How to Win in Today’s Battle for Deposits
December 1, 2023 | 1 min read
Before reading Breaking Banks I'd read Brett King’s earlier books (Bank 2.0 and Bank 3.0) and listened to many of the Breaking Banks radio segments. As a result, I was initially hesitant to dig into this latest work, assuming it'd just be a repeat of what I’d read and heard before. However, I quickly realized that the content of this book was fresh and current — relevant for the year 2014.
Breaking Banks contains excerpts of King’s interviews with some of the biggest names in the industry (including Jim Marous, Dave Birch, Ron Shevlin, etc.) right alongside King’s own commentary on a full range of fintech topics such as loans, payments, millennials, Bitcoin, and neo-banks.
Basically, it’s the quintessential “who’s who” and “what’s what” for the fintech space. It gives bankers, investors, and fintech entrepreneurs the keys to thrive in the digital age.
The book reveals an industry at a turning point. Collectively, the changes in each area of banking (from loans to payments to financial management, etc.) spell disruption for some players and opportunity for others. The book makes a strong case for why breakthroughs in fintech are “breaking the cycle of traditional thinking,” as King puts it.
To give just one example, we can look at data King cites from the FDIC, which shows that the number of checks written each year has dropped by 70 percent since the year 2000. In light of this, fintech startups such as Dwolla and PayPal (along with 500 other mobile payments startups listed on AngelList) have stepped up and are revolutionizing the payments industry. As King says, “What is happening today is that [the payments startups] are all trying to create a new, better, faster, simpler mobile front-end to the payments system. If the existing system worked ‘just fine,’ then none of these companies would exist.” Clearly, things are changing.
King ends Breaking Banks by asking what all of this means for financial institutions. In the process he quotes Ryan Caldwell, CEO of MX, who says that bankers need to think hard about what it means to be considered the primary financial institution:
What’s fascinating is that all these banks and credit unions have set as a top objective to be the primary financial institution, and yet if that wish were magically granted, the bank or credit union would say, “Hold on—we just wanted to be your primary institution.” And the end user would say, “Well, what do you think that means?”
King shows that for an increasing number of end users, having access to a branch isn't necessarily a prerequisite for choosing their primary financial institution. These users find that visiting a branch is a nuisance in the digital age, and as a result they've started to care more about where they can find a simple, cohesive digital experience.
What should financial institutions do as a result of this change?
Breaking Banks answers that question. It shows, to the dismay of some, that answering that question via traditional methods simply won’t cut it. The digital age has forced financial institutions to rethink how the entire customer experience works. Luckily, Breaking Banks can show readers exactly how to start rethinking.
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