The dinosaurs were wiped out by an asteroid they didn’t see coming. The dinosaurs of banking have no such excuse.
Innovation in technology and the way it is used is all around them, and there is a proven demand for new ways of doing things. For over a decade customers and consumers have lived on their smartphones, doing increasingly complex things with their mobile devices. We have all come to expect, and indeed demand innovation. But do the traditional banks respond? – No they don’t.
Banking is an inherently risk-averse culture: Risks are forbidden, and if you fail, you can expect to be fired. Of course we have seen colossal failures in the banking system, but institutionally the culture of traditional banking is still all about risk minimization. The very well-rewarded leaders of banks got where they are because they don’t take risks, and everything is stacked to try and preserve the status-quo, even if that clearly fails to satisfy the needs of customers.
The result of this fear-based approach is that new ideas can’t be allowed to flourish because they threaten to de-stabilize the system, and there is a constant tendency to eradicate innovation and extinguish any signs of innovation culture.
In addition, what drives banks is not their customers, but the regulators. It’s a case of governance, governance, and more governance, and unless the regulator allows it, the banks will not do it. Because unless an action is mandated, why bother?
The dinosaurs just kept on doing what they were doing, until the meteor hit, and the traditional banks will hold out for as long as they can, hampered by their own heritage. They regard it as being so hard to change infrastructure and working methods which have been around for decades, but there is a hint of recognition that they must be seen to have some reaction to contemporary markets. As a result we see the game of charades which most banks play in the ‘innovation theatre’ that seeks to reassure us that something is happening. Mostly it’s just words, like the promise of more customer-facing attitudes, when at the same time bank branches are being closed, and customers locked out from using cryptocurrencies.
Into this arena comes an entirely new type of banking – the ‘Any Asset’ bank, B52. Bank52 is very much customer-facing, and puts customers front and center of all its offerings. One of the key aspects of this is the concept of transactions being possible in any asset – be it fiat, crypto, or other forms – all done seamlessly from the same account. B52 has no legacy issues, no lumbering, dinosaur-like history hanging around its neck. It’s a brand new enterprise, built exactly for its time by a trio of high level European bankers with vast banking and financial sector experience.
However it’s not only how B52 will operate as a bank that’s different from the old model. The professed aim of the founders is, ‘To become the Amazon of financial services’ through an ecosystem of third-party fintechs engaging directly with B52’s customer base. It’s what banking should have been doing for some time, but is only now possible, thanks to the unique circumstances and opportunities which come from the formation of Bank52.
If only those poor dinosaurs had looked up and seen the meteor coming…