Originally published on July 16, 2018 in Payments Journal by Jo Hippolyte


The financial industry is in the middle of a paradigm shift, centered on how value is perceived and delivered. The traditional lines between our tangible and the intangible worlds have merged, and we now value intangible digital experiences as much as physical things.

Under the influence of the tech titans and app-based services such as Uber, people have come to expect services that function perfectly, are available on demand, are increasingly personalised – and that deliver constant value and pleasure, in real time.

This shift in the perception of value is profound because it completely disrupts the artificial scarcity mechanism that has driven more than 200 years of global trade as we know it. The converged technologies that provide access to these experiences also make them tangible to others, creating audiences that can be marketed to. Social media platforms such as Facebook and Twitter currently operate on this is the basic value model.

This shift in the perception of value is profound because it completely disrupts the artificial scarcity mechanism that has driven more than 200 years of global trade as we know it. 

The financial sector has been slow to react and is still pushing standardized products using segmented mass marketing that fails to consider consumers as individuals, or capitalize on opportunities to service their hopes, needs and desires at a personalized level.

Open Banking uses the concept of personalized and permissioned data as catalyst to deliver financial services via non-banks, blurring the lines between sectors, and creating opportunities to service this wider perception of value. For example, once payments services providers have access to transaction data, they will be able to anticipate when customers are likely to need a short-term line of credit and offer their service as an alternative. This, in turn, creates a number of issues that all participants must manage and engage with, but also creates an environment for innovation.

Wealth 2.0: Value expectations, trust and society

By 2020, it is estimated we will have reached global digital maturity, where three quarters of the planet, will have access to an internet-enabled device. By this time, most global organisations and brands will have built digital platforms and most will have even restructured their businesses around them. These platforms and the converged technologies they support will be valued, monetised and commoditised as capital assets in their own right.

The experiences they enable will be measurable, quantifiable and tradable through digital footprints or experience data much like brands on the stock exchange are now. Businesses will use the data as currency, to trade globally across key market verticals like finance and health, disrupting current commercial models of value just as social media platforms did when they first came into being.

The music industry, one of the first hit by the digital wave, has now become pioneers in trade in intangibles. De la Soul recently proved it is possible to trade data with consumers direct. By releasing their entire back catalogue for free download, in exchange for fan contact details, they were able to build their own audience community platform where they can market their music to fans direct in hours.

For banks, seemingly benign technological offerings like micro payments and omni-channel financial services in apps and platforms, are opening potentially game-changing monetization channels that will redefine the way in which we perceive wealth and finance and behaviourally engage.

Today Amazon customers can use Amazon Balance, a facility you can top up on and offline; AmazonPay to pay for services; and, if you’re one of the 100 million paying Prime subscribers, for every purchase via the facility you get 2% cashback. That looks and acts like a bank account with a balance, which incentivises you to spend with the benefits a bank-issued card might provide. With that power, firms like Amazon are primed to reimagine what financial services looks like through adjacency at scale and stealth rather than directly competing around the traditional current account.

There is also a huge opportunity to redefine and future proof next generation financial trade to encompass intangible value. Digital technology has disrupted whole sectors by making commodities that were once artificially scarce, abundant and removing entire supply chains in the process. However, technology is moving far faster than society can process, so there is a big role to play in helping to educate consumers on how to manage their financial data beyond simply communicated changes required by new rules such as GDPR or PSD2.

Incumbent Banks currently maintain a high level of rational, utility-style trust from consumers but very little emotional engagement with them. Rational trust says that when I turn the taps on in the kitchen water will come out, and when I put money in the bank today, it will be there tomorrow. I don’t really care exactly who provides my water, or bank account so long as it works as I expect.

Banks that can leverage the value of existing rational trust to unlock consumer desire for services and experiences are best placed to stay relevant to consumers.

This basic, rational trust has traditionally reinforced the huge customer inertia that underpins the incumbents and has facilitated their complacency.

Institutions with physical branches also have the added perceived responsibility of contributing to the local community as a key part of High Street and urban architecture. This perception is critical to their rational ‘intangible’ brand wealth in terms of heritage, value to consumers, as witnessed by the outcry over the scale of branch closures, particularly in smaller UK towns and villages.

It is also a double-edged sword in terms of balancing the diverse financial needs and brand perceptions of society with efficiency and delivery costs. However, as the notion of life-first financial services rather than products continues to evolve, so too will the concept of the physical branch and how it delivers truly customer-centric propositions.

Banks that can leverage the value of existing rational trust to unlock consumer desire for services and experiences are best placed to stay relevant to consumers. But success will be determined by their ability to build connected brand experiences.

Connected brand experiences:  Achieving brand stretch through two way engagement

The experience data or “foot prints” we as technology users generate in its many forms: (behavioral analytics, location tracking, spend patterns, dwell times, hover tracking, things we ‘like’ etc) is rapidly emerging as the ‘digital’ currency for experience measurement, optimisation and trade, and is the core element of the big data movement.

Patterns in consumer digital behavior can be identified and synthesized at both micro and macro level in real time to provide huge competitive advantage, allowing business to manipulate consumer desire and consequently supply and demand in ever more subtle ways. We as consumers are starting to realise the true value of our digital footprints and unique data too, and are willing to fight to protect it. This is changing the traditional panacea of relationships we have with organisations, and what we are willing to accept as recompense for granting access to it.

Designing and delivering connected brand experiences that encompass online offline and real time and location data touch points, will help financial organisations stay relevant and valuable to customers, gain trust, and ‘stretch’ into adjacent sectors. It will enable them to deliver on expectations in terms of support for community high streets and overall retail economy, and be relevant to the fast growing digital mainly consumer segment, being ever present in their lives wherever they play.

For customers, it offers the promise of active relationships they can both rely on and trust, whenever they need them, at any stage in their lives. In many ways, brands are benchmarks for consumers that allow them to engage with change in ways that they understand and trust at speed.

In today’s experience driven economy, brand behaviour is just as important as brand perception in terms of helping consumers navigate this fast changing technological panacea. Active two-way engagement that is emotionally intelligent and understands the nature of value across all touch -points is critical to both capturing and keeping them. It is important to recognise that every time there is a game-changing new technological breakthrough, consumers look to see how brands behave and judge them on it, both ethically and experientially.

Creative intelligence and wealth 2.0: Why it matters

As financial services transform into a more open, transparent and collaborative landscape, attitudes and cultures must shift. For banks, this begins with the skill sets you hire for, nurture and build around, and the leadership that underpins it.

Look at the makeup of an average bank board and compare it to the leadership at a tech titan, or a fintech firm. The diverse mix of education, employment history and personality types offers an array of thinking taking in technology, science, psychology, the arts and entrepreneurialism.

Critical to future success will be the ability to harness ‘creative intelligence’. Creative intelligence is the ability to define what can be, as well as what is. In a rapidly changing world where fundamental definitions of value are changing, creative intelligence is key to competitive advantage.

In a rapidly changing world where fundamental definitions of value are changing, creative intelligence is key to competitive advantage.

The ability to conceive of creative financial solutions that adapt to changing life needs and definitions of value, and adapt supply and demand to encompass intangible wealth as a currency is central to success. Open futures are really about re-shaping finance to encompass intangible as well as tangible wealth, and enable people to manage it to fulfill their personal financial purpose.

Creative intelligence is also critical to future economic growth. It is embedded in all the economic sectors through the different design disciplines, whose contribution to the success of trade currently goes unrecognised. It is the catalyst that allows what is intangible to become tradable since it defines the nature or type of value created (both physical and digital). Creativity defined artificial scarcity over 200 years ago, and is used to control it through the creation of artificial needs and wants to this day.

There is a huge opportunity for the creative industries to shape the next phase of economic trade, but to do this, it must mature and recognize both the critical role it plays in global trade, and its impact on humanity. Global digital maturity has ignited a paradigm shift from the economics of production, to the economics of human purpose. In this open economic future, with access to richer data, understanding what unifies and appeals to us as humans offers opportunities to create richer, innovative new services that customers want and need.

Now is the time to examine your business model and service offering to make it fit for the new future in financial services.

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