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Duncan Grave argued that banks do not need a social license to work. Ben Gracewood asks: What if they had one?
Banks desperately want you to care about their brand. They spend millions of dollars on TV commercials with weird monsters to make you feel something, anythingwhen you see their red, blue or yellow logo.
Constrained by a combination of regulation and market forces, they all offer the same products at the same prices with the same features. Which bank you join is mostly down to luck: which branch was closest when your parents opened your first account, or which banker was the first to say yes to your overwhelming mortgage application.
If a $10 million ad campaign means you’re 0.01% more likely to choose a bank than a kid looking at a clock in a store window while choosing between identical mortgages with the same interest rates, then it’s money well spent. Money that could otherwise go toward lowering your interest rate.
Bankers are so in love with their brands that they truly believe in the important vibe associated with their logo, and will regularly research the market to see how people feel, or what logo comes to mind when you’re asked to recall it on a random phone call. conversations “bank”.
In these surveys, they don’t ask, “How badly do you want your bank gone?”
If I were the head of a bank in New Zealand, I’d just roll out the best banking API, eliminate marketing costs, reduce the products to a few simple options, and then sit back and do all the money. The BenBank API will allow anyone with permission to make payments and transfers, create and update accounts, validate receipts, upload transactions and more. This will also provide identity verification (in compliance with anti-money laundering laws) and enable the creation of a new account.
The API is free to use. Or maybe developers could get 0.05% of whatever fees and interest they bring to BenBank in exchange for adding a “powered by BenBank” logo somewhere on the login screen.
Here’s what will happen to BenBank over the next six to 12 months:
New Zealand’s best developers and designers will create mobile apps and websites to interact with BenBank. These apps will look better and be much easier to use than any banking apps you use today, because the best designers and developers don’t work for banks right now.
Companies such as Apple, Stripe, PocketSmith and Akahu are expected to deeply integrate with BenBank, bringing products such as Apple Card and P2P payments to market, and driving innovation between consumers of BenBank’s API.
Entrepreneurs would innovate on BenBank’s API, creating products such as micropayments, daily rental payments, instant financial valuations, and ideas that are impossible to come up with in our current environment because banks are stagnant and unable to innovate.
An influx of customers to BenBank would cause an industry-wide panic, with other banks rushing to implement similar APIs, further expanding the range of products and processes available to kiwi. Free and fast interbank payments in New Zealand are a huge benefit that is currently largely untapped. In a future New Zealand where every bank has an API, we’ll get instant* P2P payments with zero exchange fees.
*Yes, banking nerds: Clearing will take longer, but the API will easily confirm the availability of funds and receipt of the transfer.
A couple of years after the launch of BenBank, you buy a coke at the dairy, grabbing it from the fridge and then walking out. Everyone has a location-based payment API on their phone, so the dairy owner simply taps an icon on her phone to receive a payment from another phone currently in her store. API will do the rest.
BenBank is $2 billion in profit and no one cares because BenBank is cheaper to use than any other bank and everyone loves the user experience. In other words, BenBank has a huge number of social licenses and people are happy to pay for it.
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