Few were surprised by the announcement of Uber’s Money2020 announcement. It solves two key problems for them — it means they can stop using Mastercard Send to pay their drivers and it increases driver stickiness. The only surprises are that they took so long to do it and that the other platforms like Airbnb and Lyft haven’t done the same thing.
The likes of Monzo are successful, at least in part, because they were available in people’s pocket, rather than requiring customers to enduring the friction of coming to their branches. However, all that really has done is take a branch and put it in an app.
Challengers still expect customers to come to their app to do their banking. This might be easier than going to a branch, but the reality is that people don’t do it. If you’ve got an iPhone, you can see it for yourself — go to Settings, Click ‘Screen Time’ and ‘See All Activity’. Compare how much time you spend on all your banking apps compared to things you actually want to use, like Twitter, Instagram, Snapchat, Uber etc.
This is an existential threat to all banks and neobanks. Just like companies are vulnerable to competition from companies earlier in the user journey (think Google Flights vs SkyScanner) or from companies that owned distribution (Amazon Basics vs Amazon Marketplace customers), it’s soon going to become clear that financial services companies will become vulnerable to competition from companies that own our attention.
Unless you’re in accounts payable or treasury, moving money is always a part of some other user journey and not an objective in and of itself. You want to buy a car when you type “best deal on new Volkswagen golf” into Google and end up on CarWow, but you don’t want to think about how you finance it, or how the money makes it from you or the lender to the car dealer. You’ll spend hours watching and reading the reviews on the car, and as little time as possible doing the money bit. Folding credit scoring, underwriting and payments into something like CarWow makes a lot of sense from a user journey perspective, but isn’t great if you’re a bank sitting on the 7th screen of an iPhone hoping that someone checks your personal loan offers.
Keeping financial services stuck in mobile banking apps would be a little like Zara opening stores in the middle of a desert, instead of on busy high streets or in busy shopping malls. Unless you have people coming past, you can’t get attention and you can’t make a sale.
Putting banking inside the Uber driver app is just the beginning. Eventually banking and payments will be embedded in everything because companies that are not banks will want to give a great experience on that part of the journey as well. And with the barriers to entry for launching financial products tumbling around the world, making it possible to launch a new product from a standing start in days, it’s moving from impossible to inevitable.