A recent article about the new email service Hey opened with the observation that, "Changing your email address feels like a pointless struggle in a world where the existing options, however unremarkable, work basically fine. Like changing banks, really."
That banks these days are all more or less the same is likely a common perception, despite the recent explosion of digital banks, challenger banks, neobanks, and other neologism-enhanced banks.
This is understandable because banks all do more or less the same job, and that job is pretty static — literally. You rely on a bank to hold your money. And the traditional source of revenue for a bank relies on you leaving your money there, so that the bank can loan it out.
But what if that job was done a bit differently? What if, instead of being a passive warehouse for your money, a bank was a vehicle for it? A dynamic collection of services, rather than a static storage space?
Going backwards
Right now, whenever you want to use your money, whether it's to invest or buy insurance or get a loan or just make a payment, you go out and find different options, try to figure out which one is best for you, and then direct it to your bank to pull your funds. And your bank, like the very friendly warehouse it is, will happily make your funds available for pick-up.
“It’s a very fragmented, inefficient situation. ”
So you have many different uses for your money, all with many different options available, all leading back to your bank, but each with an incomplete picture of your overall financial context. It's a very fragmented, inefficient situation.
Get a life
They'd all be able to do a better job for you if they had a more comprehensive picture of your financial life. Your investment brokerage can likely already do a pretty decent job of picking some stocks. But despite whatever helpful questionnaire it presents you when you sign up, it just doesn't have the same historical understanding of your finances that your bank does. That fuller picture can inform when and how much to invest, based on your spending habits and the timing of your cash flow.
So what’s the scenario?
Similarly, there's a variety of insurance and mortgage options out there. Which approach makes the most sense for you? Sure, you could sit down and try and figure out all the different implications based on your finances, but guess who already has all that info and could just plug those numbers into the same model for all of its customers? That's right, your bank. Why should all of its customers waste time recreating the same model to varying degrees of success, when the bank could do it once for all these shared scenarios?
Pete and Repeat
Not only that, but all of these different services need to know that you even exist in the first place and are looking for them. The number of consumers is vast. But the number of service providers - insurance agencies, investment firms, etc - is limited.
“it would be much simpler if you could share a single consistent financial profile with each of these providers.”
A bank could much more easily make a single list of current service providers available to all of its customers than for each and every one of its customers try to make that same list for themselves, thousands or millions of times over. And it would be much simpler if you could share a single consistent financial profile with each of these providers, rather than having to build up a new one with each different one.
Re:definition
So a bank could be redefined along these three lines.
1.
Aggregate financial services to save you time.
2.
Help you understand common scenarios so you can make better decisions.
3.
Share a definitive financial profile to optimize outcomes.
With its central position in your life, a bank is really in the best role to do take on these roles. And in doing so, it becomes a much more dynamic entity.
A bank redefined along these lines is like a map showing you the best route to get to where you want to go, and the car to take you there. Now it's taking you places, instead of just sitting around waiting for you to tell it to make your money available. A car's probably worth more to you than a garage, right? And a car with GPS? Now you're talking. All you gotta do is provide the gas.