“Retail has always been a few years ahead of banking, first with online transactions, and now with physical store closings. Banks that fight this trend aren't just prolonging the inevitable, they're wasting money.”

Ron Shevlin, Forbes

Good day,

The end of the year is fast approaching, and we find it quite appropriate to reflect on the notion of change. This year has become without warning life-changing for all of us, with profound consequences on our perceptions of right and wrong. When personal freedoms are curtailed, we are left with less opportunity to explore, leaving us with the obligation to focus on what is in front of us whilst we weather the storm. In “interesting times” we are more exposed to extremes of fate, and if we play the situation well, we might just win. This is what drives many entrepreneurs forward, regardless of their domain.

Closer to home though, we are surprised to see a new FinTech fill the gap left by the big banks, as analysed below. The pandemic seems to have accelerated certain conclusions and made an opportunity create itself. However much we are tempted to agree with Ron that fighting the trend is a waste of money, we cannot help conclude that being countercyclical to the trend can nevertheless provide opportunity. Breakthroughs set the trend, they are not part of it.

With this, we wish you a very merry holiday season and an excellent start to the new year! Our next newsletter will be on 4^th January 2021. Take care now!

In the news last week:

Human bankers are returning. One Scottish town is having a fully-staffed bank point for the first time since two years when its local bank closed. OneBanks will be working with Open Banking for the service, as well as with tech partners including Endava, Trust Stamp, Nuapay, NCR and Accenture Business. This got us at C-Innovation thinking a little more, for a number of reasons.

For years the high-street banks have been racing to reach customers by opening more and more local branches. The idea was that by being physically close to their customers, banks would see more trade. With the advent of telephone banking and then internet banking, the need for physical in-branch staff fell, and the familiar reasoning of supply and demand started to drive the banks to close some of their branches. Some communities today have no more physical link to their bank, which for the bank itself might make sense because of the excessive cost of providing services in some places, as well as the existence of other channels.

It is important to remember that not all bank customers are comfortable or indeed understand telephone and internet banking. Though the service at some of them can sometimes be excellent, such as First Direct has been for many years, some people just want simple face-to-face banking. So what OneBanks is doing is filling the gap in the market left by the bigger banks.

Some may be of the opinion that banking is a privilege. However, when having a bank account becomes a prerequisite for renting a home, then it is more akin to a public service, or day we say it, a social right. The extremes of the banking spectrum – the young, the poor, the elderly – might not offer a sufficient yield for many banking services providers (banks, neobanks, technology companies), however it is clear there is money in it, judging by OneBank’s decision. Instead of multiple banks competing in this area, perhaps OneBank’s presence is a sign of the market adapting to reality?

• The pandemic seen through the lens of startup founders and entrepreneurs.

Find out more about what we do, and read our previous newsletters and insights.

FinTech

• The state of European technology in 2020.
• Confidence in neobanks’ survival in UK very low.
• FinTech meets AgriTech.
• UK’s DIT looks to connect FinTechs with global banks.
• Crypto custody starts at BBVA and Standard Chartered.

Technology

• Tesla taken to court by Dutch taxi firm.
• Alexa and Siri have competition!

FAMGA and more

• Google now offers support for Apple Music.
• Finally Apple offer over-ear-phones.
• Amazon does not dominate all markets.
• Facebook faces antitrust lawsuit in US, involving 48 attorneys-general.

Mergers, acquisitions

• Tesla makes money by diverging in itself at a good time.

Funding

• Sequoia, the “grandfather of VC” has a new European chief.
• UK’s GoHenry pocket money app receives $40mn to enter US.
• Finnish startup Rundit raises $1mn for portfolio management and monitoring.