How long for the Spotify of Banking?

Uber has disrupted the taxi business around the world and has removed friction like no other from a complex industry. That is the reason the company is often being used as an example for the financial service industry.

Personally, I am more interested in the “Spotify of banking?” than “Uber of Banking”. Why is that you might ask? The answer is – as so often  – data. Let me explain you what I mean.
If you are a long time Spotify user you might have started using the music streaming service when there was no proper alternative for your needs. But this changed during the last year: today you can choose among many different providers including Apple, Amazon and Google. There might be plenty of reasons why people don’t change but if you talk to a long term Spotify user about switching the service you will hear one reason for not doing so very often: Spotify knows me too well.

Just one example I just saw this week:


What they mean by that is that while using Spotify for a longer time, the service understands the music taste of its customers and can suggest suitable other music. The user is “locked in” with Spotify due to the usage of the service. If you listen to a lot of music this can make a huge difference: instead of skipping annoying songs Spotify will select the right next track for you.

However, keep one thing in mind: we are “just” talking about music. Do you see the reference to banking?

At the moment we only have “negative stickiness” in banking. People don’t switch their financial products because it is too complicated and too much work. How long will it take player of the industry (or outsiders!) to change this into a “positive stickiness”?

That describes the situation when we could easily switch our financial product to a new provider but we don’t do it because we are afraid of starting at zero again. Starting from scratch with a new music streaming provider would cost a current Spotify user a lot of time in selecting the right songs until the new service understands its users taste. Just imagine what providers of financial products could give us for reasons to stick with them because of better usage of data in regards of breadth and depth (!). This could be something like: Pre selected products, perfectly tailored to our needs, at the right time, at the right place, …

And this is of course not just limited to purely financial products because our financial data provides a lot more insights into our lives than our taste of music. We all know data is the new oil. When will we be actually able to make proper use of our financial data?

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