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Nice review, and I'm fully agree on the digital comments. I have been pitching for while that bank's need to grasp the way in which they are uniquely digital businesses, with no physical product. I'm waiting to see who will be first to acknowledge that cash is non-core and "officially" outsource it. The supermarket banks are probably ideally placed.
Chris, as entertaining and thought provoking a post as ever, but with one slight flaw. Kodak *did* get the emergence of digital (check this out: "Kodak is the leader of the US digital camera market, with sales of 2.15 mln units in the first half of 2005 and 22.1% market share". So it's absolutely about being ready for change, embracing it, but there is also more perhaps to do with keeping up with the disruption of the market and also doing so profitably. I don't know the full details of Kodak, but maybe they tried to hard to hang on to the old whilst also embracing the new.
I do agree. When I'm discussing this I use the analogy that the internet broke down the walls of the organisation, so you could reach the customer directly: but it still clear that it's you, the bank, the customer is coming to, to do their "banking". Now with social technology that boundary dissolves. For the customer it's getting on with their life, doing what they need to do wherever and whenever, including some things that require financial services. Just as in '96 we didn't know how far those web technologies would take us, in 2012 we don't know where these social technologies will. But it's likely the impacts on the provision and consumption of financial services will be substantially greater.
Chris, I believe you are spot on here, on both themes. Banks are information businesses, manufacturing, delivering and managing products which exist (essentially) only as data. But how many of them think of themselves that way ? And then don't get me started on organisational boundaries. Time and again, if you look from the customer's outside view in you can see the internal barriers impeding service, decreasing efficiency. We have amazing technologies available now to change the way things are done, but doing things better means cutting across these boundaries and time and again it is too hard. My hope is that as the recognition comes of the value of exploiting information that this will show the way things needs to be organised and we may make progress. Maybe.
In general I think the success of Oyster, the Polish experience you describe and so on suggest that touch and pay is an acceptable model for many - generally more convenient than fetching cash from your pocket. However I have encountered a problem, in that it seems these things can interfere with each other. My Oyster had worked fine then Barclays sent me a contactless card and suddenly my Oyster had a problem about 3 times out of 4 when I touched my wallet on the reader. The only way round it was to take one or other card out of the way. I tried another Oyster we had in the family but the problem persisted. If this is an inherent problem it raises the question of whether once we have more than one NFC card in the wallet is juggling cards much more convenient than juggling cash ?
I guess it may not have been a coincidence that the story immediately below this in the FSClub Daily News summary was "Banker's fear "social time bomb" - BBC ( ). Bankers happen to be the most publicly visible (with some reason !) example of the divergence of wealth distribution we have seen happening over the past 20 or so years which seems now to be gaining growing attention. I think it's wider than bankers being over (or under ?) paid and consequently this attention is likely to continue for some time yet.
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Feb 6, 2012