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It's funny. This post, and the post it references[1], gloat about technology but they don't speak much at all about the value provided to bank customers, which,

It's funny. This post, and the post it references[1], gloat about technology but they don't speak much at all about the value provided to bank customers, which, by the way, are a very diverse group. It's very "if you spend countless of millions of dollars to build it, they will deposit." I don't think anyone would argue that technology doesn't have the potential to be used as a competitive differentiator in the consumer banking sector, but as somebody commented on the referenced post, "Disruption is much more fundamental. It is about rethinking the needs and desires." Interestingly, if you focus on the needs and desires of customers, you might come to the conclusion that building a bank is the worst way to pursue the opportunities technology has created in financial services. USV's Andy Weissman had a great post that talks about this[2]. [1] http://jackgavigan.com/2014/04/14/disruptive-bank/ http://jackgavigan.com/2014/04/14/disruptive-bank/ [2] http://blog.aweissman.com/2013/01/banking-and-unbundling.html http://blog.aweissman.com/2013/01/banking-and-unbundling.htm...

ballard 13y ago
It's techshedding, not focused on how they're going to provide a better or different service.
notahacker 13y ago
The other point is the majority of banking services that seem ripe for improvement - day to day bank account administration - is a cost centre for banks rather than a profit driver. The banks actually pay back their overheads through customer-hostile characteristics of the service like not discouraging people from going overdrawn and fees for faster money transfers, and the broad customer base is desired primarily as an audience to sell financial products to. Trying to beat banks by offering better day-to-day banking is like trying to beat Amazon by building a better Kindle. Even if you beat their economies of scale and focus on customer value to the point where large numbers of consumers actually switch, you'll still be less profitable than the big retail banks unless you're better than them at marketing and pricing loans and mortgages. And if you have got a better money lending strategy, do you really need to bother with thousands of small deposit accounts to be successful?

ballard 13y ago

It's techshedding, not focused on how they're going to provide a better or different service.

notahacker 13y ago

The other point is the majority of banking services that seem ripe for improvement - day to day bank account administration - is a cost centre for banks rather than a profit driver. The banks actually pay back their overheads through customer-hostile characteristics of the service like not discouraging people from going overdrawn and fees for faster money transfers, and the broad customer base is desired primarily as an audience to sell financial products to. Trying to beat banks by offering better day-to-day banking is like trying to beat Amazon by building a better Kindle. Even if you beat their economies of scale and focus on customer value to the point where large numbers of consumers actually switch, you'll still be less profitable than the big retail banks unless you're better than them at marketing and pricing loans and mortgages. And if you have got a better money lending strategy, do you really need to bother with thousands of small deposit accounts to be successful?