July 9, 2017
Change is hard. This is not a grand revelation to anyone reading this right now. (Keep reading. I promise, it gets better). Change is so hard, in fact, that there are multi-billion-dollar companies whose sole purpose is to help other companies discover, adapt, and adopt new ways of doing business. Change is necessary, particularly in financial services, and if you believe in FinTech, then – by definition – you believe in change. But that’s just the start. What do you change? What do you keep? When do you make the change? How do you know if the change is working or is even a good idea? The future is, by its very nature, unknown. That’s what makes change so hard. This week, we look at a few examples: calls for change, benefits to adopting change, and how some ideas shouldn’t change but adapt.
So the challenge for the banking industry is not how to serve the small sector of consumers that prefers online-only banking. Rather, the task at hand is a balancing act of providing the full slate of in-person and digital banking services to a diverse consumer base—and doing it all well.
Let’s get this out of the way up front: I don’t agree with the conclusion of this article (the quote above.) However, while I may not agree with the conclusion, it doesn't mean the general premise is wrong.
People must (and want to) have a good relationship with their bank and for good reason. In the simplest scenario, banking (and the rest of the economy) would be scary if customers were constantly worried that their bank couldn’t deliver, at a minimum, on keeping their money safe and accessible. Around the world, and even in the US, with examples like USAA, digital/challenger/neo-banks have achieved customer trust without a single branch. (Okay, technically USAA has a few branches and a disclaimer; I’m a USAA customer but there is no branch in sight!) That said, a human touch is still critical to creating exceptional customer experiences – it just comes in different forms. It’s the human touch of talking with a great customer service representative on the phone or chat when things go wrong. It’s also the human touch of a bank experience that is designed to fit a customer’s life, not interrupt it.
If the last ten years have taught us anything, it is that people can easily create human connections via digital channels. Banks and financial services are just starting to adapt and adopt this approach – and digital first banks will get there a lot faster.
"It’s in consumers’ best interest to make sure regulators do not make FinTech wait too long.
It’s a good exercise to imagine yourself being a regulator in financial services. It’s always easy to say you’d be more open to innovation, faster with changing regulation and creating an environment for FinTechs to flourish today – not tomorrow. There are certainly opportunities and ideas being suppressed by the sheer weight of regulation and compliance. On the other hand, we don’t exactly want stewards of an industry like financial services to have a quick trigger – we are talking about people and business financial lives. What’s the balance?
Regulators must take a leading role in the seismic shift in financial services – failure to act is not an option and change is coming. Regulatory agencies are filled with smart people, which means change is coming. Let’s just hope FinTechs are focused on the important question, Is my company truly ready for regulators to look under the hood?
Cryptocurrencies are being legitimized as well as encouraged to grow and innovate.
What’s so fascinating about FinTech is the multiverse we’re living in - so many different countries, regulatory bodies, and financial services ecosystems. The amount of change across all industries in the last 10 years is quickly exposing the fact that 20th-century regulation doesn’t exactly fit the 21st-century marketplace. Financial services incumbents (unlike retail) have been shielded from much of the technology’s impact but how long can that last? Furthermore, what are the impacts of an economy that waits too long to embrace new technologies, like cryptocurrencies?
Innovators around the world will take a lot of resistance until they find a home, like Switzerland, which supports them. None of us know the opportunities ahead yet, so kudos for the Swiss for the light touch. Recognizing leadership isn’t about control but creating an environment where change happens. We’ll see who else follows suit.
See you next week!