If I were a Bank

Two weeks ago I was attending the London API Days conference. It was focused on Open Banking and the PSD2. Needless to say, there were plenty of attendants from retail banks. The common feeling among these incumbents was fear. They feared disintermediation. And they feared their branding could lose exposure and brain share in their customer base.

But if I were a bank, I would see a huge opportunity in open banking and the unbundling of my services. I would aim to become a platform on top of which fintech companies could build their service offerings.

If I were a bank, I would become a technology company providing all kind of banking infrastructure services to third parties through APIs: from payments, to deposits, through KYC and AML.

If I were a bank, I would not care losing my retail banking customers. I would transition to become a B2B business. My customers, my brand, my market positioning would completely change. Any company offering financial services would be my target customer.

If I were such a bank, and given a first mover advantage, I would seek operational excellence (leaving customer intimacy or product innovation to my B2B customers). These conditions combined, would let me grasp a good market share, enough to build economies of scale and scope. I would be able to serve additional customers at marginal cost zero.

If I were such a bank, I would not care losing power to my B2B customers. I would be able to serve my customers at lower costs than they would do on their own. I would hold valuable data from end customers across all bank services, whereas my customers would have a limited view. I would be able to build services that my B2B customers would never be able to build. These capabilities would disincentivize vertical integration.

If I were such a bank, I could vertically integrate with agility thanks to my API based banking platform. I could partner with fintech startups or build my fully owned solutions through subsidiaries.

If I were a bank, I would fear anyone with this vision that had the capacity to execute it. Because such a bank would make my infrastructure obsolete, would make my organization lag behind the pace of innovation that it would enable, and would turn my bank irrelevant to retail customers.

But I am not a bank.

I originally posted this article on linkedin: If I were a Bank

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