The Bank’s True Competition Isn’t Other Banks

WalmartFirst Star­bucks offers dig­i­tal pay­ments, now Wal­mart is offer­ing low-cost money transfers.

Banks aren’t only com­pet­ing with Sil­i­con Val­ley, they’re com­pet­ing with smart com­pa­nies who see a tremen­dous opportunity.

Why is it so hard for big banks to inno­vate their way out of this chaos?

Don’t you think banks should do pay­ments or money trans­fers bet­ter than some­one who’s never done it before?

If the banks are not care­ful, they’re going to be cut out of the value chain com­pletely (though every so slowly):

  1. Trans­fer­wise is 3 years old and has sent over £1B. “We dis­cov­ered that to get rid of these charges we sim­ply needed to skip the banks altogether .”
  2. If the mobile phone is the new bank branch, why wouldn’t the tel­cos own your bank­ing? Espe­cially if pay­ments are made via SMS.
  3. UK News­pa­per launches wealth man­age­ment ser­vices. Piv­ot­ing on trust: When it comes to money, trust is cru­cial and The Times and Sun­day Times have been the papers of record for the lat­est money, invest­ment and busi­ness news and advice for more than two hun­dred years…”

Unfor­tu­nately for banks, it’s not just about com­pe­ti­tion. It’s also about a chang­ing cus­tomer & mar­ket pro­file:

Mil­len­ni­als don’t have the same bar­ri­ers to switch­ing banks as their pre­de­ces­sors & they view safety as the oppo­site of inno­va­tion. Mean­ing, they’re not even going to think of the banks when they explore inno­v­a­tive alter­na­tives to tra­di­tional bank­ing products.