If Brett King is Right, We’re All Wrong.

August 22, 2012 at 7:42 am 1 comment

Brett King is a banking futurist whose central argument is that the branch is dead and mobile technology is fundamentally changing the way consumers expect their financial products to be delivered to them.  If he is right, and I for one have drunk the Kool-Aid, then you should think long and hard before investing in fancy new branches.  And if you don’t have a robust online presence soon, then you may not have a credit union. 

The good news is now King is putting his money where hs mouth is, or at least getting other people to do so, so we’ll be able to test how much technology has changed banking.  His Movenbank has raised $2.4 million in a first round of investments, has an incredibly slick new website, and has started to sign people up for CRED, a credibility score.  Each of these steps represents a challenge to the way we do business.  Go to the website and it will tell you not only that the branch is dead, but that plastic is dead as well.  All your financial transactions are just a mobile app away.

What about improving your credit score?  King is somewhat vague about what CRED is, but as explained in an interview with The Financial Brand, it is a proprietary algorithm that uses, among other things, the number of a person’s social media contacts and online purchase history to give them a score.  King stresses that this is not intended to replace the traditional credit report. but it sure does look like it.  Movenbank could ostensibly know instantly whether or not to give a loan to somebody.

Most importantly, we should all take a look at how this new start-up internet bank is being marketed.  As can be seen from a promotional video, it captures the Zeitgeist of a generation that believes that the solution to all problems are moments away.  The bank doesn’t control you, you and your mobile phone control the bank.  The bottom line:  if King is correct, then the modern bank is as much a virtual presence as a physical one, makes instant decisions based as much on an individual’s social network as his or her financial health, and gives the member the feeling of being in control. 

The next generation of members may leave the traditional banks, but won’t go to a credit union simply because it reflects a not-for-profit ethos.  Critics of King’s view argue that the death of the bank has always been greatly exaggerated and that at the end of the day people want a place to safely put their money.  The virtual bank sounds good in theory, but scares the heck out of people in practice.  But as a generation of consumers grows up in the digital world, they will be sophisticated enough to realize that their money is as safe in a virtual bank as it is in that brick and mortar building their parents insist on visiting once or twice a month. 

And, don’t underestimate the appeal of using the network as a financial indicator.  As Malcolm Gradwell pointed out, this is a generation that, rightly or wrongly, views the network as an egalitarian alternative to stodgy old organizational structures like the modern bank.

Entry filed under: General. Tags: , , , , .

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1 Comment Add your own

  • 1. how long to build credit after bankruptcy  |  January 31, 2013 at 12:44 pm

    Yes! Finally something about 10 best ways to build credit.

    Reply

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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