Why banks are opening their doors to crowdsourcing
Once upon a time, banks were big, impenetrable buildings staffed by people using impenetrable language. As specialised, trusted institutions, they held the monopoly on managing our money, and rarely looked externally for guidance or ideas.
But these monoliths are now facing competition from a number of angles; financial technology start-ups have been a disruptive influence on the sector for the past few years, and now retailers like Tesco, Sainsbury’s and, from 2018, M&S, are expanding their banking services to include more specialised products like mortgages. Faced with this change, some banks are beginning to look beyond their immediate surroundings and towards these challengers – and their own customers -- for ideas on how to innovate.
As well as Nubank in Brazil and GTBank in Nigeria, which are shaking up the power structures in their respective markets, one obvious banking disruptor is Monzo – not a new name in the industry (it was founded in 2015), but one that has had an eventful year. The digital-only ‘challenger bank’ not only gained its banking licence in 2017, but also announced the opening of The Drawing Board, a collaborative community space in its London HQ. This space, says Monzo community manager Naji Esiri, will be used as “a launchpad for amazing projects chosen and organised in partnership with you – our community”.
Meanwhile CYBG, the banking group that owns Clydesdale and Yorkshire Bank in the UK, last year launched digital banking service B, which defines itself not as a bank, but as ‘a constantly evolving lifestyle service driven by what consumers want and need in a fast-paced world’.
This year the group launched Studio B, on Kensington High Street in London, which houses a digital-first banking solution, an in-house innovation lab, and an events space. The store uses feedback from customers to design customer-led solutions; it is currently looking at areas such as AI, open banking and increasing customers’ financial resilience in 2018.
Flamingo spoke to Helen Page, group innovation and marketing director at CYBG, about the thinking behind Studio B and what this approach signifies for financial services more widely.
FLAMINGO: What led to the creation of Studio B?
HELEN PAGE: CYBG has had a presence in London for a long time but our last branch, in Piccadilly, was fairly traditional with reducing footfall. We wanted to offer customers an alternative to traditional banking as well as an alternative to digital-only banks. We launched Studio B to create a fun environment that adds new value through experimentation. It is a creative, interactive space that has been designed to open minds and inspire the kind of thinking that could help shape the future of banking.
F: Does the rise of crowdsourcing in financial services signify a democratisation of the industry?
HP: Customer trust in the banking industry has been tested over the last few years and, at the same time, new entrants in other industries have won following by being transparent and working closely with customers. We believe banking should be no different and that the best way to build and retain trust with customers is to be completely transparent. This extends beyond pricing to working with customers to create new solutions to their problems. We firmly believe that our customers can help us to shape a better banking industry.
F: Are the lines blurring between retail and banking? Should banks feel threatened?
HP: Customers have been blurring the lines between retailers and banks for a long time, but the challenge in the banking industry has been our ability to recognise and respond to that. With Studio B, this is within a retail rather than a banking-led environment. At its heart, banking has always been about the safe transit of money, whether that is between customer and merchant or between lending and saving. The need to keep customers and their money safe and to keep banking services effortless and available 24/7 is a fine balancing act. The experience and maturity of existing banks in this space is often underplayed, but is definitely an advantage.
Bronwen Morgan, Flamingo