I’m a big fan of digital challengers to old technopolies — I’ve moved everything I can from big telco to MVNOs, big bank to neobank, cable TV to Netflix and its ilk, from big taxi to ride hailing. But there are plenty of challenges.
One of them is this, highlighted by Chris Skinner on his blog. He argues, rightly, that you need to build from a position of trust when it comes to banking. This is particularly acute because you’re talking about things like money. Yes, the old banks have been great at creating what we might call ‘trust theatre’ — big imposing granite pillars, people walking around in uniform, familiar logos everywhere, not a hipster in sight. And we know how quickly those granite pillars can seem like a bad joke. But at the end of the day we know they’re regulated, that there is at least some process behind the facade, and that our money is as safe there as anywhere else.
Wise, Revolut and others have charged in, and done very well by offering services we really should have seen a decade or more ago from our digital banks. With Revolut, for example, I can give my daughter a debit card and see what she’s spending, what she’s spending it on, and generally give her a better sense of what money is than I had at her age. And it works well.
But of course, I’m not going to put any real money in my Revolut or Wise account, not yet, anyway, because they have not won my trust. And that is a hard thing to do. It’s not that I trust Big Bank, anymore, but I trust the regulators enough to feel that that is a good enough brake on Big Bank from stealing more of my money than they do already with hidden charges. (Bitter? Moi?) And yes, Revolut and Wise are regulated too. But it hasn’t been tested. And the lesson we’ve learned from any startup with an app and money is that we’re still in the dark ages, where nothing is written in stone (or granite).
Some of us are still shaken by the demise of bike-sharing companies, one of which disappeared overnight with most of our deposits. If a firm like that can make $10 million disappear overnight, then couldn’t financial startups do the same thing? Probably not, but for many of us, one digital wallet in an app is the same as another, in terms of security, whether it’s a fly-by-night bike company or a Fintech company. Sad, but true.
So Chris is right in saying we need to start with trust first when it comes to digital finance companies. But it also applies to other kinds of digital first companies too. I have moved all my mobile phone accounts over to virtual operators (MVNOs, mobile virtual network operators, which are basically companies which buy capacity from a real telco, and then package it up under their brand.) I am tired of traditional telcos, and 24 month-plans, so for me anything is better than the old guard, especially ones that involve easy onboarding. but I can see problems, and smell a lot more.
For one thing, the urge is always to add more customers, and to try to slice and dice services until you get a compelling mix. By definition, then, you’re focusing more on new customers than traditional ones, and while that’s fine, you need to be sure that by adding new customers and services you’re not making things worse off — comparatively speaking — for existing customers. In my case, I was initially OK with having three separate accounts and to install separate apps on all devices (and move a SIM card for my mobile wifi dongle to a phone so I could install and maintain that account) but I did so because I was told that soon they would have family accounts, and that all this could be done under one roof. When that did happen, it turned out it only worked for new accounts (more or less) and so not only didn’t benefit me, but also disadvantaged me as an existing customer.
And that’s the thing. When you prioritise the new customer, you’ll inevitably lose some of your existing customers. That easy onboarding is also easy off boarding, and so I’m off to the next MVNO as soon as I can. Coupled with this is the other ‘theatre’, which is customer service. Customer Service Theatre is when it’s easy to talk via chat with a company, but where you’ll always get someone calls Brad, who is clearly copying and pasting template responses, where he’s totally focused on making me happier etc, but where there’s no substance behind it. Either Brad hasn’t been briefed, since he works 1,000+ km away, or is outsourced entirely, or he just lacks the authority to make decisions beyond the most basic. If you mistake that for customer service focused not on happiness but on fixing something that is broken, then you know you’ll have problems. Not in year 1, necessarily, but by year 3 or 4.
And so here’s the thing. Netflix is easy come, easy go. It’s pretty straightforward stuff, doesn’t require much customer support — I’ve not used it once in 6 or 7 years. But anything involving something more specialised, such as money, or internet access, or food, or any kind of specific item you’re purchasing, then you need to win over trust. And that means, depending on what you’re selling, having proper customer service with experienced handlers with access to engineers, and the ability to make decisions, and you need to keep a laser eye on your existing customers and to ensure that the quality and breadth of your service evolves to meet their evolving expectations. Don’t assume their goodwill is something that will last.
If I had to boil it all down, I’d say: If anything you’re doing smacks of Theatre, then fix it. Or those people who arrived first may leave first. Noisily.