Digital technology is disrupting industry after industry. The price of computing, data storage, communication, and coordination continues to plummet. Artificial Intelligence, sharing networks, crowdsourcing, crowdfunding, and digitization of old analogue processes are revolutionizing huge swaths of the economy. It's these trends that are radically changing the needs and behaviors of banking customers AND it's these trends that are now forcing the banking industry to revolutionize.
Banks must disrupt themselves or be disrupted.
104. WHAT SHOULD BANKS DO?
1. MOVE FAST IN A FAST CHANGING WORLD
2. KEEP YOUR CUSTOMERS HAPPY!
3. UNDERSTAND YOUโRE NOT THE ONLY GAME
IN TOWN
4. KNOW YOUR ADVANTAGES:
โ FDIC, PERCEIVED STABILITY, CONVENIENCE,
RELATIONSHIPS
5. DISRUPT YOURSELF BEFORE SOMEONE
ELSE DOES
Photo: Michael OโDonnel
Weโve done it with computers.
At the efficiency of the 1940s, an iPhone would have to be larger than the city of Chicago, and draw more power than the entire state of California.
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Weโve even done it with oil and water. The average american now uses a third less of each than in 1970, even as the size of our economy has doubled.
Thatโs not enough, not yet. But itโs a start.
Images: Wikimedia
AIRBNB HAS NEVER BUILT A HOTELโฆBUT HAS A HIGHER MARKET CAP THAN HYATT AND LIKELY TO PASS HILTON < 3 YEARS
AIRBNB: $10b
HYATT: $9.5b
STARWOOD: $15B (WILL LIKELY PASS IN 2015)
MARRIOTT: 18B (WILL LIKELY PASS BY 2016)
HILTON: $23b (WILL LIKELY PASS BY 2017)
DO YOU WANT TO BE A WINNER?OR A LOSER?
DISRUPTION STARTS AT THE EDGESTHEN HITS THE CORE
BANKS EARN UP TO 20% OF REVENUE FROM NON-INTEREST SOURCES: ATM FEES, CREDIT CARD FEES, ACCOUNT FEES, ETC..
UBIQUITOUS SMART PHONES CAN ENABLE TRANSACTIONS WITH NO EXTRA HARDWARE
$1.6 TRILLION IN MOBILE TRANSACTIONS IN 2013
317% GROWTH FROM 2012
VISA AND MASTERCARD WANT TO OWN THIS SPACE TOO
BUT AT 3% OVERHEAD, NO GUARANTEE THEYโLL WIN!
MOBILE PAYMENTS WILL MAKE IT EASIER FOR NEW PAYMENT NETWORKS TO GROWANALOGY: WHATSAPP, VIBR, SNAPCHAT, SECRET
MAKE ANALOGY TO CHAT NETWORKS
ONCE YOU HAVE THE HARDWARE, SOFTWARE CAN SPREAD
MENTION BITCOIN
Remittances totalledย $534 billion in 2012, grows annually byย ~8%, and accounts forย more than 10%ย of the GDP in over 20 countries.
Remittance is one of the most expensive forms of payment.ย The average cost for remittance in the first quarter of 2013 wasย 9.05%. At this rate, remittance operators will collect over $50 billion in fees this year.ย Remittance operators profit from transactions fees, margins added to currency exchange rates, recipient fees, cash payout fees, plus a variety of additional fees. In 2012, Western Union, the largest remittance operator, generated $5.66 billion in revenue with aย net profit of $1.02 billion.
These fees and margins would be excessive to anyone, but are especially burdensome to the people who use remittance most: low-income migrant workers and their even-lower-income families.
โIf the cost of sending remittances could be reduced by 5 percentage pointsโฆdeveloping countries would receive over $16 billion dollars more each year than they do now. This added income could then provide remittance recipients more opportunity for consumption, savings, and investment in local economies.โโThe World Bank
Remittances totalledย $534 billion in 2012, grows annually byย ~8%, and accounts forย more than 10%ย of the GDP in over 20 countries.
Remittance is one of the most expensive forms of payment.ย The average cost for remittance in the first quarter of 2013 wasย 9.05%. At this rate, remittance operators will collect over $50 billion in fees this year.ย Remittance operators profit from transactions fees, margins added to currency exchange rates, recipient fees, cash payout fees, plus a variety of additional fees. In 2012, Western Union, the largest remittance operator, generated $5.66 billion in revenue with aย net profit of $1.02 billion.
These fees and margins would be excessive to anyone, but are especially burdensome to the people who use remittance most: low-income migrant workers and their even-lower-income families.
โIf the cost of sending remittances could be reduced by 5 percentage pointsโฆdeveloping countries would receive over $16 billion dollars more each year than they do now. This added income could then provide remittance recipients more opportunity for consumption, savings, and investment in local economies.โโThe World Bank
US INDUSTRY IS LESS AND LESS CAPITAL INTENSIVE. A LONG TERM NEGATIVE TREND FOR LENDING.
BETTER RATES FOR LENDERS THAN BONDSBETTER RATES FOR BORROWERS THAN CREDIT CARD DEBT
2/3 OF MONEY IS NOW INSTITUTIONAL INVESTING
LEAD INVESTOR IN LAST ROUND WAS GOOGLE
WHAT CAN BANKS DO?
MOVE FAST IN A FAST CHANGING WORLD
KEEP YOUR CUSTOMERS HAPPY
UNDERSTAND YOUโRE NOT THE ONLY GAME IN TOWN
KNOW YOUR ADVANTAGES โ FDIC, STABILITY, CONVENIENCES
DISRUPT YOURSELF BEFORE SOMEONE ELSE DOES