SHOCK WAVES

Shockwaves

Leading fintech commentator and publisher of the Digital Banking Report, Jim Marous, spent the better part of 2019 on his Disrupt Yourself tour, giving banks an uncompromising message: embrace change, take risks or events will overtake you. Then COVID-19 happened…

COVID hit completely unexpectedly. And those organisations that were the furthest along the digital curve were the most prepared for the unexpected.

When bank branches were forced to close and everyone asked ‘now what?’ the ones that were faking digital, those that replicated paper systems with automated ones and weren’t ‘thinking digitally’, Funding has become pretty tough found they had the biggest hurdles to for fintechs. If they’re running a big jump to move to the next level. shop but don’t have venture capital

When we conducted research for the funding, they’re running out of cash. Digital Banking Report, 70 per cent of They’ll be looking for partners because organisations said they had digital that’s natural for them. But if you’re a account opening. Three questions later, mid-sized, traditional financial institution we asked ‘how many of you require the with legacy people who have been consumer to come into the branch to moved up the ranks because of their finish the process?’. Seventy per cent said time with the company, that’s the worst they did. That’s what I mean by faking it. thing imaginable for them.

If they really want to see how it’s done, Right now – with the whole world they should look to China – to looking at equity, diversity and gender organisations like WeBank and Alipay – bringing more women and people of that are built from a digital structure colour into financial services, which as an out. WeBank’s digital mainframe allows industry is the furthest behind, is a good it to test different innovations on live call. But if you bring in new blood, people computers. Because it has so many with new thinking and great ideas who backups in the digital world, it can take have been educated in digital technology, one of them and say ‘let’s replicate what the last thing you want to do is put them reality will be’. It’s conducting 20 to 30 through a legacy onboarding programme, updates a month, when most financial learning how we do it. No. You should be institutions in the States, and probably in the There are going asking them to teach you how to do things. UK, too, have a, quote/ to be other A good example of unquote ‘major update’ every six months to a year. surprises beyond doing things differently is Marcus, the new

So, first, you need to COVID-19. And digital bank by Goldman catch up: restructure your organisation from the consumer’s Sachs. It basically set up the entire organisation a digital perspective, going to present around the consumer because there are going to be other surprises you with some experience. It’s not adding services until beyond COVID-19. And of the biggest it can do it right. So, the consumer’s going to it doesn’t have a present you with some of the biggest. chequeing account yet but it does have They will demand more and more of savings and lending accounts, it has the you and that’s not going to be driven by Apple Card, and it’s soon going to have what some other financial institution, a loan package around the Amazon somewhere else, did. It’s going to be Merchant. But it’s going to make sure that driven by what a retailer, a restaurant, a every step that’s not absolutely required hospitality company, an airline, has done, isn’t in the customer application process. perhaps with a one-click identification Unfortunately, financial institutions in procedure or a compelling their legacy mental state often look at the engagement proposition. worst-case scenario, for what could go Organisations internally – their wrong and build for that, as opposed to people – have to disrupt themselves. doing what Rocket Mortgage, in the US, That is why I believe the does, for example. If Rocket can have an organisations at risk right now application for a mortgage done in five are your mid-sized, mid-level minutes, please don’t make me take 10 financial services providers. minutes of my life to open a bank account.