Banking institutions are starting to fear that they are increasingly perceived as a utility in terms of people’s financial management – a situation some say is making them the ‘plumbing’ of the system, while big tech companies can just hop in their space and snap up the best of the profits. Google, for example, is diving into banking and has liaised with Citigroup and Stanford Federal Credit Union to offer the infrastructural support cater for customer relationship.
Where the modern drive for platform business model is being considered, the businesses that spring to the minds of most people are the AirBnBs, Ubers and even Alibabas of this world. But banks – those legacy, bulky businesses – will not usually be anywhere on that radar. Yet, this kind of transformation could be of great profit to traditional banking businesses, if only they can rise above the cultural and mindset barriers.
However, banks have a huge and time-bound opportunity to get in on the new direction of business. Platforms connect people and services in an asset-free or asset-light model – the operators own little to none of the means of production, but they connect consumers with those that do. If banks will mean more than the electricity provider to the modern man, they will have to become responsible for linking them to the solutions to their more pressing needs. Asides from retaining relevance, this model provides an opportunity to drive down cost and increase profit margin significantly.
For instance: mortgages, car ownership, leaving home for a new rental lease – these are only a few of many transactions and contracts with moving parts that many people are poorly-equipped to handle and for which they would require expert help.
Currently, banks are not providing the help needed If they could evolve to become a platform for people to access experts who can help in these important life moments, they could become a one-stop-shop for people looking to make financial decisions.
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