Digital banking has lost the edge
What is digital banking? Banks got digital as early as the eighties, way before the music industry, TV or other sectors known for taking big hits from digital disruption. So one could argue that digital banking has been around for a long time now. Banks are digital at their core, but what most people understand by digital banking is the conversion from branches to being self served by on-line and mobile solutions. How mature are these digital services that the bank customers now more or less are forced to use?
For comparison, let’s take a closer look at the music industry. It has undergone profound changes in recent years. Initially, digitization of the music itself on to CDs, which led the way to sharing and downloading. Later the downloading became more main stream, only to be replaced by streaming once bandwidth was no longer a scarce resource. All of this has happened in a relatively short time span.
Now let’s compare music to banking. Banks services became digital way before the music industry did. Internet banking had its infancy in the mid nineties, and mobile banking entered the scene a decade later.
In the beginning on-line banking was just a crude way of accessing your basic banking infrastructure… and it largely still is! Services have basically not evolved. Unlike the music industry, banks have not undergone profound changes. Consequently there’s a growing gap between the main stream on-line services that we consume today, and the clunky banking services that are neither personal, helpful nor social.
Within this lies great opportunity. There are brilliant services waiting to be invented. Services that are truly digital in the sense they implement new ways of interacting with the customer. Services made possible by technology not imaginable just a few years ago. We see this happening all around us, and the sings are clear; banking is up next.
So why are digital banking services in the state they are today?
Research shows that people in their forties are the ones that are the most satisfied with their current digital banking service (being internet or mobile). I think the reason behind this is two fold: 1. They have spent a major part of their adult life learning to interact with banks, understanding bank lingo and operating their clunky on-line bank. They have invested time and effort, and are quite satisfied with their own achievement. When asked they generally state that they are happy with the digital banking services they get. In reality they are actually proud to be able to function and operate in the complex world of banking, and they misinterpret this sense of achievement as the services being great. 2. Current services are largely made by middle aged men, and inherently to their own taste and standards. Consequently older people find them hard to understand and operate, and younger people find them irrelevant.
So we (I’m one of those 40 year-olds) make the services for ourselves. But clever as we are, we have observed the younger generations grow to enjoy the smartphone a lot. Consequently “let’s put the bank in a mobile app” sounds like a brilliant plan. But how did that play out? I’ll get back to that in my next post.