Are You In Banking Or Technology?

I’ve had a lot of conversations with bankers and technologists and realized something recently. That realization is a simple but important one, and it is this: dealing with technology is very different to dealing with money; furthermore, dealing with money through technology is very different to dealing with technology through money.

It may sound like a strange thing to talk about or write, but it is important as it explains why technology companies like Amazon and Alibaba will struggle if they ever try to open a bank.

Let’s start with the basics. We all use technology a lot these days. Most of us have smartphones and Facebook accounts, and most of us don’t get that angry if our call drops or our update gets few likes. However, if our money transfer fails or our salary payment does not arrive on its due date, then we get really angry. The difference is obvious: money is a key control factor in our lives, but technology is not.

This is why we can upgrade our smartphone every couple of years but never change our bank account. With money, we want security and safety; with technology, we want excitement and experiences.

This is also why I find it amusing to hear about technologists claiming that banks will shut down, be destroyed and disrupted by technology. It is not going to happen (as long as banks adapt and change, which they tend to do).

Adding more nuance to this, we are seeing banking and technology collide. We are seeing banking and technology meld and merge in the 21st century. Then, as mentioned earlier, dealing with money through technology is different to dealing with technology through money.

What I mean by this is that when I deal with technology through money, I am just looking to pay for stuff typically. So we have Square, Stripe, PayPal, Venmo, Alipay, WeChat Pay and more. They let me pay for stuff online. Great. But that is not dealing with money through technology, but dealing with technology through money. It lets me pay for stuff online and on my mobile.

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