … 

The real issue here is the lack of an engineering culture. Companies don’t do, they talk. The fear of an engineering culture is that tech must be seen as owning the “technology how” but have no input on the “what”.  The business “owns” the what.

Taking a voice from engineers and spreading it throughout a committee limits empowerment, autonomy and collaboration.   This is especially acute in such a hierarchical organisation that will always look upwards for sign off and permission as a way to resolve any conflicts that arise from the committee structure or between business and tech.

The Silicon Valley magic isn’t that they have better MBAs writing the internal business cases, it’s that their engineers are typically the age and demographic of the customer base they’re going after.

The cultural bias of Generation Y is baked into every line of code.

Amazon’s Jeff Bezos has a concept called Pizza Box teams. The idea being a team working on a product or project should be no bigger than you can feed with one pizza box. This is typically harder to do inside a big bank, because the entire committee structure will want to sit on the team of 7, but wouldn’t it be fun if they tried?

4. Face the Facts

When internal reports read like a press release crated from cherry picked KPIs, it makes you wonder why. It probably has something to do with ego,  bonus culture and a lack of bandwidth for management to be critical of every KPI that is waved under their nose.

If your mobile transactions are up 200%, how does this benchmark against the competition both traditional and new entrant?

I’ve never heard a conversation in an incumbent bank about how “the MAU (Monthly Active Users) trended higher when we took 0.5 seconds off the App Intro screen”, or that “DAU (Daily Active Users) spiked 30% when the interface was refreshed”. These are the things challenger brands obsess over. User engagement isn’t a buzzword, it’s how your customer feels about your product reflected in how they’re using it.  Everyone should be talking about it.

5. Empower Autonomy of Decision Making

If you’re in a rapidly changing marketplace like crypto currencies, how do you empower employees with autonomy to execute? There is a need to “power down” and push decision making to those who demonstrate a solid understanding of the changeable nature of the market. Often these employees will be younger and new to the organisations culture. How do you create safe space for this exploration and how do you ensure the organisation can embrace it? The key is finding the right place to give visibility and having the management talent that can harness the creativity. There is a good chance this exists somewhere in the organisation, the challenge is putting the two together.

Perhaps the Pizza Box teams concept holds the key.

6. Fail More

Definite Failure is vital. Nothing ever fails in a large corporations, typically failures fit into two categories, money bonfires and zombies in the wilderness. Money bonfires have so much political support, false certainty and a lack of data to the contrary that the project keeps stumbling forward. Zombies become marginalised until eventually you just stop worrying about them and they go away. This robs the organisation of the ability to learn from failure and collect data. The very keys to success.

The really odd thing is that at a personal level most executives will admit their biggest failures made them who they are. Yet media training and culture prevents organisations from allowing this level of honesty and frankness internally. It’s very difficult to tell the truth without hurting someone’s feelings, but I’d argue it’s more dangerous to avoid the truth to save someone’s feelings when the regulator and innovators are breathing down your neck.

The Moment of Truth

Is there a bank account there with the bravery to really embrace these ideas? Becoming genuine internally is the key to being authentic externally and winning a whole new generation of customers, and it will show in the products and services. Are bank employees empowered to make this change? Time will tell…

The Bank to Developer (B2D) SDK and Business Model

There are several trends converging to make FinTech and Banks being disrupted very sexy news indeed.

  1. Post Financial Crisis Bank Hatred
  2. Shiny Startups Like Square, Stripe and the hard to pin down Bitcoin
  3. Interest from GAFA (Google, Apple, Facebook, Amazon)
  4. Interest from VCs

This trend is typified by certain Tech (crunchy) press lately about Bitcoin, Transferwise and Banking Disruption:

I sense there is an assumption that because the logic of what a bank does is actually frighteningly simple, it would be really easy to disrupt them if someone could just get the jigsaw puzzle right.

An Alternative Perspective

I disagree with the mainstream narrative, and at the risk of being contrarian…  I propose that a new business model will emerge and has already started to do so.   Transferwise, Azimo and others already rely heavily on banking infrastructure.  Whilst the hype may suggest they are changing the face of  banking, the short term reality is that they are just adding cost (or profiting less), and perhaps a nice UI to the equation for the end user.  Banks have caught on to this trend and… I feel a bold prediction coming on:

In the next 18 months banks will actively participate in inviting disruption into the market, and profit from it because they see the opportunity.

Finance is Difficult to Disrupt

The CEO of Moni Technologies said something very interesting at the recent TechStars / Barclays Accelerator launch.  He was surprised just how tough the basic regulation you need to get a money transfer business of the ground is.   Not just the paperwork but the costs  and the sheer amount of over head you take on by keeping up with (for example PCI-DSS).

This is where I think banks can actually help FinTech ‘disruptors’ bring new products and services to market.  Banks are actually good at keeping up with regulation, which is costly and makes innovation very difficult…

Banks Need a Change of Mindset about HOW they Invest in Innovation

 Because Bank 1.0 has a war on two fronts.

  1.  The drive to being ever more secure, stable and robust in core systems
  2. The drive for ever more nimble, agile and beautiful customer experience
 This tension has escalated in recent years with the investment in mobile, digital competing for budget with ageing core systems.
Banks fear a core system failure like RBS had, or fraud events like the Target hack… The business dilemma had two main points

1) Focusing on Core Systems Could Lead to Losing Market Share
If a bank did nothing but invest in quality, stability and security it risks is losing ground to competitors who would bring the shiny new mobile app to market and win market share.

2) Focusing on Innovation Could Lead to Losing Market Share
If a bank did nothing but invest in features, the core systems could become less robust. The cost of failure is immeasurably high with the potential for fines, bad press and lost business.

But I put it to you that trying to do both is Even Worse!
No bank would actively make a choice to lose market share. So they have been fighting a war on both fronts. Push the innovation agenda, and drive towards ever more stable and secure systems. To quote Winston Churchill “It’s like standing in a bucket and trying to lift yourself out by the handle”.

The mandatory and regulatory spend will continue to eat at least ~70% of IT Spend. Roughly ~20% supports client driven change, leaving just 10% for “innovation” which often takes the shape of “me too” app development.

An Historic Lesson on Business Model Change for Survival

At the turn of the millennium, BT were facing a break up from the regulator Ofcomm as the monopoly player in the UK telco sector. What they did was actually smarter than it first appeared, they got out in front of the regulation and split their business into “Wholesale” (AKA Openreach) and “Retail”.

The Wholesale business had to focus investment on what would allow them to serve many “Retailers” including BT Retail, as well as all the other Telcos (Talk Talk, Virgin Media, Sky etc). The benefit of investing in the tools and capability to “unbundle” the local loop was that this protected the scale if the wholesale business.  I’d argue BT got the business model right and survived the transition from “owning the pipes” to “re-selling the pipes” quite well.  Below, is an outline for how Banks might improve on their current situation:

Changing the Business Model 

It will take an incredibly brave executive to be the first to offer “wholesale” services to competitive brands, retailers and start-ups looking to disrupt the traditional business model.  Yet, surely it is better to be well positioned for the future, than a victim of it.  The message is a compelling one to the board.  Adapt or die watch as the RoE continues to erode over the coming decade as it has over the 5 years.

Bank to Developer means:

  • Offering a suite of APIs that are easy to use, self serve and well documented
  • Offering tools to manage APIs, access to accounts, data and billing so that an API user can manage and sell on these services downstream
  • Developing a Tech Architecture that delivers Internal and External API access that the whole company is behind.  No exceptions.

Laser Focused Investment 

It’s 2014, and it’s surprising how often IT departments still re-invent the wheel and suffer from NIH (Not Invented Here) syndrome.  Leveraging tools like Apigee, DevOps and the sheer tidal wive of desire for vendors to sell “platform” tools into corporates is the first step.

Then IT and Business Execs need to use lead bullets not silver bullets.  Kill anything that is not yet in flight, that doesn’t adhere to the new strategy.  You can only make the leap if you’re willing to jump.


Benefits of a B2D (Bank to Developer) business model
If you believe like I do that
  • Small developers will always out innovate large organisations
  • Large organisations are good at “compliance”
  • There is no “SDK” for banking or payments

Then the first bank to get this right is incredibly well placed to take advantage of the huge level of VC, Start up and media interest in FinTech.  To Quote Steve Jobs:

“Innovation is about the people you have, how you’re led and how much you get it

Mobile Payments – Will they change your day?

You know that big search giant? Google, that’s the one. Their Mobile phone operating system Android is doing pretty well.  I happen to think their next big thing is payments.  Want to know why?  Read on…

Since Google announced their Google Wallet, mobile payments went mainstream.  You as a customer probably think, why do I need my credit card on my phone, I’ve got a card in my pocket right?

I have a lot of sympathy with that view.  If you want to pay your credit and debit cards work pretty well.  You know where you stand with a bit of plastic. Check out the video above for a quick demonstration of what Google propose replaces your plastic

Why put payments on your phone?

Because it’s just downright handy that’s why.  It fits into your pocket better than a wallet stuffed with everything and you’re more likely to have your phone with you, even when you don’t have your wallet.  You already prefer your phone to your wallet, payments are just catching up with you.

That’s nice, but why do banks care?

Whenever banks care about something, it raises an eyebrow.  They’re not known as an altruistic bunch.  The banks care about keeping you as a customer.  You are valuable to them in that sense.  With Mobile Network Operators, Visa and now Technology companies launching a wallet, the threat of losing you looms over the horizon.

Banks may not make much money from being involved in wallets, in some cases they actually lose a little money because the fee’s they make are a bit less on contactless or mobile payment transactions

The business case for banks

The problem is until it makes money, banks won’t run towards mobile payments.  As much pressure as they’re under to improve customer service now that tax payers are a major investor the pressure to survive and not go under is greater.  So banks have to figure out how to make money out of Mobile Payments.  The Math goes a little something like this.

Cost Reduction

  • Customers who have more than one card – reduced – less plastic cost
  • Cards never need replacing – less plastic cost (as adoption grows)
  • Drive customers to self serve on mobile – less branch / contact centre cost


  • Coupons / deals using mobile device – unknown benefit
  • Context sensitive advertisements (buy it now) – unknown benefit
  • Value added services such as Personal Finance Management

It’s clear adoption is going to be crucial to getting any benefit from Mobile Payments.  Without regulation or a mandate from Visa / Mastercard this could get messy.  The opportunities require banks to provide you with offers for things you are likely to buy and use their card to buy with.  Look for offers in your mobile wallet to become common place towards the end of the decade.

The long road to adoption

When it comes to adoption, the Merchants are crucial. From Tesco and Walmart right down to Papa Joe’s little ice cream place.  In the next 5 years, the big names where you do your weekly shop, will change the devices you use at their checkout.  When this happens, there is a good chance they will put a contactless device there.

The temptation to merge their mobile marketing and payments capability will lead to increased adoption.

What happens next

One thing is for sure; Google will seed the market at a loss, and make money from the advertising. That will be tough and near impossible for anyone to compete with, without closing them out through regulation or lawsuits.

Your data will be the price of all these free new services.  So don’t worry about new charges.

  • What are your thoughts about how Mobile will play out?
  • Will banks invest to work with Mobile Payments?
  • Who will win the Mobile Payment race?

How interfaces are changing retail experience

It is said that the internet will kill the in store retail experience. Do you think this could change talking with someone in your bank about a new loan products?  How about trying out new kitchen designs before buying?

  • How would you use this surface?
  • Do you think business will embrace it?
  • Would your company use it?
  • Could this revitalise the bricks and motar experience