Opinion: FinTech vs High Street

If you’re a regular reader of this blog, you may have noticed that I have strong opinions regarding consumer financial services, particularly when it comes to Revolut, which I wrote about a lot by now.

I didn’t start writing about these services because of a professional interest, but rather because when I moved from Italy to Dublin (via Los Angeles), I felt like I stepped back ten or more years with the banking system. And while this improved significantly when I moved to London, there are still a few things baffling me from time to time.

But as I discussed in one of my recent Revolut-bashing posts, compared to Ireland the high street banking options in London are so much more interesting that I’ve effectively ditched Revolut for day-to-day payments. So why would anyone care about FinTech products?

I have been thinking this for a while, not just as a customer, but with an awareness that, if I decided to change my perspective in life and go for a riskier professional position, from my rather cushy one, FinTech appears to be the place to be right now. Particularly given the unfortunate experience I have gained in this field by now.

One of the issues appears to be one of branding, and trust. Quite a few people appear to have a dislike for high street banks because of their association with previous scandals or news. And that’s what makes it funny to see how high street banks appear to just want to enter the market with new brands.

Another thing that Monzo appears to capitalize on, in their tube advertisements, is the ability to receive instant notification of the money spent. And that’s something that I deifnitely can relate to. This is particularly important when you get to more shady stores, or to coffee stores with untrained staff, that may suggest that a transaction didn’t really go through, and suggest you to pay cash instead, charging you twice.

Indeed, this was one of the biggest advantages of using Revolut for me in Ireland. The “famous” Tesco Bank credit card didn’t really have even an online banking platform, and the only way for me to confirm whether a transaction went through was by looking at my Tesco points statements. But this is not something revolutionary: I had notifications of all online transactions, and card-present transactions over €50, on my Italian pre-paid card in 2006 (via SMS, not via app at the time, of course.)

While I feel Monzo is right to take a swing to most high street banks for not implementing these notifications, even in 2019 London it’s not true that you need to “go FinTech” to have this level of support. My American Express does the same, and you cannot say that AmEx is a new player on the market!

And it doesn’t stop at just sending me notifications for the charges: American Express goes one step further, and integrates with Google Pay so that you get the notifications even without having the American Express application installed.

Indeed, I have a feeling that, for the most part, customers would be happy if the level of support in high street banking was on par with American Express:

  • Their website lets you log in with a simple username/password combination, rather than the silly security theatre of “Give me the 1st, 2nd, 123th character of your password, and 1st, 5th and 6th digit of your PIN” (seriously, setting aside the random index selection, why on Earth do you need two equivalent factors?)
  • New charges on the card are notified immediately, either through app or through Google Pay (I don’t know about Apple Pay but I assume that’s the case there as well).
  • You can get your card’s PIN online, which is usually verified by a text message OTP.

One of the things that AmEx does not do, that I think all of the FinTech players appear to do, is freezing/unfreezing the card on the fly. A feature that Barclays has been advertising all over as if they had invented it.

It is pretty much possible, or certain, that some UK high street banks already started providing all of these options, maybe in different combinations. As I said, Barclays does appear to have the ability to freeze/unfreeze the card. Fineco does not mail out the PIN but rather has you requesting it online and delivers it as text message. And as I made as a point before, Santander has a credit card with no foreign transaction fees.

Many of the articles I read over the importance to FinTech startups imply that the main reason why big banks can’t be this flexible or “innovative” is that they have old, heavy and difficult to manage backends. From second hand discussions, I can believe that the backends are indeed as heavy and clunky as they are purported to be, but it does seem to me that many of the features involved can’t be that tied to the backends, given that most of the banks can provide those features already.

A number of features that I see being deployed throughout different banks is the ability to “budget” expenses. While they sound particularly interesting, this appears to be mostly a “frontend” feature. Santander has this feature, but somehow they decided to implement this on a separate Android app only, which I gave up on. Indeed, it does not allow you to correct their classification of expenses, which makes it pretty much useless, not just because some vendors are classified completely wrong, but also because sometimes the same vendor might be used for different reasons (Boots, CVS, Walgreens, and similar all provide both medicines and groceries; how you categorize their spend depends on what you bought!)

While Santander have already won me over as a bank customer, I do feel that they would win over more of my credit card expenses from American Express if they implemented “this one weird trick” of informing me of charges as they happen. Because small things like that are one of the reasons I use my AmEx quite a lot in the UK, even after I reach the needed spend to upgrade my Marriott membership to gold.

So yeah, my hope is that high street banks will finally see the competition from FinTech as a list of features that they should, opportunistically, implement, rather than an excuse for the branding and marketing departments to come up with new ideas to be “hip”.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s