What happened to the revolution we were promised?
every revolution begins as consciousness because some group of people has to imagine change — Gloria Steinem
…and so they did!
The fintech revolution
Many proclaimed the revolution was upon us as neobanks, challenger banks, and fintechs began popping up everywhere.
Revolut, Monzo and Starling threw away the script for retail banks, writing history as they went, while funding for fintechs across the wider realm of the financial technology sphere was breaking new ground and unicorns were popping up left, right, and centre.
The excitement was palpable (well, for nerds like me, at least). The air was full of talk about the future of legacy banks, how or if challengers could grow, and fresh discussion about how the new breed of fintechs treat people and customers and how they could combine vogue tech like AI and blockchain into the fabled invisible banking.
But, in terms of the life cycle of tech and digital and mobile, all of that was eons ago.
Where are the challengers now?
Revolut broke 2m customers globally, Monzo broke 1m customers locally, and Starling announced their platform had its first customer in RBS.
These are amazing milestones and are really solidifying their pedigree and proclaiming to the world that they’re big, they’re bad, and they’re here to stay!
From disruption…
When the new breed came to town, we had shortened customer journeys, onboarding and KYC.
Great user experiences and beautiful user interactions like banks have never done before.
We got new ways of doing authentication and proving you are who you say you are.
We got mobile-only, digital-only.
We got robot customer service and twitter sass.
And there were card controls legacy banks never had, PIN reminders, analytics and categorised spending, and goals / pots.
Some started as cash card neobanks, some as challengers.
Some started with deposits, some with aggregation.
Some moved into crypto, some moved into Europe and the US, and some moved into SME business banking.
But, aside from the initial door-kicking, mic-dropping, explosive, disruptive entries into the marketplace, what have our new digital savants been doing?
…to normalisation
Well, they’re normalising.
They’re growing, firming up.
They’re expanding and diversifying their product / service portfolio (overdrafts, loans, savings, credit cards).
They’re opening up to more customer types (joint, business, youth, savings).
And the product of this normalisation period? A new status quo.
Our revolution has turned into something familiar — all of these banks look like, well, banks, don’t they?
What happened to my revolution?
It’s understandable that challengers need to double down, focus on growth and revenues / profit in order to develop sustainable businesses.
Of course they do — they’re for-profit organisations!
But they were billed as so much more…
We used words like disruption and innovation, first-movers and early-adopters.
We treated their leaders like mages, savants, gurus.
We threw awards at them and called them ‘best’.
Though what we appear to be losing in scale and sustainability and profitability is what made them, them — disruption, innovation, change!
It’s no longer about driving innovation — it’s now about catching up.
We’ve finished changing banking — now we’re just improving upon a familiar system (with it’s minor changes assimilated from the initial disruptive bang).
Are you a bank or do you do banking?
But it’s not all doom and gloom.
Some will almost certainly be stuck in a rut and continue solely improving or expanding, but others will jump back on that horse and start disrupting, again.
Though this will probably come hand-in-hand with tangible and value-adding full-scale implementation of technologies like AI, IoT and DLT, as well as increased capability delivered from future iterations of Open Banking and PSD2.
Those who own the platform will win and that’s where fintechs like aggregators will be able to leverage their platform advantage.
Challengers like Starling may have built a technological platform with great scaling capabilities, as well as diversifying revenue streams by being able to sell Banking as a Service.
But all of that sits behind the veil of visibility — it means nothing to customers!
Fintech aggregators like Emma, Yolt and Tandem could gain huge advantage in being the single point of contact for all of a customer’s financial needs.
Challengers could be relegated to providing back-end support, while aggregators become the whole engagement layer.
So what?
The revolution is dead! Long live the revolution!
We may have had our fintech revolution, but the results seem to resemble more of a lick of paint than moving walls and doors.
There’s a couple ways this could go. Maybe it’s all done and we’ve had our fill of the revolution. Maybe it’s part one. Maybe there’s more to come.
Although we’re normalising, let’s not give up on the revolution quite yet. It probably won’t be long before we’re on the cusp of Fintech Revolution 2.0…
