There are so many great minds building great solutions, great software, and just one person or a couple of them are able to create a new small company which will grow to a large one, as it happened to apple and it happens to most of them, ...but can anyone build a Bank???. Hmmmm, It seems really difficult, almost an impossible mission.
When we talk about a Bank, first thing that comes our head is that great branch in a nice size building with helpful and smily employees providing you money, granting you a mortgage or a loan, saving your money, or advising us how to invest our money.That Branch of course is just a small little part of the Bank, which might have 1000 branches, 2000 ATMs, 2000 employees, etc!!. Ufff, creating a new bank??, ...Impossible to achieve it, moreover if you are a developer!!.
Hmmm, let's now think in another way, let's see how people interact with the banks nowadays. How many of you have visited a branch more that 10 times this year??. How many of you doesn't use your mobile app, or your favorite bank's website to handle all your financial tasks??, ...how many of you have paid with paypal??, ..and how many are starting to pay with Apple Pay??. Let's go further, let me give you 5 company names and the description of what they do and how they were created:
It is the innovative start-up which turned smartphones into credit card processors. Just get the Square Card Reader, plug it into your device and you are all set. They now also have a "fixed" square stand.
This financial services, merchant services aggregator and mobile payments company is based in San Francisco, California, and was founded in 2009 by Jack Dorsey and Jim McKelvey from an idea who came up after Jim wasn't able to complete a $1,000 sale of his glass faucets and fittings because he could not accept credit cards. It launched its first app and service as soon as in 2010, in August 2012, Starbucks started using Square to process transactions with customers who pay via debit or credit card and In February 2014, Whole Foods Market announced it would use Square Register in select stores' sandwich counters, pizzerias and coffee, juice, wine and beer bars. They even created a Square Wallet app but was pulled out of the Apple Store and Google Play due to Square's difficulties in subsisting on the razor-thin margins provided by its core payments processing business. In March 2014, Square announced it will start allowing sellers to accept bitcoin on their own storefronts through Square Market
What bout having a debit account that will help you keep track online of what are you spending your money on, a card you can use in tons of ATMs (more than 40000) without fees and which let you send money to your friends using Facebook, email or text message??. Sometimes you might think moven, which has no branches, can replace your bank, ..and actually it can do it if all you need is an account and a debit card. It even allows you to forget your wallet at home and pay on NFC devices using mastercard PayPass
It was founded in 2011 by Brett King and Alex Sion. Raising an initial $2.4m of seed money on july 2012 and it first went live (Beta version) in February 2013. Finally, Moven raised a Series A investment round of $8m for product development and to help launch overseas expansion in July of 2014.
Most likely you are acquainted with the great Finovate, a conference showcasing the best and most innovative new financial and banking technologies, ..Moven was the winner of a Best of Show award for their demo at FinovateEurope 2013 and you can see a demo of the company clicking here.
BankSimple, as it was named originally was founded in 2009 by Alex Payne, Joshua Reich and Shamir Karkal and in summer 2012 was launched as a Beta. There were 20000 customers in six months and in summer 2013 that number was doubled. Its services??, ..as with Moven Bank you will have free fee Atms (more than 55000), open an count, have a visa card, transfer money in between your friends. It is not a true bank, relying on Bancorp to hold customer accounts.
Although Simple Bank frequently criticizes the traditional banking model, ..it has become part of it being acquired by BBVA on On February 20, 2014 for $117 Million. Yes these guys received $117 Million for a company founded 5 years ago (besides the money they already made with it):
...oh, yes, you only see two guys here, Joshua and Shamir, as Alex Payne left the company on 2012 to focus on programming and developing..., maybe he is now feeling a little bit as Ronald Wayne, ...just a little.
Store all your credit cards in just one called Coin. When you are going to pay, just take you Coin card and select from the led screen which card to use. That Simple, ..isn't it?
This company is as recent as that you still cannot get its product, it will be launched on 2015 and actually if you preorder now you will get your coin card by summer 2015. It has been founded by Kanishk Parashar, a PayPal veteran, who first developed a smartphone wallet app in 2010 called Smart Market that went ....nowhere. Why do I think this company will succeed??, ..well, yes the mobile phones are replacing our cards but it will take a couple of years to see it massively and next year will start seeing the change. Meanwhile that moment arrives Coin is a good solution and I already know 4 people who has preordered it.
Braintree (Pay Pal)
We all know about paypal, ..a service which enables a customer to pay, send money, and accept payments without revealing his financial details. It also now offers you credit and some other financial services, ..and why not, it is even a nice way to exchange currency :). It was one game changer in the way we make payments many years ago, and now is back with Braintree.
Braintree is a merchant account which targets its services primarily at e-commerce merchants, subscription-based businesses, and merchants that key in all of their credit card transactions. It offers virtually automatic PCI Compliance by storing the credit card data off of the merchants systems
So what is the Bank 3.0?
What all these companies have in common besides providing financial services??. A great Mobile App and Website with expectacular user Interface as well as intuitive, ..and services which differ from a typical bank encouraging customers to move away from their secure great big bank. Let me give you just 6 clear examples:
- I want to set some financial goals as for example save money for my next trip to Bahamas, be able to pay my mortgage and save money to be able to lease a nice & fancy car. What about if I set up those goals in an app ant it tells me everyday the maximum amount of money i can spend to be able to achieve them??.
- Ohh my!!, ..i cannot find my card. Not sure if i left it at a friend's house or in that thai restaurant yesterday night, ...hmmm, instead of canceling the card I wiil block it from my mobile phone until I find it. If I find it then I will activate it back and if not I will just cancel it.
- You are with your friends at a dinner and suddenly you realize you forgot your wallet at home, ...or you are the one from the previous example and still hasn't found your card, ...hmmmm, no worries, just get your mobile app and make an online transfer to whoever is going to pay for you at the dinner
- I have 10 credit cards, ...yeah I am so cool that i have 10!!, ..but I don't want to carry them all so I will just save the info of all of them in my phone and I will decide from my app which one to use in each payment. Yeah, ..I am cool!!.
- You received a check and want to cash it in. Just take a pic with your mobile phone and there is the money, in your bank account!.
- How much money did i spend in my trip to the USA??. Hoy much in New York, How much in Boston, and how much in San Francisco??. I will just search by city in my list of expenses and that is. Job done.
Does your bank provide all these services??. ..and these were just 6 simple examples.
Customers are getting away of the physical place of a branch and therefore the physical application forms, the physical signature. These translates into the bank changing its business model to simplify the applications forms, to create online services, to enable access to more specialized agents online instead of visiting a branch. This new era is being called by some, bank 3.0, and I recommend that you take a look at the book "Banking 3.0" from Brett King, who by the way happens to be the creator of Moven, follow Brad Leimer blog , evangelist of bank 3.0, Banking strategist and who just moved to head the new U.S. based innovation function for Santander, a great international bank that is moving torward very fast to Banking 3.0 as you are aware of.
On the other hand, none of the Solutions provided above are going to grant you a mortgage, or a line of credit, or so many, many other financial services that your bank provides so still you will need that big classic bank near you.
Can Moven, Simple Bank, etc provide these solutions, can they have specialized staff as the banks we all know??. They could, but they do not have it right now and it will take for them long time to have it. And that is the great advantage of the Banks you already know.
This Classic Banks are aware of this technologically change and they are not staying still, they are moving towards the Bank 3.0, some of them really fast, including all these services and more, ..can you imagine a Contact Center turned into a team attending customers and signing up contracts though videoconference??, Customer signing applications forms with their fingers on their tablets, and even agents coming to your home, to your workplace, to your university, ..or wherever to close a great deal instead of you going to a branch??. That is not a dream, that is a reality.
These Banks are doing this not only investing in a great IT team, but also buying and teaming up with startups and small companies. Don't you want to be small start-up teaming up with a great bank???. Be part of the Bank 3.0 revolution.