The driverless bank
In the not too distant future, we can see a world where your Uber is a driverless car where the journey is totally personalised to your needs not only by the time and location/destination but also by the journey (fastest, scenic, economical) and comfort/car features.
The cost may not only be subsidised by the sharing, but also whether you are willing to watch ads or sponsored programmes. The car itself maybe owned by several people as assets get tokenised people will be able to invest in part owning several cars rather than risking all their money on a single car investment.
In this scenario we see a truly digital organisation. One without the five P’s that typically creates friction:
- Physical money
Clearly Uber has these five P’s today, the difference is they are not seen by passengers and their customers. They are indeed a great example of frictionless commerce.
So, what can banks learn from this? It essentially boils down to designing the organisation and customer journeys without the five P’s, and adding them in where necessary or ensuring they add value.
People: Uber has over 22,000 internal employees globally, yet passengers will never meet any. However, drivers certainly may, as Uber have people that conduct checks on drivers to ensure their vehicles meet certain standards. Whilst few customers realise Uber does this, most appreciate it. Both traditional and digital banks need to ensure staff are easily accessible when they need them most. Whilst banks target 24x7x365 services, online banking operates human assistance only during official office hours.
Cash: Uber doesn’t allow cash payments in the UK where there are high levels of banking, but it does in many countries round the world where there are greater levels of unbanked. For many countries a cashless society is a long way off, this creates a challenge for digital banks. However, Monzo has partnered with retail network PayPoint, whilst Starling has partnered with The Post Office to handle cash.
Process: Uber has been designed to be frictionless for customers, but to ensure passenger safety and local taxi regulations are adhered to via their five step process before drivers can be onboarded. The process here has a clear and defined purpose. Traditional banks seem to struggle to make processes frictionless for customers, for example many still require you to complete a paper form which has to be taken to a branch to send money overseas. Such banks need only look at Transferwise to see how this should be done.
Paper: For both customers and drivers, Uber handles documentation digitally so I’ve not been able to find examples of where paperwork is provided. However, from a customer perspective, Uber provides digital receipts that are far richer in detail than customers would receive from taxis that provide paper receipts. These can be printed by customers if needed. In comparison banks do provide statements digitally, however these are inevitably the same as those printed. Why not provide better detail for example by leveraging the insights from money management features in their apps? Or including relevant discount vouchers based on the customers spend.
Premises: Of course, Uber has physical buildings, but these are for staff. Here traditional banks have an advantage as they have branches customers can visit. Increasingly they are becoming modernised and providing an inviting, comfortable place to discuss your money and sometimes to work also. Digital banks like Tangerine (Canada), Timo (Vietnam) and CheBanca (Italy) have all introduced branches to support their digital offerings.
The key difference between a digital organisation like Uber and traditional banks is that it has been designed from the ground up to be digital, only inserting a few of the five P’s where they add value and where it’s absolutely required.
The challenge for traditional banks is that they have been designed with the five P’s. I’m not saying that this is an impossible transformation for them, I’m just saying surely it has to be easier to start a fresh like their challengers.
Dharmesh Mistry has been in banking for 30 years and has been at the forefront of banking technology and innovation. From the very first internet and mobile banking apps to artificial intelligence (AI) and virtual reality (VR).
He has been on both sides of the fence and he’s not afraid to share his opinions.