Original image from @tomloverro
Like the software industry, Retail Banking has been disrupted by smaller niche players. In both cases, fingers are being pointed at the changing customer behaviors and shifting demographic. The software industry has been lucky having the right environment for it to go through a little trial by fire. Are there anything banks can learn from the software industry?
Banks are more like Software than Apps
What is the difference between computer software and Apps? By definition, Software and Apps are different words for the same thing; a collection of binary that gets executed on a chip. However each term carries massive philosophical differences.
You need to be invested in Software
Remember the days when we had to take lessons and get certified to use a word processor, those days are far gone. If I can’t work out how to use an app (or if the app simply don’t align to my values), I’ll trade it with a better, simpler, bigger, smaller, faster or open source option. And I bet you, there is an option out there for me.
Apps do one thing and one thing well. I take photos with the iOS camera app, edit them in VSCO, fix a few things with Skew then share them on Instagram. They are more focused than their older siblings, and because of this limited functionality, I need very little time to start getting the most of it.
Traditional banks are like Software, they have all sorts of trick up their sleeves. This however, just like sofware, makes it almost impossible for its customers to make the most of it without proper training.
On the other hand, smaller services like Venmo, Robinhood, Circle do one thing and one thing (arguably) very very well. Because of that, they are just much easier for us to get familiar with. Each one of these companies are focused on making sure their service is indeed easy to understand.
Maybe I should switch camp, but I can’t
Whatever the software maybe (Powerpoint vs. Keynote, FCP X vs. Premier, Aperture vs. Lightroom, Cubase vs. ProTools, the list goes on), there are moments where we probably thought – I am so missing out right now. I can’t believe I still don’t have that feature. The guys on the other camp have it so much better.
Apps need to be the best as they can be in the only thing it offers. And for everything else, Apps often play nicely with other Apps. They wouldn’t necessarily offer mediocre features, implemented just for the sake of ticking a checklist for some RFP or product reviews. Apps let their customers pick, choose and string different services together exactly to their preference, which is a win-win for everyone.
When my bank say “we’ve got the same thing as what Mint offer”, well yes – but you forgot that I also have money in my Paypal, Venmo, Circle and Amazon accounts. Before you start becoming amazing on all fronts, or start to augmenting what you lack with offerings from your “competitors”, I would stick to using those smaller best of breeds in their own little niche, thank you.
But you need serious tools for a serious job
There are obviously cases where we just need that almighty computer software that can’t quite be replaced with anything else. Cough … Photoshop. But for many, we don’t even know half of the features Photoshop offer. All we know is that it’s a powerful tool that takes a lifetime to master.
Banking is the same. Unless the bank is committed to educate me in every single part of my financial life why not stick to the ones they’re really committed to?
Banks need to open up like the software industry
Giant software companies like Microsoft are starting to realize that the only way for them to be amazing is to be a collection of startups. Microsoft cloud offering can’t just run Windows in this world full of Linux servers. Microsoft Office can’t just run on PC, while the rest of the world is moving to the web, mobile and Macs. Companies like Microsoft, unbundle, innovate and start becoming good members of the ecosystem in each of the different areas they choose to be a part of.
It’s time for banks to be amazing in every single way … or start unbundling.