A Bank is an Operating System
For all the tech in this image, bank = building. That needs to change.
In the late 19th century, as the first automobiles started to appear, they were often referred to as "horseless carriages." This moniker seems quaint to us today, but it perfectly illustrates a historical example of an old mental model struggling to comprehend a new technological reality.
It isn't just in the reals of high tech like, autonomous vehicles, AI-driven decision-making, and quantum computing, it is happening in nearly every category that is affected by the ever-increasing rates of technological innovation. This can have disruptive effects on brands, especially large, brand leaders, since it often allows new competitors to enter their market in ways that leave the leaders unprepared to deal with the shift.
"Horseless Carriage" Thinking
The term "horseless carriage" reflects a paradigm where the new (the automobile) was understood in terms of the old (the horse and carriage). The mental model was built around the idea that transportation required a horse. So, when cars arrived, people could only make sense of them by reference to what they knew: the horse and carriage. Even the way we measure the power of an automobile is framed in terms of the horse: horsepower. The widespread adoption of the automobile had profound effects that we are all aware of. If you were a coach maker, or a buggy whip manufacturer, your business was headed toward exctenction pretty quickly.
The problem with “horseless carriage” thinking is that it limits the potential of new technology. If cars were only thought of as carriages without horses, we might never have realized their true capabilities. We wouldn't consider them as independent entities capable of speed and flexibility far beyond that of a horse-drawn carriage.
For example, once one is able to conceive of automobile without the cognitive baggage of the horseless carriage mental model, it opens the door for a whole host of developments built around the mental model and the potential of the automobile:
Parking lots
Gas Stations
Drive through
Attached garages
Supermarkets
Expressways
This phenomenon is not unique to the dawn of the automobile era. More recently, mobile phone manufacturers still thought of their products as telephones, with keys and switches. Motorola was a leader in this space, and has become the market leader in developing phones that were smaller and smaller. Of course we know what happened—Apple announced the iPhone and the world changed overnight, right? Not exactly. At first Apple was criticized for delivering a phone with no keyboard. The technology was still slow, being optimized for call quality and messaging.
But once people caught onto the idea of a keyless all glass interface, apps became more practical. Mobile carriers too worked hard to improve the speed and cost of their data networks, turning the mainstay features into commodities. This led to app stores and new economies for developers. The mobile phone went from being primarily a messaging device to an omnibus communcation and creative tool, disrupting not just phone makers (remember Blackberry?) but photography equipment makers, audio equipment makers, and powered the rise of social media.
The Horseless Carriage of Banking
Banking too, is undergoing a profound shift, that will disrupt the industry. For at least the last hundred years, the bank was a place you went—to deposit or withdraw money, apply for a loan, open an account, or exchange currency. Banks had branches with tellers that usually recognized their local customers. ̃Our mental model of banks has been remarkably consistent since Victorian times. Even today, when there is a story about a bank on TV news, the visual shown is almost always the building.
But driven by digital technologies, banking is poised to go through a major mental shift. Today we rely much less on cash than we ever did. Digital wallets like Venmo and Zelle and digital payment technologies like Apple Pay allow people to freely exchange funds without needing cash. For those that do still need the occasional cash, ATMs are ubiquitous. We can check our balances online, and conduct almost all our financial business without having to go to a bank branch. The digital bank of today is less a place, and more of a financial operating system, that we rely on multiple times per day.
New technologies and developments like Open Banking and blockchain will allow FinTech service providers to capture and establish relationships with customers through value-added services. This could force traditional banks into an even more commoditized market.
Capital One is a good example of a banking brand that has made the shift. If you were to visit thier corporate headquarters, you could almost be fooled into believing you were on a Silcon Valley tech giant’s corporate campus. Capital One doesn’t see themselves as a bank, rather they see themselves as a tech platform in the banking space. Just this simple shift in thinking has allowed them to be much more agile and innovative in the market, and able to scale their brand much more flexibly. It was they who were able to re-imagine the bank as a fin-cafe.
Traditional banks know that the future is digital, but they also have the kind of inertia, that gets in the way of agility. Usability on banking apps is often painful, and getting support often requires long waits on hold.
The Age of the OS
Imagine for a moment that a large bank were to completely reimagine itself from a Bank to an operating system. IF it went from being product-oriented, to being oriented around human experiences? How would it change the existing bank building? Could branches become community spaces dedicated to financial health? Could we transform the idea of the banker to be a financial healthcare practitioner? Could banks help parents manage allowance, and chores, while teaching them financial literacy? Could they more directly support local entrepreneurship with education, fostering connections, and mentoring? How might it better support the booming gig economy? Could it be possible to think of banks not simply in terms of capital and money, but in terms of resources and growth? What might that look like?