Antony Jenkins, the former CEO of Barclays, says a new wave of tech-savvy startups that can do things better, faster, and cheaper than the big banks will disrupt their traditional businesses like lending, payments, and wealth management. A number of fintech startups are working hard to disrupt. On the other hand, big banks don’t sit still either. Citi, BoA, Capital One are opening up APIs to outsiders. Citi also hopes to innovate much faster through crowd sourcing Mobile Challenge initiative with a mobile-first strategy. There are a lot of interesting moves.

Mobile is eating the world. Every company is building their mobile app. Early starters now are talking about “mobile-first”. But is a mobile-first strategy sufficient to change the game? Mobile-first implies that the same or similar user experience will also be available for larger screens later. Such a strategy doesn’t necessarily explore the full power of mobile. To be truly innovative, mobile banking should not be a simple extension of online banking.  Instead, shall we be “mobile-only” to disrupt? Mobile-only doesn’t mean that we close all branches and ATM (wait a second, why not?) but that we should have a mobile-centric mindset to improve user experience or build new business models. As 30% of all online shopping purchases now happen on mobile phones, the days of “look on mobile, buy on laptop” are no more. The impacts of changing customer behaviors will be broad and deep. No doubt, banks will feel the impacts and need radical strategies not only to survive but also thrive. Tencent WeChat is a great example of mobile-only strategy. Tencent is a Chinese Internet giant, whose QQ is the most popular messaging app on PCs in China with 800 million users. When Tencent developed the mobile version of QQ, they found that it wouldn’t bring the best experience to mobile users. So they built an all-new mobile-only app WeChat to fit well in this new mobile world. WeChat is a huge success. In only a few years, it attracts 600 million active users. But more than just a messaging app, WeChat becomes actually more of a portal, a platform, and even a mobile operating system today. In fact, Facebook’s messenger app is copying some of its ideas.

The banks start sharing APIs to their proprietary software with nimbler, unregulated tech companies. Hopefully this will nurture more innovations. Citi goes further with crowdsourcing by Citi Mobile Challenge. After going through the APIs, however, I would like to argue that it is not enough. Basically these APIs provides the interfaces to traditional banking transactions. It is a good start. But it limits the innovations to existing products/services. We may see new interesting user experiences but hardly find disruptive changes to business model. Take Uber as an example. A taxi company can quickly build a mobile app for users to book their service by a simple tap, just like Uber. However, the true innovation of Uber is the sharing network. Some Uber-like disrupts will change the practices of banks, which have been essentially same for hundred years. And we may see such changes in near future.

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