Reasons to be cheerful

by Robert Jones and Sami Mallis

There’s no industry that more needs to change its game than financial services – and yet that seems so unlikely to do it. This is not because of the conservatism of banks, but because of the conservatism of consumers. In many ways, it’s a justified conservatism – ‘don’t mess around with my money’ – and yet things could be so much better for all of us. Cash machines and credit cards revolutionised money in the 1960s. Since then, we’ve had great but relatively small innovations, mostly from smaller players. In the mainstream, little has changed. But there are three signs of hope.

The revival of ethics

Why do we still so mistrust banks? In the UK, only one in ten people say they trust bankers to act in their best interests, according to Which?  But one global bank is trying to do something about this: Barclays. Through its Transform programme, led by CEO Antony Jenkins, Barclays is shifting its culture towards making money ‘in the right way’. Employees who don’t accept values like integrity are told: ‘Barclays is not the place for you’. The change will take time, but it's certainly in earnest. And around the world, Islamic banks, like Noor Islamic Bank, are becoming a mainstream alternative. They don’t charge conventional interest, they invest ethically, and they share profits and losses. Ernst & Young predicts that Islamic banking in the Middle East and North Africa will double in size between 2010 and 2015. Expect more banks to take ethics much more seriously: but who will do it best?

The transformation of payment

Why do we still carry a pile of coins, and a stack of plastic, around? Here’s where there has been change, with online payment systems like PayPal, contactless cards, person-to-person payment devices like Square, and mobile systems like M-PESA. Square, for instance, now processes $41 million in payments every day. And we’re on the brink now of cashless, cardless payment, as our phones and credit cards converge with innovations like Apple’s Passbook, Google’s Wallet and AmEx’s partnership with Isis Mobile Wallet. Expect rapid change in the next couple of years. One brand will probably emerge as the standard: which one?

The modernisation of advice

Why is there still no big, branded financial advice service? Financial advice is a huge industry, and the demand is growing – yet it has shown few signs of entering the modern world. When people don't know which advisors they can really trust, alternative sources are doing well, often with a lot of peer-to-peer content. Moneysavingexpert.com in the UK reaches 13 million users a month. CaféMom is a successful forum on family financial issues targeted at mothers. SALT is a free membership programme from the non-profit American Student Assistance to help students manage their loans and take control of their money. These examples are promising, and expect much more. But which big brand will really grab the still-open opportunity for good, sensible, large-scale, mainstream financial advice?

  Robert Jones is head of new thinking at Wolff Olins. Sami Mallis is a marketing associate at Wolff Olins London. 

Image via SALT and American Student Assistance