Bank 3.0: Why Banking is No Longer Somewhere You Go, But Something You Do

As with the previous edition, this is one of few books which attempts to address the importance of customer experience and disruptive change specifically to the banking sector. The author does a good job at explaining all of the new technology and channels impacting the industry. He also begins with an overview on the importance of customer experience, invoking Maslow’s hierarchy of needs, Moore’s Law, and the increasing rate of adoption of new technologies, from the computer to Facebook. He addresses four main phases of behavioral disruption: the arrival of the Internet, emergence of the smart device, the move to mobile payments, and the transformation of banking to something we do, as opposed to somewhere we go. Acknowledging the importance of channels, he stresses that the bank must become “channel agnostic,” eliminating silos, as the consumer does not use products or channels in isolation.

The author argues that the 3^rd phase of disruptions, the move to mobile payments on a broad scale, will result in “a fracturing of the commercial banking business as we know it today.” As a result, the emergence of the “de-banked” consumer will transform and threaten banking as we know it. He believes “the consumer experience is no longer the domain of the branch, it is the domain of the brand,” which we believe is a misunderstanding of the customer experience. He goes on to explain in Bank 3.0 that “the shift is towards real-time engagement of customers when and where they need a solution,” stressing the importance of usability and cross-sell to win customers, rather than putting the customer relationship at the center of focus. Social media is viewed as all-powerful in this context, going as far as to attempt to use the “occupy” (Wall St.) movement as an example for using social media and crowd sourcing as a mechanism for designing new products that are “immediately advocated by customers.” The book also criticizes banks for focusing on “life events” as “key moments of truth,” stating that these events (marriage, move, new job, new child) are infrequent and “the reason customer engagement is low in general.” For this reason, he feels banks need to address” the customer experience of money for everyday individuals,” similar to Amazon’s model.

One cannot help but get the feeling that the author is proposing social media as the next model for banks to succeed in staving off the forces of extinction. The risk in this focus  is similar to that in utilizing CRM technology as a panacea at the expense of further commoditizing the business by only responding to customers’ transactions at hand or past behavior. We believe that the banks will still possess the power to add value in the lives of their customers, if they focus on the customer relationship as opposed to just channels for serving them or trying to anticipate everyday transactions.  Despite their slow response to industry trends, we still believe that banks will be the ultimate holder of the customer (banking) relationship.

The first edition of BANK 2.0—#1 on Amazon’s bestseller list for banking and finance in the US, UK, Germany, France, and Japan for over 18 months—took the financial world by storm and became synonymous with disruptive customer behaviour, technology shift, and new banking models.

In BANK 3.0, Brett King brings the story up to date with the latest trends redefining financial services and payments—from the global scramble for dominance of the mobile wallet and the expectations created by tablet computing to the operationalising of the cloud, the explosion of social media, and the rise of the de-banked consumer, who doesn’t need a bank at all.

BANK 3.0 shows that the gap between customers and financial services players is rapidly widening, leaving massive opportunities for new, non-bank competitors to totally disrupt the industry.

This is a comprehensive book (or even textbook) for understanding and, to some extent, evaluating where your bank stands in meeting the future of financial services. Bank practitioners will enjoy the numerous diagrams illustrations, checklists and examples of project roadmaps. Consultants will find this to be essential reading for measuring bank preparedness for the technological changes at hand. For more on this subject, see the Senteo reviews for Bank 2.0 and Infinite Possibility.