Upstart Brands Nip at Well-heeled Banks


“Banks aren’t doing a good job at innovating for consumers,” said Robert Dighero, a partner in the London-based venture capital firm Passion Capital. “Start-ups are nibbling away at some of their most profitable businesses.”

From FastCompany, Robert Anderson, Creative Director of the payment processing startup Square, notes:

"Well frankly, this industry has been neglected for so long that even putting in a modest amount of thinking in terms of modern user experience makes this stuff way better,"

In the wake of some of the most inexcusable scandals, after significant fee increases during the worst recession since the great depression, after generous taxpayer bailouts were gobbled up by financial services companies without so much as a thank you, (except for AIG, whose thank you almost became a f*** you) is it any wonder entrepreneurial Innovator Brands see the big brands as vulnerable?

London’s fast-growing start-up scene is trying to disrupt the financial status quo. As consumers’ trust in banks deteriorates because of a series of recent scandals, young companies are pressing their newcomer advantage. Firms are offering services like low-cost foreign currency exchange and new ways for small business to borrow cash.
Most financial services companies have been behaving like Quo Brands, having the same old one-way conversations with their customers during this difficult time. Odd, given the real brand-building opportunities crisis like these offer. After all, A.P. Giannini founded Bank of America (then called Bank of Italy) to lend money to struggling immigrants when the establishment banks wouldn't. Innovator Brands like GoCardless, Wonga, MarketInvoice, and Simple.

Simple founder Josh Reich has captured the unfortunate essence of the Quo Brand banks: “Banks make money by keeping customers confused,” Mr. Reich said. “There’s no incentives to make the experience better.” Simple, on the other hand, charges no fees and provides customers with deep insight into how they spend their money with powerful online analytics tools.

How do they survive with no fees? No ATMs. No branches. No branch managers. No tellers. Just a simple, white card that acts like a debit card. 

Simple and the other Innovator Brands in this industry are poised for a noisy and disruptive success. Unless, of course, they go the way of other Innovator Brands in financial services such as esurance. Esurance is now, as the radio ads smugly point out, an Allstate company.

If you can't beat 'em, buy 'em.


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