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April 12, 2012

Banking on the not so far fetched Future


Joris van Heukelom’s keynote speech at the Future Ideas conference at the Dialogues House last month intrigued us so much, that we interviewed him at the MakerStreet office in Amsterdam two weeks later. The ensuing dialogue challenged our idea of what Banks will be doing in the future and with whom they’ll be partnering.

If you were the head of a bank what decisions would you make?
“First of all, I can only give an answer to this based on my experience as a consumer and the digital skills I’ve gathered over the last decade. The first question is why do most of us go to a bank? Van Heukelom asked. “First and foremost, this is where most of us are paid. Because of that, banks have access to an incredible amount of information. They know what I spend my money on, when my account is close to being in the red or when I have a buffer. And the way in which a bank represents my financial situation is important to me—it needs to make sense and enable me to make better decisions. That said we are all becoming savvy as clients and after the financial crisis of 2008, we want to know exactly what our bank does with our money once we’ve deposited it.”

Van Heukelom points out that retail banks, from a simple consumer point of view, have two main functions:
1. Representing information in a usable and comprehensible way anno 2012
2. Giving trust that the money you deposit will be able to be drawn upon at a later date and is being used in a proper way.

Yet, since the “bank run” on Fortis which led to the government taking over Fortis NL and ABN AMRO activities in October 2008, consumer trust has been so deeply eroded that clients may be more likely to see a company such as Google or Facebook (also known for its ability to represent information) as more trustworthy. “Banks lack transparency and because of this, the trust issue looms large,” he emphasizes.

So what are the Banks most afraid of?
When van Heukelom speaks to the higher management layers of large banks in the Netherlands, he finds that they are more concerned with players outside the sector like Google and Facebook, than their traditional rivals, wondering when these international giants will start launching banking-like products. “The fact that Google has banking licenses in a lot of countries including one issued by the Central Bank of the Netherlands could be a sign that at some point they will be encroaching on what’s traditionally seen as territory of the Banks,” he posits. “ Facebook could introduce a global new currency tomorrow!”

“Imagine that your salary goes to the Bank of Google,” he supposes, “I’m confident that within no time, they’ll be able to tell me exactly what they are doing with my money. Wouldn’t that be great? Detailed information about where the money is spent. Total transparency.”
In an article last year by Dave Davies, entitled Why would Google become a Bank, Davies explained that Google had obtained a banking license from the DNB in 2007, although it is a license for digital banking.

So what’s in it for the customer?
Ease of use, total transparency, and convenience through seamless digital services are all important. Integrating payments with email, while being able to enjoy full online and mobile accessibility, would certainly make it easier to pay bills and re-use that information for accounting purposes later on. Google is great in representing information. Much better than the average bank and since Google’s revenues are not based on the traditional banking model, they should be able to charge lower interest rates and fees. Those conveniences, in addition to cost savings strengthen their case even more.

What will happen?
Only time will tell. Whether the Bank of Google will take over the Bank of America, no one knows, and van Heukelom points out that it’s not all about Google. Indeed, it might just be Facebook. Whichever company it is, it is clear that banks should reassess their competition and consider outside-in alliances that before 2007 might have been unheard of.

Joris van Heukelom has been working in the publishing & telecom industry since 1998. Starting at Viacom (MTV, Comedy Central, Nickelodeon), then moving to KPN in 2005 and Sanoma Media in 2007, van Heukelom joined MakerStreet as a partner last year. Throughout his career, van Heukelom has continuously challenged big publishers and telecom companies on their Digital Media strategy, reminding them to keep the end user as a central anchor point.

Last summer he kicked of a StartUpschool with the goal to accelerate and foster innovation in smaller companies and start ups. Van Heukelom sees his role as creating a hybrid mix between innovation in the big and the small world. He holds a Master in Marketing & Advertising and a Master in Communication Science. In addition to being a partner at Makerstreet, he is Chairman of IAB the Netherlands.

Written by Elizabeth Kleinveld, Senior Innovation Manager at the Dialogues Incubator.

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