If you’re old enough to remember the early 2000’s, you probably have fond memories of your Nokia mobile phone. I had two, even. They once dominated the market for smartphones. At some point, however, they stopped feeling so slick. Nokia phones started becoming an almost-comical foil to the simplicity of an iPhone.
Indeed, their CEO did realize that they were, in so many words, probably fucked. There’s a tried-and-true method to make someone vividly aware of the need to take action. Point out the burning deep-sea oil drilling platform that they’re standing on.
Stephen Elop, CEO of Nokia, in a 2011 memo:
There is a story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters. As the fire approached him, the man had mere seconds to react. He could stand on the platform and inevitably be consumed by the burning flames. Or he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform,” and he needed to make a choice. He decided to jump. It was unexpected. In ordinary circumstances, the man would never consider plunging into icy waters. But these were not ordinary times—his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a “burning platform” caused a radical change in his behavior. We too are standing on a “burning platform,” and we must decide how we are going to change our behavior.
If you want people to be eager to change, paint them a picture of the burning platform. Or so they say. I don’t think it worked for Nokia. Microsoft acquired the mobile phone division in 2013. Nokia’s stock has since lost more than half its value, all during one of the largest bull markets ever.
And so, a former giant was eaten alive by a hip new competitor.
All this talk about burning platforms makes me think of none other than consumer banking. Chase, Bank of America, Citi, etc. Boy, does that platform look smokey. Just like Apple and Google came in and ate Nokia’s lunch, I wonder if the same will happen in the banking world.
You’re already familiar with the relevant trends. We spend more time on our phones than we do asleep. We get frustrated when things can’t be done instantly, through an app. We are kinda pissed at big banks for being complicit in the 2008 mortgage crisis. And boy do we hate fees. No more fees, please.
As a result, we get a bunch of hip fintech brands that give us free checking accounts wrapped in an app. The trends seem obvious, the platform is on fire, and the response is to give people what they want.
It’s not only startups that are jumping in this direction. Every big bank has a hip digital strategy. Goldman Sachs has poured over $1 billion into Marcus. Some of these even have a bit of traction. Maybe it’s just a matter of time before these new, friendlier brands gobble up one of the most lucrative businesses in the world.
On the other hand, if Henry Ford gave people what they wanted, the Ford Mustang would have been an actual mustang. It’s not always clear whether the platform is actually, really, on fire. And even if it is: which way to jump?
The Model T is a great example of an unexpected disruption. Sure, automobiles already existed at the time, but they were a quirky contraption that most people couldn’t see themselves using. The horse was how people got around, and it was hard to imagine a world without the ubiquitous stage coach.
The literary device may be obvious at this point, but I have to spell it out anyway.
What if the consumer bank of the future is really no bank at all?
Sure people will probably need to store their money somehow, and have a convenient way of spending it. This doesn’t mean Dedicated Ubiquitous Financial Institutions are the best way to do that.
Uber launching their new Uber Money product may be the canary in the coal mine. It’s a bank-like service, with a checking account and spending cards, for the drivers. Your earnings are automatically available to you in real-time. This is likely the best “banking” option for an Uber Driver. It will be hard for a non-Uber bank to compete with this functionality. And, I predict they’re not going to stop with checking and cards.
Who’s next? Walmart, Amazon, Koch Industries? And where does that leave Chase?