Finance Monthly August 2019 Edition

hen my daughter was very young, she had a favourite dummy. One evening, just before bed, we were alarmed to discover the dummy was missing. As soon as we finally got her to sleep (no easy feat!) I grabbed my mobile, asked Alexa to find my daughter’s dummy, and immediately purchased two for next day delivery. I’m not sure who was happier—my daughter, who was reunited with her beloved dummy, or me, who was able to fix a problem easily, quickly, and painlessly, thanks to Amazon. The problem with this scenario, of course, is that Amazon does much more than sell dummies. They’ve disrupted nearly every industry with the same level of speed, convenience and customer satisfaction, and now they’ve set their sights on the financial services industry. If you’re not worried about this tech giant’s potential impact on financial services, you’re not paying attention. That said, there’s no reason to throw in the towel, hand over your bank and admit defeat. Rather, financial institutions can leverage their concern to drive innovation, focus on their strengths and fight back. Let’s face it—Amazon is entering the banking space with m a n y advantages. A massive pre- existing customer base, unlimited advertising space, and pre-built channels, such as Alexa, the Kindle, and Amazon.com, to name a few. Their biggest advantage, however, is their ability to innovate an experience. Look, for example, at the act of reading. Amazon transformed that experience by taking books, which they’d already mastered, and making them digital. What might they do with something like money, which is already an almost purely digital asset? Despite these benefits, Amazon faces some challenges. Although they’ve shown that they can mine my data to find the exact dummy I need quickly and efficiently, they have yet to prove they can be trusted with my bank account. One misstep and Amazon could go the way of Facebook, which has spent years struggling with trust issues and data breaches. This is not to say that financial institutions don’t struggle with being seen as trustworthy by their customers. What this means for a bank, however, is different. Generally, people trust a bank to hold their money, but that trust is tested when they need to resolve a problem or avoid a fee. Trust also wavers by generation. According to a recent PwC survey, 72% of baby boomers trust their primary financial institution the most with their money, while only 53% of Generation Z felt similarly. Less trust means more opportunity for competitors like Amazon. If banks want to stay ahead of Amazon, they must preserve the trust they have by improving on the things Amazon does well— operational efficiency, transparency, convenience, and a near maniacal focus on the customer. First, financial institutions must put the right technology platform in place. Amazon is a pioneer of data-driven decision making. Everything from new products to new acquisitions is based on the W Financial institutions must design experiences for the customer. “ “ Nathan Snell, Chief Innovation Officer - nCino FRONT COVER FEATURE - BANK OF AMAZON 11 www.finance-monthly.com