With the advent of Apple Pay, digital-only banks, and PayPal loans, it’s a fascinating and progressive time for Financial Services. However, there’s yet to be that “uber-moment”, explains David Leen.
I have yet to see the new Steve Jobs film, but I will get to it. It’s garnered great reviews and it appears to capture the man and his mission to change the world. Jobs is played by Michael Fassbender, who’s last film, Frank, had him playing the leader singer in a rock band wearing a very large paper mache head, Fassbender is quite a versatile actor.
Anyway back to Apple…
I think these are fascinating times in financial services; Apple Pay is getting equal billing by the banks and credit card firms, particularly in their adverts. It appears that they are paying (I assume) to promote the Apple Pay compatibility in their own adverts, and it has become quite standard in the way that firms promote their brand alongside the Apple logo. My own bank has yet to adopt Apple Pay so I can’t comment on it personally, but I am yet to see someone use it, have you? I suspect this is the quiet before the storm. When have Apple ever been the junior partner in any relationship?
PayPal are also expanding their services. Last week I received my first offer of a PayPal loan. It came with an introductory offer and (like payday loans) there would be a swift decision, and the money paid into my account the same day. PayPal have been offering business financing for a little while, so you can start to see their direction of travel.
I spoke to someone at one of the big banks recently who said he was waiting for the “uber moment” when a disruptor comes into the FS sector. The challengers have created some disruption with branchless set-ups, and the advent of digital-only banks is well under way, with the second one being granted a UK licence a couple of weeks ago. That said, there has yet to be an Uber moment. I think the one thing that is true is the rate of change, whether that be omnichannel, regulation, the ‘brand banks’, or new government incentivised offerings – no two months are the same. I met a director of one of the start-up banks recently, and in talking to them it felt more like a tech firm than a bank. I think here rests a good point, how will these firms who are not steeped in contemporary regulation, grapple with it? We will happily sign a 48 page document sent via Apple without reading it to continue our iTunes service, but will we do the same for a mortgage or ISA?
The newer of the challenger firms have a different business model, which is predicated on small numbers of FTE, outsourcing as much as you can but retain in-house all your IP. This looks like a good model, and one that they tell me you can expand and contract rapidly. I think the firms that truly get customer service, like John Lewis have done in the high street, will do well, but firms that we don’t recognise, will we trust them with our money?
There is much change going on and at a pace. Let me know if you can spot the Uber in banking or insurance, I haven’t seen it yet but I am sure it’s on the horizon. Will it be a traditional bank who find a truly innovative service, or a supermarket with a whizzy offering, or someone left of centre who we just didn’t expect or know of?
It’s not if, it’s when.