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Sunday, 13 December 2015

Complacent, Too Big to Fail? Don’t Ever Kid Yourself!

Yet another little news piece popped out of the digital ether last week and it seemed to me that it was a real game changer.

Briefly it announced that the Bank of England had granted a licence to another online bank, Tandem, following the licence granted to Durham based Altom in June this year.

These are not just online banks but are designed to operate purely as mobile banks using an app on a smartphone or tablet.

They will offer all the usual retail banking services such as current account, payments in and out, statements, savings and loans and should start operations in 2016.

Tandem claim that their offering will save clients a "substantial amount of money" due to their high level of efficiency. Indeed it has been suggested that because of the software Tandem will have only 140 staff for which conventional banks would need 10,000.

More than fifty mobile banks are said to have applied for licences.

In a recent interview Anthony Jenkins lately CEO of Barclay's and previously head of the retail division suggested that if these new mobile banking services take off then conventional retail banks would be decimated. He predicted that bank employment could fall by anything from 30% to 50%.

If these new mobile banks are successful and current predictions are for 5 million customers within five years they will revolutionise retail banking and some would say not before time.

Look a few only years back and reflect on how the web has been the platform for remarkable changes in the way that we buy things.

Typically Amazon has revolutionised retailing of books and now of just about everything else.  Uber is the largest taxi company in the world without owning a single taxi.

It has been said that the world's largest bookseller Barnes and Noble should have started online sales of books but from the outset Amazon was viewed as an upstart competitor who knew nothing about selling books.

Barnes and Noble were by no means alone.  Many high street stores looked on the web based companies as cheapskate competition and only now are beginning to realise that this is the way that consumers like to shop.

Maybe the high street will become display areas in the future so that consumers can see the goods and then buy them online. It (the high street) is not exactly healthy in its present state.

The overall fact is that some other industry or commercial sector is currently being eyed by some clever software designers to set up another Uber style operation.

Check out a Hong Kong based company called LaLaMove, a van delivery company in Uber style throughout SE Asia.  Medicine?  Take a look at www.pushdoctor.co.uk to see how you can have a face-to-face consultation with an NHS GP from your smartphone or tablet.

What if Amazon who are currently building a massive new facility at Manchester Airport likely to employ 1,500 staff, decide to start selling food on same day delivery? How would the supermarkets react to that?

Business leaders have always acknowledged that there is and will always be competition. Historically it has been easily identified and performance monitored.

The problem now is that competition is coming from sources that are completely anonymous and that have no reputation in the specific industry. They are coming, as it were, from left field and the attack will be completely unexpected.

For the consumer it is very exciting but for long established businesses it will be traumatic in the extreme.

No businesses and especially the banks have a divine right to exist even if some of them think they have. We can forget the "too big to fail" cry that went up at the start of the recent credit crunch.

Complacency is death to businesses and these left field competitors will be licking their digital lips at the prospect.

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