Banking UX

Whatever next-generation banking is, it won’t be banking

Whatever next-generation banking is, it won’t be banking. Main Tesla photo: Teddy Leung /
Written by Chris Skinner

Next-generation banking will require next-generation imagination, and Chris Skinner uses the car industry as an example of true innovation.

After writing about whether we’re creating faster horses when we think of applying open sourced technologies to banking, some more thoughts occurred to me:

  • Are we applying blockchain to clearing and settlement rather than reimagining the whole trade cycle, from liquidity structures to collateral management, using open source platform structures?
  • Are we using data analytics to get more customer share of wallet rather than reimagining our customer relationships using digital intelligence?
  • Are we using API capabilities to break down our existing financial processes into plug-and-play components rather than reimagining our components on the basis that we can now build new ones?

In each case, my concerns are all about applying new technologies to existing bank structures rather than changing the thinking to create new structures. In each case, I wonder whether we are just developing faster banking rather than reimagined banking, in the same way that Victorians imagined faster horses rather than reimagined transport.

I have some ideas of reimagined banking, which I’ll come back to another day, but let me typify how flawed our thinking might be by using cars as an example.

Next-generation banking (and next-gen imagination)

Henry Ford reimagined transport by building the first mass production line for cars. You could have the car in any colour, as long as it was black, and he thanked the lord he didn’t ask the customer what they wanted as he would get the answer “faster horses”.

These days, Ford, Chrysler, General Motors, BMW, Mercedes, Toyota, Honda and more are trying to reimagine cars, and failing.

Car companies are thinking next-generation cars and starting with the assumption they will be cars. They like what they build today, and are constrained by their lack of imagination as a result.

“I like to drive cars,” says Mark Reuss, product development chief at General Motors, “so this is a little funny.” Not funny-ha-ha, Reuss clarifies, but funny-odd. He’s sitting in the driver’s seat with his hands on his thighs and his feet on the floor of a big Cadillac that’s driving itself around a banked oval.

When Google and Apple start building cars, their starting point is that they’re not building cars – they are building internet-enabled digital transport systems. A digital transport system is a whole system, not just a car. The transport vehicle itself will be an internet-enabled people mover. Does it need to have four wheels? What will its power source be? How will it move? What is its purpose?

[Google] has a profit margin of about 22% and a $495bn market capitalisation – more than triple the size of GM, Ford, and Fiat Chrysler combined. In other words, the digital giants will start with assuming they are building an internet-based intelligent transport system rather than the next-generation car. They are free of incumbent thinking and can build from scratch, a little like Elon Musk’s Tesla has done.

The result will likely be that Apple could build its next category killer. Just as Steve Jobs had the vision to see the iPhone as a minicomputer for the mobile internet (Nokia thought it was a mobile phone), I’m hoping that Tim Cook and his team are looking at the Apple iCar as a transport system for the mobile internet.

Last week, it was revealed that Apple had hired former Tesla vice president of vehicle engineering and Aston Martin chief engineer, Chris Porritt. It is believed he will be working on Titan, Apple’s car project.

Whatever that is, it won’t be a car. Just as Henry Ford ignored customers’ demand for a faster horse to build cars, Apple et al will ignore customers’ demand for sexier cars and will instead build personal transport networks. Which brings me back to banking: what are we building in banking – faster banking, or a value transfer network reimagined for the internet age?

To be continued …

– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Main Tesla photo: Teddy Leung /

About the author

Chris Skinner

Chris Skinner is an independent commentator on the financial markets through the Finanser, and chair of the European networking forum the Financial Services Club, which he founded in 2004. He is an author of numerous books covering everything from European regulations in banking through to the credit crisis, to the future of banking.

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