The financial services industry is being attacked from all angles by "minnows," or smaller tech startups, and the most successful financial institutions will figure out how to partner with those minnows to offer their customers more access.
That’s according to Chris Skinner, chair of the European networking forum the Financial Services Club and the author of several books. Skinner spoke late last week at the Boston offices of Goodwin Procter at a breakfast event promoting his newest book, "Digital Bank."
While Skinner has written several books previously, "Digital Bank" is the first one he wrote as a kind of think piece, he told his audience. In his latest work, Skinner focuses on the idea of banks as technology companies and the strategies that banks might use to launch, or become, "digital banks."
"We actually have to fundamentally transform our companies from being based around human networks to being based around information networks. It’s not easy. It requires a new business model, a new architecture, a new structure … to deliver a digital network service. You can’t do this through the old physical network service," Skinner said last Thursday.
Skinner, who hails from the United Kingdom, offered several examples of those aforementioned "minnows." Among others, he named Funding Circle, a peer-to-peer lending platform that’s now backed by the U.K. government as a solution to encourage more small business lending, and Personal Capital, similar to a Mint.com for high-net-worth individuals.
"Banks are becoming these huge integrators of capabilities across services. Banks can’t do everything. They can’t be good at all of this, so where they are not good, they will find a specialist who can do it for them, and they will take that component and integrate that into their service," he said.
Skinner cited a study from BBVA that estimated by the year 2016, digital transactions will outnumber branch transactions by about 300 to 1, and he traced the history of currency from the invention of coins in ancient Sumeria to the advent of paper money to cards to the chip today.
But at the risk of focusing on the technology toward the exclusion of the humans who use it, Skinner reminded his audience, "it’s the relationship you have with that technology that’s going to make a difference. It’s the humanity of how you digitize that will make the biggest difference to your institution."
