Banking, Uber, and Tesla


This week brought a fascinating series of articles to my Twitter feed and inbox. Banking industry analysts, consultants, FinTech VCs, and startup founders published a series of points and counterpoints on the changing nature of financial services and banking.

“Uber moment” works really well in a quote, and comparisons with the disruptors of other industries work well in headlines (see above). When you dig deeper, as these articles do, you see subtleties that point to problems in bank customer service (as much of an oxymoron as “bank marketing,” on the whole) and changes in the nature of work that indicate great opportunities for everyone. It will be interesting to see who listens.

Now for the links:

Never underestimate the power of default

“Banks are banking on the power of default in these new software applications, and the bank’s ubiquitous presence in these services should tell us all something about not only how important they are in the matter, but how seriously they are taking the opportunity to earn market share,” writes Ben Milne founder and CEO of epayments firm Dwolla. FinTech firms operate using banks as a “default setting.” Banks have gotten wind of it, and they’re using this to their advantage, Milne argues.

Banking is going through an Uber moment, but not the one everyone goes on about

Likening FinTech firms and banking to the ridesharing app that threatened to upend the taxi industry, David Brear, co-founder and CEO of 11FS, says now that banks have finally recognized the onslaught of alternative platforms entering their sector, it’s important to remember why they got into banking in the first place: customer service. Parenthetically, he admits that he doesn’t like Uber. I don’t either. Why? I drive better than many of their drivers. Not so with a city cab.

An open letter to FinTech VCs

Bank marketing and research maven Ron Shevlin wants to prevent one more ” ridiculous, delusionary, twisted view of reality from being published” by the FinTech crew. The the FinTech investment opportunity does not add up as published in the tech media. “There’s simply no way these firms will be able to agree on regulatory and policy issues. The primary reason is that their individual financial services strategies aren’t well-honed and formed, which means they don’t really know what they should be advocating for,” he argues in a post for The Financial Brand. Take a look at the lower costs of deliveirng financial solutions and the changing nature of work to see where some of the opportunities really do lie.

Why U.S. FinTech is a joke

On the other hand, “FinTech in the U.S. is an incremental game of kick-the-can populated by entrepreneurs who are incessantly stymied by frightened bankers and investors,” writes Freemit CEO John Biggs in a CoinDesk article. Millennials want no part in the traditional banking sector, and innovation is long overdue. So why is the U.S. FinTech scene so timid? Well, it’s often met with skepticism by bankers and regulators. “But by abandoning innovation for safety, that stewardship is done in half measures. Like the parable of the three servants to which the master has given out money, we find that Europe and Asia are the first two servants, and the U.S. is the third.”

Banks should stop fretting over Uberization and start getting “Ludicrous”

Why is banking not having an Uber moment like everyone seems to be predicting? For one thing, there’s no financial services “Uber” to take on small and midsized banks the way that Uber transformed transportation, according to The Financial Revolutionist. “In the wake of another lousy quarter for big banks, we are looking to see how they respond beyond simply cutting compensation and head counts. Those steps may be necessary, but no bank is going to cut its way to inspiration. They need to put in place bolder, more ludicrous innovation plans before their profits get permanently run over.”

FinTech advantage? Driving banks towards a connected ecosystem

It appears that FinTech firms serve as traditional banking’s catalyst toward more customer culture and technology, according to Bill Sullivan, global head of Capgemini’s Financial Services Market Intelligence Group. The “Customer First” approach, personalization of consumer experience and maintaining an omnichannel experience were among hot topics at the NetFinance event in Miami.

First working drafts of W3C payment APIs released

The Web Payments Working Group of the W3C, the consortium that publishes standards for the world-wide web, presented the first draft of its payment APIs. The group, which seeks to make online payments easier and more secure, released drafts for payment request, payment methods identifier, and basic card payments APIs. Go to GitHub, where the cool coding kids hang, to see a FAQ. The number of banks listed on the participant roster is telling.

Awesome Flashback: When electronic banking was ‘taking hold’

The American Banker estimates 44,000 consumers and small businesses now use microcomputers and terminals to do their banking from homes, offices, hotel rooms, airport club lounges, and other remote locations.” That wasback in 1985, the year I decided to buy an IBM PC rather than a Honda car. “While the use of such terminals brings higher costs for users, its capabilities will grow over time,” David O. Tyson wrote in the article from the paper’s archives.