Bank 4.0: Banking everywhere, never at a bank

by Brett King

Sixteen years after von Braun’s surrender to Allied forces, President John F. Kennedy Jr announced that by the end of the decade the US would put a man on the moon. It would be in a rocket built by Wernher von Braun.

This process of iterative design, or engineering, is known to engineers as “design by analogy”3.

Design by analogy works on the philosophy that as engineering capabilities and knowledge improve, engineers find better ways to iterate on a base design, perhaps finding technical solutions to previous limitations.

To create something truly revolutionary you have to be prepared to start from scratch.

Musk has the unique ability to learn new skills to an extremely high level of proficiency in very short time frames.

If you were starting from scratch today, building a banking, monetary and financial system for the world, a banking system for a single country or geography or just designing a bank account from scratch, would you build it the same way it has evolved today? Would you start with physical bank branches, insist on physical currency on paper or polymers, “wet” signatures on application forms, passbooks, plastic cards, cheque books, and the need to rock up with 17 different pieces of paper and three forms of ID for a mortgage application?

I would suggest banks have traditionally provided three core key pieces of utility: 1.A value store—The ability to store money safely (investments fall into this category) 2.Money movement—The ability to move your money safely 3.Access to credit—The ability to loan money when you need it

Whenever we talk about what a bank does for us, or what we need from our bank, we generally don’t describe channels, bank departments or products—we describe utility and functionality.

But let’s be clear—it is not the bank products of today that will ultimately become embedded in this smart world. Only the purest form of banking utility.

In this emerging world of instant payment utility, for example, the artifacts and products we associate with payments today—hard currency, cheque books10, debit and credit cards, wire transfers, etc—will simply disappear.

“Alexa, reorder me a pair of Bresciani socks.”

technology that deliver experiences and utility today.

Real first principles thinking in banking isn’t happening in established, developed economies. The real action is in emerging markets or developing countries where legacy is poor.

Bank 4.0 is going to be embedded in cars that can pay in a drive-through without the need for plastic, or autonomous vehicles that generate their own income and pay their own road tolls. Bank 4.0 is going to be embedded in voice-based smart assistants like Alexa and Siri, available at your command to pay, book, transact, enquire, save or invest. It is going to be embedded in mixed-reality smart glasses that can tell you, just by looking at something—like a new television or a new car—whether you can afford it. Bank 4.0 is about the ability to access the utility of banking wherever and whenever you need a money solution, in real-time, tailored to your unique behaviours.

The bankers of tomorrow are not bankers at all—the bankers of tomorrow are technologists who enable banking experiences your customers will use across the digital landscape.

ebay is a shark in the ocean. We are a crocodile in the Yangtze River. If we fight in the ocean, we will lose. But if we fight in the river, we will win. —Jack Ma, CEO, Alibaba Group

6.It’s more important to be best than first

Artificial Intelligence, the blockchain and the need for smart contracts will lead to IP-optimised value exchange systems that circumvent currency controls by necessity.