How the business model of
Brett King: At Moven we started with trying to reimagine the bank account itself, based on the mobile phone – how would a smarter bank account function? What advantages would it give you from a context and interaction perspective? What problems could it solve? Then we tried to get rid of all the existing friction in servicing and managing customers to make it optimally efficient, getting rid of anything that didn't add direct value to the consumer. The easiest example of this removal of friction is that you don't need to go to a physical branch to open an account with us, and can be set up and ready to go with a Moven account in just 2-3 minutes (it takes around a week to get you your contactless sticker and debit card, however).
The real disruption behind Moven, however, is our cost of acquisition and distribution, compared with a traditional retail bank. Even though we sit on top of a bank partner and processor who charge us for use of their platforms, our marginal cost of acquisition is still 90% lower than most retail banks, and our distribution costs are even lower than that on a scale basis. The biggest issues for traditional retail banks with a competitor like Moven is that once we are successful, it really begs the question whether the traditional distribution network based on branches is viable on an ongoing basis, when a competitor can run the same business at 5-10% of the typical cost base.
Why is the CRED ecosystem an innovation?
CRED and our
Do you really think retail banks will disappear?
Obviously retail banks will survive, but I do believe that generally there will be far less retail banking brands in 10-15 years, and there will be a lot less branches, and those that remain will look very different to today. The really interesting thing, however, is that banking is already starting to become distributed where the utility or functionality you need from the bank is embedded in a transaction, purchase or interaction in your daily life. Think of it this way – you don't buy a mortgage, a car loan, or a credit card from a bank – you actually buy a home, you buy a car or you go shopping and traveling. In this way, when you simplify banking and remove or abstract unnecessary friction, then banking becomes something real-time, embedded in your life when and where you need it.
So who is best placed to sell us a car loan or a mortgage? Maybe not a bank. Sure there is a bank in the process somewhere, underwriting the risk on the loan and providing the credit, but the organization best suited to delivering that product is probably a card dealer or a realtor. Banking is set to just become part of our everyday life, enabling our life financially – not as a distinct, special service that requires us to stop our normal buying process of buying a home and asking the bank for permission first to see if we can afford it…
Why retail bankers are hiding their head in the sand and what can they do to compete?
Every business facing this level of disruption has pretty much responded in the same way. Borders and Barnes Noble failed to see the impact of Amazon to the business of buying books online, and with e-Books and the Kindle or iPad. Blockbuster refused to see the disruption that services like Netflix,
The thing is that these businesses are in the business of providing their product or service, not of adapting to changing consumer behavior. It takes a lot longer to change the direction of a business that is an incumbent with very traditional rules and processes like banks. In fact, banks think that the requirement of having a banking license, bank regulation and their physical distribution networks make it very hard for competitors like Moven to come along and compete. However, because of the sudden and rapid changes we're seeing in consumer behavior as it pertains to banking and payments, the banks are already well behind others like PayPal, Square, Moven, and Simple. Generally the problem is one of competing internally for budget with the guys who run the branch network, and secondly, trying to get the compliance and legal guys to accept that digital can be just as secure as a face-to-face interaction.
Actually, there are some banks who show some promise here. The recent BNP Paribas branded "Hello" bank, UBank and Commonwealth Bank in Australia with Kaching, and the attempts by the like of OCBC in crowdsourcing customer engagement, or ASB Bank in New Zealand with their Social Media capability are some excellent examples of banks who have pulled their heads from the sand, so to
