Banking for a fairer future
Business owner Vaughn Davis has a few tips for banks in the face of looming competition from modern alternatives.
New Zealand’s big banks have a money problem, and if they don’t do something about it, it’s going to kill them.
It’s the money that’s piped in under the front door of each bank’s headquarters 24/7, day after day, year after year. A high-pressure torrent of billions of dollars, theirs by right for being the portals through which, for the last 150 years, all commerce must pass. It’s seductive and it’s dangerous. When real disruption hits banks, it will be too late for innovation, reinvention or pivoting.
The best time for New Zealand banks to reinvent themselves was yesterday.
If I were them, though, I’d start today, and start with these five things:
Hold your own funeral:
Why should banking be immortal?
Imagine a future where banks simply don’t exist. How do people exchange value? How are they paid? How do they buy houses? How do they travel overseas or get stuff online?
It’s likely the answers to all those questions are happening now. As science fiction author William Gibson said, ‘‘the future is already here; it’s just not evenly distributed.’’ So find those processes and technologies people are already using to sidestep banks and imagine these are ubiquitous. Ask whether your current offering has any advantages over them. Find ways to incorporate them into how you do business. Or plan for the managed death of those parts of your operation that just don’t have a future. Don’t settle for spinnovation: I like gadgets. But it’s easy and wrong to confuse producing a gadget with real systemic innovation.
Smart phone card readers, cashless moneyboxes and the like are all cool. But do they challenge the fundamental way your bank does business? If not, maybe what you’re doing is more ‘‘spinnovation’’ than innovation. Don’t let it replace real change. Fight Facebook, not fires: Financial services could be an insanely profitable regional or global play for Facebook (and yes, they’re dabbling in that already).
So a very smart thing for a bank to do this year would be to assign a team, not to consider responses to an imagined Facebook bank, but to invent one. What boring and unprofitable things would you leave to the old-fashioned banks to provide? Then, once you’ve invented it, launch it before they do. Simplify and add lightness: Limit the menu. One cheque account, one savings account, one term deposit, one credit card, one mortgage (available in fixed or floating flavours).
Maybe add some term options for the mortgages and deposits. If people want anything more complicated and expensive, then maybe you’re not the bank for them. Consider free: No account fees. No transaction fees. No credit card fees. No credit card interest. No mortgage interest. How attractive would that be to customers?
Oh, and here’s a sixth idea: Get some diverse, young people in. Give them a place to experiment and see what they come up with. Launch the good ideas. Kill the duds. Repeat.
Vaughn Davis owns advertising and social media company The Goat Farm, co-hosts innovation discussion group The Moxie Sessions and is content director for TEDxAuckland.