The end of the year is fast approaching, and we find it quite appropriate to reflect on the notion of change. This year has become without warning life-changing for all of us, with profound consequences on our perceptions of right and wrong. When personal freedoms are curtailed, we are left with less opportunity to explore, leaving us with the obligation to focus on what is in front of us whilst we weather the storm.
“Retail has always been a few years ahead of banking, first with online transactions, and now with physical store closings. Banks that fight this trend aren't just prolonging the inevitable, they're wasting money.”
Ron Shevlin, Forbes
Closer to home though, we are surprised to see a new FinTech fill the gap left by the big banks, as analysed below. The pandemic seems to have accelerated certain conclusions and made an opportunity create itself. However much we are tempted to agree with Ron that fighting the trend is a waste of money, we cannot help conclude that being countercyclical to the trend can nevertheless provide opportunity. Breakthroughs set the trend, they are not part of it.
In the news last week:
Human bankers are returning. One Scottish town is having a fully-staffed bank point for the first time since two years when its local bank closed. OneBanks will be working with Open Banking for the service, as well as with tech partners including Endava, Trust Stamp, Nuapay, NCR and Accenture Business. This got us at C-Innovation thinking a little more, for a number of reasons.
For years the high-street banks have been racing to reach customers by opening more and more local branches. The idea was that by being physically close to their customers, banks would see more trade. With the advent of telephone banking and then internet banking, the need for physical in-branch staff fell, and the familiar reasoning of supply and demand started to drive the banks to close some of their branches. Some communities today have no more physical link to their bank, which for the bank itself might make sense because of the excessive cost of providing services in some places, as well as the existence of other channels.
It is important to remember that not all bank customers are comfortable or indeed understand telephone and internet banking. Though the service at some of them can sometimes be excellent, such as First Direct has been for many years, some people just want simple face-to-face banking. So what OneBanks is doing is filling the gap in the market left by the bigger banks.
Some may be of the opinion that banking is a privilege. However, when having a bank account becomes a prerequisite for renting a home, then it is more akin to a public service, or day we say it, a social right. The extremes of the banking spectrum – the young, the poor, the elderly – might not offer a sufficient yield for many banking services providers (banks, neobanks, technology companies), however it is clear there is money in it, judging by OneBank’s decision. Instead of multiple banks competing in this area, perhaps OneBank’s presence is a sign of the market adapting to reality?