Having been involved with delivering internet banking solutions since 1997 I recently looked back on some of the research I was reading at the time and also some of the presentations I was giving at conferences and to Banks. What I found is that many of today’s trends were identified early on in the era of e-commerce.
McKinsey’s wrote a paper in 1997, titled “A Revolution in Interaction”1. It proclaimed “An upheaval of equal proportions is about to be triggered by unprecedented changes in the economics of interactions”. They described interaction as “the searching, co-ordinating, and monitoring that all people and firms do when they exchange goods, services or ideas”. Given when this paper was written it is certainly worth a read, as it provides a really good analysis of how business changes as interaction moves online. Whilst some banks have achieved an omni-channel approach to self-service banking, the majority of these still lack the ability to exploit interactions for sales, advice and loyalty in an efficient and effective way.
The McKinsey paper also mentions the concept of “mass personalisation” but this was six years after Don Pepper and Martha Rogers wrote “The One to One Future”2. This book created a step change in marketing thinking and was very applicable to Internet businesses years later, however much of this would still be revolutionary in banking even today. Banking products are virtual so are ideal to be priced and or configured to the individual customer. Some modern core banking solutions now provide this, whereas it would be rare for a legacy banking system to support this flexibility.
The Economist wrote a piece titled “The Rise of the Infomediary” 2 back in June 1999. It wrote about three very different companies that exploited the Internet with a business model whereby they sat between buyers and sellers and mediated the exchange of value. One of these was an auction business, Adauction, very similar to ebay (launched in 1995). These were the very early examples of what we would now recognise as platform businesses, a big trend again in the last few years because of the successes from the likes of AirBnB and Uber.
In 1998, I gave a presentation to the British Computer Society on the future of banking, highlighting a few trends. One of these was about data, “Data is the new currency” it was about how data could be more valuable to banks than the currency they managed. In 2006, Clive Humby of Tesco Clubcard, talked about “Data is the new oil”, he gave a great analogy how refined data (oil) was worth much more than the actual data itself. Yet today many banks still underuse the data they have, let alone, fully “refine” it to extract its best value.
In 1991 I worked for Lloyds Bank where I was involved in creating the vision for Single Customer View. It took many years and a huge amount of investment before the bank realised its vision, but this is paying huge dividends now. I’m sure many of you have similar stories and I would love to hear about them in the comments.
So, if you are currently reading about trends for 2017 or what the future of banking will be, I say “go back in time to understand” the future. Happy New Year everyone!