Wednesday 13 November 2019 6:34 am

Banks are under threat – and this time it's personal

The launch of Uber Money, which provides payment and banking services to the company’s drivers, is an example of the next big trend in banking — the rise of the so-called “non-bank”.

The establishment of a financial product for non-banks goes beyond simple revenue growth. It is about establishing loyalty, and in the case of Uber, loyalty of their drivers to the Uber brand. This concept can be applied to non-banks across different sectors that are looking to hypercharge their customer relationships.

What gives these organisations the upper hand is that they know their customers and users intimately. They have vast amounts of data that allows them to personalise financial services in a way that no traditional bank can compete with.

They also have the tools to package this knowledge into a product using modern, intuitive digital banking systems, which can be tailored to the needs and desires of each of their customers.


This goes well beyond just Open Banking. 

Platform-based cloud banking is entering a new era of customer relationship management to enable non-banks and banks alike to offer products to an existing network of loyal customers.

The next stage in this revolution will see Amazon-style dashboards deployed, which will remember the client when they log in, recommend services that they may need, and offer faster payments.

In recent weeks, a wave of traditional banks have published financial results showing that their business is under pressure from PPI payments, international trade wars, and the regulatory burdens that are pushing up their costs.

These banks are pervasively losing customers to non-banks that offer loans and wealth management services, along with other connected services that were once the preserve of bank ecosystems. 

Uber, for example, can now empower its drivers through a financial services offering which includes a transaction account, car loans, pooling insurance, expense management, to name but a few. We can imagine that other tech firms will feel compelled to follow suit. 

Tackling this entropic threat requires bold thinking from the big banks – they must act like challengers and dump their legacy systems. Banks have no choice but to embrace the brave new world of hyper-personalised services. 


The banks still retain brand trust, which has been their trump card against attacks from challenger and neobanks. But so far, this legacy trust is not protecting them in a world of non-bank banking. 

Uber’s drivers trust its brand and are compensated to work within Uber’s ecosystem. If Uber can make banking and payments easier and tailor products accordingly, then using Uber Money is a no-brainer.

Traditional banks need to get personal. They need to build their data capabilities so that they can win the battle for hyper-personalised banking. If they don’t recognise this danger and seize the moment, Uber Money is the tip of a very large iceberg which may yet bring down the “unsinkable” big banks.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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