Technology and the future of “banking”

bankingI’ve been thinking a lot lately about the consumer banking industry.

Consumer banking remains the single biggest operating segment for big American banks like Bank of America, Wells Fargo and Citigroup in terms of both revenue and net income. Generally speaking, other operating segments like investment services, brokerages, wealth management or real estate services come no where close. Yet in myriad ways, these mainstays of consumer banking are being eroded – both by financial services-focused disruptors and by those from outside the industry.

As I discussed in my newsletter last week, the rise of “FinTech” firms is already having a significant impact on the wealth management market. Wealthfront, just as one example, recently announced that it now has $2 billion in assets under management – all in just a little over three years in business. The actively managed mutual fund market is now grappling with how to answer automated services like theirs in a way that preserves their operating margins – and finding that that answer isn’t yet clear.

I think that Wealthfront’s challenge to the mutual fund market is a great example of what’s about to happen in consumer banking. The changes coming to how people will keep and manage their money will have major consequences for the banking industry, obviously, but also for the merchants that consumers do business with. Fortunately, merchants and consumers could be the big winners in the democratization of banking.

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Facebook expanding in all directions

If you’re a subscriber to Ben Thompson’s Stratechery blog, then you may have seen his daily update this morning discussing Facebook’s announcement that it will begin hosting news sites’ content. As usual, Ben’s analysis is spot-on, as is his observation that BuzzFeed is way out ahead. From the NYT:

With 1.4 billion users, the social media site has become a vital source of traffic for publishers looking to reach an increasingly fragmented audience glued to smartphones. In recent months, Facebook has been quietly holding talks with at least half a dozen media companies about hosting their content inside Facebook rather than making users tap a link to go to an external site…

Facebook intends to begin testing the new format in the next several months, according to two people with knowledge of the discussions. The initial partners are expected to be The New York Times, BuzzFeed and National Geographic, although others may be added since discussions are continuing. The Times and Facebook are moving closer to a firm deal, one person said.

Considered in context with my post yesterday about what Facebook could – and perhaps is – doing with its payments service, I find this particularly interesting.


Some thoughts on payments

coinsI’ve written about payments quite a bit lately – in both my newsletter last night as well as in one two weeks ago. Between the rapid expansion of Apple Pay and announcements by its would-be competitors (if you want to call them that), Android Pay and Samsung Pay, all of the major platform providers are attempting to hone in on this lucrative market. Further up the stack, software-defined services are attempting to do the same, offering cross-platform universality: PayPal/Venmo, of course, and now Snap Cash (which is really Square Cash), and (finally) Facebook payments.

Unless you’ve been paying close attention, it’s easy to get confused by all of these new payment methods. Which are peer-to-peer? What do I use in a store? How do I just pay the damned dog sitter?

It seems to me that too many people think of payments in a strictly traditional sense: like writing someone else a check, which is how many of us have long used PayPal. That was probably fine for a time, but I think that era is over. It’s time to broaden how we think of payments to fit the age of social.

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Three charts that explain “omnichannel”

If you’re a retail industry executive, these are the kinds of charts that keep you up at night.

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U.S. consumers, particularly younger ones, are spending much less time in malls and in physical stores. Store foot traffic has been dropping for years, which is subsequently putting pressure on merchandise productivity and comparable store sales – which have generally been pretty dreary in the physical retail sector.

For retailers, though, the bad news doesn’t stop there. The decline in store traffic accompanies a slow but steady long-term shift in consumer tastes away from retail staples like apparel and towards other consumables like food, digital media (ex. music, games/apps) and personal electronics:

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Rise of the Unicorns

unicornIt’s been something of a running theme over the last ten years, particularly in the blogosphere and social media, to declare that blogging is doomed. With the closure of Andrew Sullivan’s iconic blog, this debate has been spun up once again: Ezra Klein bemoaning the decline of the blog in the era of the social web, and Ben Thompson pointing out that his own recent success with Stratechery is a counterexample of “Blogging’s Bright Future.”

I think the rise of Stratechery actually provides some interesting lessons to anyone paying attention to the future of business models in journalism, blogging and the web generally. But as so often with new media, the medium is often confused with the product. Talking about the success or failure of blogging itself is a little like arguing about whether the smartphone “works” for whatever one wants to use it for. Blogging actually works pretty well for some goals, and less so for others.

Rather, a more interesting question might be – what will blogging be used for in the future, and importantly, who (if anyone) will pay for it? These are the kinds of questions that cleave blogging away from the future of journalism, I believe, and more towards… whatever you want to call what Ben is doing. Indeed, I’m inclined to agree with Klein: blogging is still a pretty crappy business model, and it’s certainly not a viable future for journalism.

But then, who ever said blogging has to be about journalism?

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