I was recently reminded of the pace of mobile banking innovation by a store on my local high street. This particular store has certainly seen better days. The blue interior has that slightly musky look to it, probably due to the lack of natural light caused by the worn out posters plastered over the shop window. Whilst the stores all around it are abuzz with shoppers, I haven't seen anyone enter or leave the premises in months. The store in question is Blockbuster. Once a mainstay of any high street around the developed world, they are now few and far between. The sharp rise and fall of Blockbuster is an excellent cautionary tale for most bank CEOs, but the message is currently not being heeded.
Banks have been tossing around with the idea of mobile banking like a hot potato for years. Stuck in an endless debate about what to do with it, how to best roll it out, and what benefits can it deliver, it has often been passed from the ownership of one senior executive to the next. In the meantime, most bank customers have suffered from years of underwhelming mobile banking services or none at all. The complacency of the banks to 'get mobile' means much of the blame for the failure of mobile banking to take off in the UK (until recently) sits squarely on their own shrugged shoulders.
Over this same period the sharks have begun to encircle. This failure to move with the times has resulted in the recent arrival of new competitors and startups focused specifically on mobile banking and payments. Like sharks a new influx of competitors only emerge when they smell blood and this new breed of brash, young entrants don't suffer from a lack of confidence or support. The once-held belief that banks have trust and reputational equity is dead - banks remain some of the most unpopular brands in the market today and the ongoing global recession is only making matters worse.
Like Blockbuster, the banks have waited and waited, not wanting to accept what was happening before their very eyes. When they finally did move they tried to retrofit a mobile banking strategy into their existing organisational structure. Roles, processes and operating models were mostly replicated from other channels. A reflection of this is the number of mobile banking services that replicate the look, feel and functionality of their online banking counterpart. New entrants are not burdened by this sentimental attitude and are designing new services from the ground up.
To add to this, the banking industry has suffered from a culture of waiting for others to take the lead. Not wanting to put your neck out is an acceptable practice and for some it's part of their core strategy. This mobile banking strategy was fine for years because each bank was as bad as each other in taking only tentative steps forward. The snail pace delivery of most banks due to legacy systems, and most importantly legacy attitudes, means new competitors have gained a foot hold when they probably shouldn't have. Don't be mistaken disintermediation is happening, and soon it will have happened.
The good news for banks is that for a short time their destiny is still in their own hands. As banks finalise their budgetary plans for this year, there is probably one last opportunity to think long and hard about where best to allocate funds. Are branch refurbishments and ATM expansion a good investment for the future? Does your mobile banking team have less staff than one of your local branches? In 2007, Blockbuster CEO James W. Keyes introduced a new strategy with a renewed focused on an in-store, retail-oriented model in the face of increasing pressure from digital focused competitors. Three years later Blockbuster filed for Chapter 11 bankruptcy protection.
