You know that expression: jack of all trades? We treat it with suspicion, right? When it comes to trusting someone's ability, we prefer specialists over generalists, precision over approximation. Imagine Usain Bolt turning up at the 2020 Olympics and promising gold medals in the 100m sprint, javelin, and the 200m backstroke. Even for Bolt, we’d struggle to take it seriously. Jack of all trades equals master of none.
So why do we let big financial institutions get away with it? These guys aren’t just claiming to be everything to everyone, they’re claiming to be excellent at it. But you don’t buy your coffee from the same place you get your haircut, so why get your current account from the same place you ask for mortgage advice?
This is the problem with established financial institutions as we know them: they’re spread too thin. They take advantage of a general public misunderstanding of financial products to claim that they should all belong under the same roof.
Go ahead and Google ‘bank account’. Click on the first result that comes up and count the number of products thrown at you. Insurance. Mortgages. Savings. Fraud. Derivative operations. Too many options and your head is spinning- I just wanted to open a current account. Make it stop. Please!
What looks like a powerful multinational financial institution is really hundreds of fragmented (and completely different) businesses under one roof. Each with varying needs, circumstances and priorities. And that’s not efficiency, it’s chaos.
No single management team will ever be able to manage and improve so many complex businesses. Economies of scale have become like a double-edged to the world’s largest banks and asset managers - crucial to their success, but a wooden stick in the wheels of 21st century progress.
This is why the rise of FinTech is so exciting.
FinTech has been buzzing for a few years now but we’re in the early days of a long and overdue revolution. FinTech innovation is exciting, not because new incumbents are looking to challenge a large bank’s portfolio of services, but because they are committing to one niche - and ready to do whatever it takes to do it really really well. FinTech revolution consists of hundreds of ambitious startups aiming to improve tiny slices, collectively elevating the entire pie. And of course, the consumer emerges as the main beneficiary. When was the last time a big bank could claim that?
Tide Banking is a prime example: they do one thing, they describe it simply and they deliver it brilliantly. Tide has created a business current account with handy tools that save businesses valuable time and money. More than that, they’re user friendly, mobile, and you could have an account ready in a heartbeat. How do I know that? Because it’s front and centre on their homepage and have heaps of new customers singing their praises.
So why aren’t established players taking note? Well, sort of. Recently, a household UK retail bank opened a similar service for high growth businesses. But they mentioned a 3-4 week wait period because certain checks could only be completed in a physical branch. Sorry. Did you say physical branch? This is just not working out. It’s not me, it’s you.
For those too slow to adapt, and struggling to make necessary improvements because they’re spread so thin. We’ve got news for you, incumbents like Tide are coming for your lunch. And they’re hungry.
Speaking of lunch. FinTech incumbents remind me of trendy food carts, they religiously focus on a small number of dishes that will keep their customers happy as hell. With lean teams and founders working closely in piping hot kitchens, they seamlessly interact with customers, gauging which dishes are selling like wildfire, the ones that need a bit more spice, and the unpopular tofu cheesesteak that should be scrapped altogether. Sorry Tofu lovers.
Like in FinTech, iterations are made quickly and in line with customer needs. Like in FinTech, something the big beasts simply can’t keep up with. Think of a global fast-food chain with never-ending menus that are only updated following hundreds of focus groups and the unanimous decision of a soulless boardroom somewhere far away. Changes go through a slow chain of command and even the most brilliant ideas take ages to materialise.
Anyway, all this talk of lunch is making me hungry. There’s this Mexican food cart down the road. They only have three options but they nail it every time. They have an iZettle so I can just tap my Monzo card and pay in a flash. I’ve been meaning to spend less on food to save for a holiday, but who can say no to extra guac.