Digital Banking 20

Skepticism

Dear all,

Here is a statement I read some weeks ago: "Digital has created and destroyed industries, bankrupted major corporations, enriched tiny startups and completely altered how we behave and interact with one another".

OK, I agree. Lovely. But now let's put the light of skepticism on some of this world common statements:

• “Develop an app and you will be in the digital arena” ... however your target audience will likely not know it exists; if they do, probably they will not download it; and if they have downloaded it, what are the chances they are using it? ... welcome back to the “old” concept of Change Management or how to make people know, desire, install and use your app. Wow … and it turns out to be more complicated than developing the app itself. I remember when we started with internet banking, not so long ago ... ... and our own employees did not even use it ... how they were supposed [or expected] to recommend it to customers. What did we do well? What did we do wrong? What can we apply today?

• “Financial institutions have embraced the digital innovation movement” ...let's be frank with ourselves, as customers of financial institutions - and custs of more than one financial institution - and ask ourselves what innovation we have received from our financial institutions – www.bankinnovation.net/2015/10/reality-does-not-match-perception-in-banking-innovation/ - .... What most institutions are succeeding at deals with digitizing their processes, not digital innovation ... complying with what someone wisely described to me as the "market regulation" - the biggest "regulator" is the market ... or you digitalize your processes or you are out of the market.

• “We are living in a bubble of Fintech companies, that - although they can affect - will eventually burst?” ...analysts predict that over the next five years 85% of fintechs will be gone. No brainer ... and I reckon they fall short in the figure of the fintechs that will be gone with the tide... but do not underestimate the remaining and the change itself. The Internet bubble also burst out ... but what did really explode? Those first companies? Or the phenomenon? ... Internet changed us forever ... for your delight: www.recode.net/2015/05/27/mary-meekers-2015-internet-trends-slides/

• “The role of branches in a digital society will evolve towards offering higher value-added services” ...quite likely, but still avoiding to speak aloud of the greatest impact of digital on branches and current staff... drastic reduction. The best I've read lately: http://www.fool.com/investing/general/2015/10/07/chart-bank-of-america-is-closing-branches-as-mobil.aspx. And this leads me to the following reflection: Fintech are not "disrupting" banks, but the banking operating model. The biggest danger for incumbent large banks are not the fintech, but the incumbent small / medium bank that are willing and able to embrace digital …even taking the painful steps.

Wish you all a great weekend.