Next Bank was a forum for bankers, FinTech influencers and digitalisation experts to talk about the future of banking – and what a discussion it turned out to be! The amount of innovation happening in the banking industry is unbelievable and the focus is now clear – data. Customer experience, payments and product management are revolving around data and the value it creates and exchanges.
I have tried to reproduce some of the discussions here for the benefit of those who could not attend; if it reads as a play-by-play and not as a blog, it is because that is what this is.
The introduction to the session from JP Nicols started with a grounding thought on how the real value of ideas comes from putting them into action. JP stressed the importance of understanding networks within organisations in getting things done, including those of the guardians, the radicals and the disillusioned.
“For innovation to occur, the idea that failure is not an option needs to be abandoned”, according to Nektarios Liolios. Banks need to rethink the way they work with startups, especially as vendors, with reduced purchase cycles and having the right kind of expectations. They may even need “translators” to bridge the gap of innovation.
Claire Calmejane from Lloyds Banking Group gave an inspiring insight into the world of innovation in banking. The “Innovation Jam” at Lloyds already has over a 100 participants and focuses on bringing digital to the branches. Claire talked about a heavy customer validation process woven in the activities, with the power of the community being utilized to create and offer services that the customers “actually want”. Having several ideas at various stages of the validation process thus create a culture of constant innovation, and even of failing, in order to get there. There is always the 3Cs, and for Innovation Jam, all prioritization is around:
- Customer Impact
- Commercial Value
Farid Tejani from Ignitr, spoke of Data being the new capital in the FinTech industry. Questions were raised around why banks are failing to innovate as quickly as we would all like, and why there is such a disconnect between banks and startups – how we wish we had the answers!
“Innovation is all about execution” was the theme of Alessandro Hatami’s session, in which the most practical step-by-step guide to achieve innovation was covered. We heard about ventures like British Gas Hive that applied innovation as a leap versus those like Google, Amazon, Gore-tex and 3M that applied innovation as a process. Hatami had a quick-fix guide to converting to the world of “Innovation as a process” listing its key elements as:
- Get a sponsor in the organisation’s higher management
- Keep it relatively cheap
- Think about the customer
- Embrace the landmines (the potential detractors)
- Make it look familiar, associating it with existing strategic projects
We all loved (and agreed with) his concluding statement that “Culture eats innovation for breakfast”.
James Moed talked about places – how he had shifted offices from a seemingly cool workspace to a seemingly empty Starbucks, continuing with his banking design activities. The discussion was around how physical locations do help in building trust, proving branches may not be dead yet. But the physical presence does have to make sense, having:
- Feet – being local, right in the neighbourhood and connecting communities
- Hands – with the ability to touch things and explore new products for as long as you like, as in an Apple Store
- Heart – having staff that connects with the audience, with tangible real-life experience
He talked about how technology should aid the process of people adding value, instead of trying to eliminate them and used an insurance industry example (Mass Mutual Boston) to highlight how creating a local community can also emphasise knowledge and expertise without hard-selling. I must admit that was quite a refreshing view of branch-banking, with the clear message that the right kind of people can add value in the banking customer experience.
The Innovation theme was continued by Daniel Gusev with a historical discourse, covering examples of Leto Bank in Russia and BBVA cash machines in Madrid to highlight the battle between automation and human interaction.
He also recommends everyone read the book The Checklist Manifesto.
Jon Blakeney from I-AM defined “digital branches” for all of us – those that have an omni-channel experience across all touchpoints, with all service transactions utilising technology and with fewer staff/reduced cost to serve. The 10 steps to get to a digital branch was also discussed which included elements like the establishment of a relationship with the customer before they walk into the branch, availability of roaming staff, video links to specialist advisors and measurement of service quality at departure. One of the highlights was the emphasis on shared screens between the customer and the branch staff, enabling a transparent, shared service model rather than the hiding away of certain customer information.
The presentation went on to name some of the banks that are actually doing it well, including Bank of New Zealand, Audi in Lebanon, BBVA “Easy Bank”, Odea Bank in Turkey and Umpqua Bank in USA, who have managed to choreograph the customer journey around the three important pillars of People, Process and Technology.
Next came Anthemis’ Yann Ranchere’s presentation on FinTech having gone mainstream. What next, is the question all the discussions have lead into, and Yann indicated the necessity to build banking services the ground up – focusing on the core elements like ledger, risk, sales and channels. The best avenue for disruption in banking infrastructure could be through blockchains, which could in turn fundamentally change the role of the bank in the value chain. Xero was highlighted as an example of a company that has successfully created the long tail of the (accounting) industry.
Then we had the presentation that had Banking and Minecraft on the same slide – Emilio Calvo Garcia from Media Net started an interesting discussion on how to treat the Minecraft generation (especially his son). That generation is used to buying apps and books online and expects “cool” things from banks as well. Ninja growth hacks like profiling and personalisation will be crucial for banks to tap into this emerging market. As Emilio put it, “we are facing complex situations, but creating a valuable experience is key”.
One of the best examples of what not to do with customer experience was this video:
The fireside chat with Eric Van Der Kleij and Nick Cary from Blockchain covered the Bitcoin-discussion-gap we had begun to face at the forum. And what a discussion indeed. According to Nick, bitcoins are just the tip of the iceberg in reimagining how the world transacts. The mobile phone puts those who live in unbanked communities on an equal footing with people in well-banked countries. Bitcoins, he indicated, is the best way for disintermediation from large financial institutions to happen. He cites the example of his own company, that has a Bitcoin-based payroll, and which takes 40 seconds to process. Nick asked me to possibly avoid featuring his “infamous” line, but it will be tragic to miss such a poignant quote from the event.
“The millennials don’t pay for music and films, so sure as sh!t, are not going to want to pay for banking.”
Julio Faura from Santander started off with a representation of the world of transactions that showed all industries competing with each other. Data is the new oil, but banks have a crucial advantage her due to the amount of trust they hold. Banks could look at social payments as the entry point to the environment driven by Amazon, Google and eBay today.
Chris Skinner concluded the forum with his thoughts on how value exchange is the crucial area to focus on, not FinTech. Facebook, Twitter and even game coins could act as currency in the future.
It was a fantastic and fast-paced day of thought provoking discussions and it was great to be in the same room as those thinking “innovative” in the banking and FinTech industry. It was also interesting to see that our massive tweeting got the event trending on Twitter.
Any opinions, thoughts or questions, please feel free to drop a comment!