What is a Bank?
- Chris Skinner, Chairman at The Financial Services Club
- 14.09.2016 07:15 am undisclosed
I was at a conference the other day when the presenter showed this quote from the Wall Street Journal:
The question is so simple it seems silly: What is a bank? Of course you know the answer. A bank pools savings and then allocates that capital. Simple, right? But that’s just the start. In 2016 a big bank also doubles as an enterprise software company and a mobile-apps developer. It is a customer-service organization to big companies and individuals alike. It is a tool of government-mandated social policy. A shareholder-return engine. An international intermediary. A seller and trader of securities. A policeman of criminals. A policeman of itself.
I was impressed. Why? Because this is the dilemma we all live with today. So many companies are now technology firms who happen to do X. Uber is a technology company that happens to do rides. Amazon is a technology firm that happens to do shopping. Google is a technology firm that happens to provide answers. This is today’s world, and today’s world makes almost every business that is not technologically relevant, irrelevant.
I say this because I travel … a lot. Getting off the plane yesterday, all I saw was every passenger staring at their phone. They were looking for messages. Urgent things to be done.
- Have you remembered to tell Charlie good night?
- Don’t forget to buy a Singapore souvenir.
- Are you coming back Wednesday or Thursday?
- The order is confirmed.
Whatever the text said, I don’t care. What I do care about is that today’s world is ultra-connected and I’m not sure that my industry, banking, is keeping up. In fact, the Wall Street Journal series illustrates this contradiction whereby a bank is no longer a bank. A bank is just a technology company trying to keep up. In a similar fashion, most other firms are just technology companies trying to keep up. To illustrate the point, Domino’s Pizza. A pizza firm or a technology company? A technology firm. Half of all Domino’s pizzas are sold on their mobile internet service, so they’re a technology company that happens to make pizzas.1 Same with Starbucks. A coffee company making $1 in $5 from their app.
So what is a bank? A bank is all sorts of things, as outlined by the WSJ. It’s all things to all people but, most importantly, it’s a technology software and services business. Get it?
