With the advent of new technologies, it is a bad idea to maintain established out-of-date standards. Yet that is what many companies do when they choose to ignore evolution. The only risk they run is disruption. In fact, numerous start-upsemerge every month, and they know all too well that it’s a good idea to use digital tools, like applications. With these technologies, young companies are up-ending the established order, and transforming their marketplace. So, what about the old institutions? Should they engage with new digital trends at all cost? What lessons can you draw from all this for your own business? I suggest finding out more about this through a bad experience I had with my American bank Chase.
Disruption, or is it about breaking the system through innovation?
Getting kicked out of your bank
One of my real estate investments is an apartment in Fort Lauderdale, near Miami, Florida. In order to collect rent, I had to open an account with an American bank named Chase. A few weeks ago I received a letter at home in London, saying they had decided to close my account, with no explanation. As a customer of theirs for two and a half years, I never had any problems. So, upon receiving this letter, I asked myself a fair few questions. I then asked my assistant to call Chase to try to figure out what was going on. Nothing doing. There was no interest and they closed the account, period. And still no explanations.
So I went to my TransferWise account. For those who don’t know, this is a service that converts one currency to another, using far better exchange rates than anywhere else. They recently also launched a service called the Borderless Account, which allows you to create bank accounts in Europe in the Eurozone, as well as Britain, the United States and Australia. Other countries will soon follow. It’s an amazing service! You can open an account very easily in just a couple of clicks. So I opened one in US dollars, and transferred all the money I had with Chase, into it.
Chase : A painful and complicated system
A few minutes after the transfer, I received a message from Chase. But in order to read it I had to log in to my account, which I did. And surprise surprise, because of suspicious activity on my account I could no longer log in. So I asked my assistant to call them back. After hours of discussion, I understood that I had to visit a Chase bank branch in order to unlock things. Except that I live in London, and there are no Chase branches here.
So because of them, I found myself in a situation where I had to transfer money to another account. And my money and account were blocked when I tried to. On top of that I had to physically go to a bank to arrange this. You have to admit this is ridiculous. However, as I had to go to the United States the following week anyway, I took on the task.
A few days later I went to Durango, Colorado. When I arrived I realised there was no Chase bank in this city. I had to get back to Croatia for a Mastermind so I didn’t have much time. Consequently I didn’t have time to find another branch in another city and pop in!
A miracle….or not !
What happened next was incredible: the plane that was due to take me from Durango to Phoenix then onto London, didn’t take off on time so I missed my connection.
American Airlines found me an alternative route, which took me to London via Dallas, with one important detail: I had to spend the might in Texas, paid for by the airline.
And here’s where something good came out of something bad: as my London flight was in early afternoon, I would have time to go to a Chase branch to solve my problem!
So that’s what I did and I ended up dealing with a charming banker, who really did do everything he could to help: firstly, after a long and laborious phone call with the security department, he reactivated access to my account. Once he was more familiar with my problem, right in front of me he called the department that deals with account deactivations, to find out why my account had been shut down.
And the person he got on the phone,.. didn’t want to answer him!
He was terribly sorry but couldn’t do any more for me. In any case, my thanks go to this human being who did all he could to help, but ultimately couldn’t. Back at the hotel I immediately made my 1st transfer to TransferWise, this time sending a much smaller amount, worried that my account might get blocked once again.
Back in London the following day, I logged into my TransferWise account….to check that it had worked and that I had safely received the money. Woohoo!
So I did more transfers every day…right up until the last day before the deactivation of my account, which still had half the money in it. I therefore did a transfer for the remaining amount, hoping it would work…and NO, it didn’t go through! AAAAAAAAARRRRRGGGGHHHH !
As a result, a few weeks later, I received a lovely cheque from Chase…a cheque, of course, which I could not pay into my entirely electronic TransferWise account! Brilliant!
The efficiency of Fintech
The banking industry is being disrupted by innovative Fintech services and this story demonstrates just how much. Co-existing with these old institutions, there are digital banks such as TransferWise and Revolut, that offer exceptional customer service.
To illustrate this, here is another anecdote that happened to me some time ago with Revolut. One day I consult my Revolut app on my iPhone and I get a message from them. It tells me that, as I have exceeded a certain spending limit, they require an additional security check. To do this, all I need do is take a picture of my passport and another of myself. I take the photos and send them through the app. It takes me barely thirty seconds and three minutes later, the check is complete. They were really fast and efficient.
By the way, Revolut has just announced that they have topped two million users. I think traditional banks should be more worried than they are about disruption.
I use more and more fintech services on a daily basis. And, I do this for their customer service obviously, but also because they’re much more suited to the modern age and much more efficient. But I do confess that some banks offer very good service. This is the case with my Canadian bank, Caisses Desjardins. I’m very happy with them because their relationship with me is personal.
I know the banker, as well as my account manager. They know exactly who I am, and I know that there’s no risk that they will close my account overnight. It’s extremely reassuring. So for the time being I don’t see myself ending any business arrangements I have with them.
The disruption of old institutions : what Chase could (and will not) do
Regarding Chase, they more than likely tried to reach me by phone. Except I always have it in airplane mode. When I want to talk to friends, I simply use Whatsapp. If they had had an application much like TransferWise for example, they could have contacted me very easily. Even if they used Whatsapp, I could have used it to communicate with the banker, show him my passport, and the authentication would have been done. This would have been much simpler and above all, much quicker. In this day and age, this kind of service is essential!
My point here is that there are companies that have stayed stuck in the 80’s. They are entrenched in their traditions, customs and procedures. They are therefore unable to adapt to the modern world. In fact, they’re forced to turn down business from customers who don’t fit in with the way they work.
The problem is that if they don’t adapt quickly enough, they will find themselves confronted with the disruption created by those companies who are already at the forefront of innovation. And this disruption is not only in the financial world, just look at the emergence of companies such as Uber, Airbnb, and Netflix.
Lessons to be learned
It’s easy to criticize other companies. However you have to be careful, because it’s trickier to work out whether we might be in a similar situation ourselves. To prevent this from happening, it’s important to educate ourselves throughout our lifetime. This is actually one of the key messages in my book “Not everyone is lucky enough to fail their studies”. No question, it is education that will equip us to adapt to the modern world, to pursue it, maybe even anticipate it and in some ways, create it. And more broadly, avoid making our customers’ lives absurdly difficult.
Another way to stay on top of innovation is to keep an eye on what the competition is doing. As soon as you see some innovation, it’s worth thinking about how it could be applied to your own system. On the other hand, if one’s business is so “rigid” that it’s difficult to make changes or evolve it, it’s better to finance a start-up inside or outside the company that will disrupt it. It’s definitely better if the disruption comes from within, rather than from an external company.
So, this what I wanted to share. How about you, have you ever had any really unpleasant experiences with banks? Have you tried fintech services? What were the results? Share your experience in the comments; I’m very interested in your opinion.