We don't live in a world of technology giants, but of merchants of magic. What Amazon, Google, or Facebook do is take an basic aspect of our experience — buying something, asking a question, looking up how somebody's doing — and remove every possible friction between intent and result. You don't search, you google. The latter is very close to how a fairy tale would describe the magical ability to get answers to any question; it's not just pragmatically better than the alternatives, but a psychologically powerful experience, which is why it has become an unremarkable, unspoken, already-made choice. That's what market dominance looks like.
For many of us, and across many different cultures, money is also something with which we have a relationship as much emotional as it's pragmatic. Having and getting money — as well as not doing it — are psychologically and socially charged conditions. This connection isn't always positive, but that's not the point. Multiple studies have shown that Facebook usage is correlated with various measures of unhappiness, yet Facebook answers to a different psychological need.
The fact that we don't have an equally compulsive behavior with mobile banking apps is the clearest sign of the fundamental cultural vulnerability of banks. We live in a world where an increasing number of things just happen in rather magical ways; once you've experienced this in one area, it's impossible not to find interacting with a traditional organization not just annoying — this was always the case — but unacceptably so. You know better now.
The difference between, for example, using Amazon and using a mobile banking app isn't really the web design, the use of recommendation algorithms, or any other specific feature. Amazon has mostly refined the act of getting something to just the parts that make emotional sense: you say what you want, you click, and presto. Addresses, credit card details, where in the world it comes from, who makes or sells it, there's a thousand details that are important aspects of the process of purchasing, but Amazon spends a most of their profit margin and a lot of very advanced technology to hide those from you. Ask for the thing, get the thing.
A bank application, on the other hand, is supposed to be about this psychological thing called money, but it crowds it behind accounts, transfers, credit card statements, a confusing variety of reports... A dozen concepts and tools, a hundred complexities, that are real and necessary, yet utterly uncomfortable for somebody who's becoming used to seeing exposed complexity as a form of incompetence, if not malice. No matter how slick the design, bank websites and applications feel like software used to: Working with banks is the equivalent of working with a programmer's idea of a word editor. The power is there, but you have to do, or at least deal with the confusing possibility of doing, things you don't understand or care about. Things that are neither asking for the thing nor getting the thing.
Once somebody has googled something or posted to Facebook, interacting with their bank to know what they have and what they can do with it is shocking and stressful. It's orders of magnitude more complex than looking through entire Internet for something, and sometimes you have to go somewhere with a paper or do something with a pen. You'll do it because they have your money, but, consciously or not, you'll be counting the days util something normal comes along.
That's the gap fintech companies are trying to exploit. It's not about specific technologies — those are just tools — but rather the simplified, intuitive conceptual vocabulary. For all the arcane magic of cryptography, the blockchain, and so on — which, like any complexity that's on your side but doesn't ask you to do anything to exploit, are good selling points — the idea of bitcoin is much closer to the unconscious archetype idea of a bank account than what actual banks offer: filling up forms to open an account, dealing with currencies, transfers between banks, differences between countries, all those feel as pointless as having to do an internet search site by site. You have an account, you have money. Why should you have to fill a form? Why should it matter which country you're in or where the money comes from?
Of course, all of that matters, because although some legal regulations and financial nuances are arguably outdated and counterproductive, not all of them are. Banks and governments have been doing what they do for a long while now, and many of the simplifications fintech companies have to do in order to provide the experience they want to end up being one cut corner too far. Most financial startups can provide some finance or financial-like services in a naturally elegant and contemporary fashion, but their customers can't do everything they need to do with them. They are at best tools, but tools that add to the overall complexity of their lives, and complexity in anything you aren't fascinated by is the opposite of magic.
Banks face the opposite problem. They have access to the extremely powerful and complex organizational, legal, and technological backend that's the real global financial system, the sometimes arcane knowledge necessary to use it, and the scale and resources to provide pretty much any money-related service anybody could need. But customers have to see, know, and deal with a lot of this plumbing whether they care about it or not; a large part of our interactions with banks feel like having to upgrade your computer's drivers and reconfigure the network card — all of it by hand, as if we were back in the '90s — when all you want to do is post a picture of your dog.
The defining characteristic of really advanced technologies is that users find how things happen too complex to explain, and why they want those things done too obvious to feel the need to.
Changing cultural expectations have turned unwanted complexity from an annoying part of "grownup life" to an infuriating throwback to the past. This is an existential challenge for banks: the history of computing shows that people are willing to accept fewer features and much reduced flexibility in exchange for intuitiveness — another word from removing everything between intent and result. It's not mainly a matter of technology, but of doing what Steve Jobs did with the iPhone (as noted by writer and futurist Warren Ellis): to come up with an intuitive, mostly subconscious, already there mythical vocabulary for what "money" is, what having and doing things with it looks like in our mind's eye, and then to use every available technology to handle all the real-world complexities away from the customer. Anything that's not magic, that doesn't "just work," detracts from the experience and opens up a window for somebody else to beat you.
"Magic" is a moving target; we're annoyed by the lack of electricity, not amazed by having it. Dominating a market today requires both cutting edge technology (ideally, something a bit further ahead than that) and an organizational structure that's not adapted to it, but built from scratch around its possibilities. But it also requires using them in a very specific way: to have the organization deal with the messiness of the real world, the plumbing that makes things happen in finance, logistics, information management, and everything else, in such an escalable way and with such superhuman efficiency that you can make it look to customers as if it doesn't exist, that getting something to appear at your door, cheaper and faster than ever before, is just a matter of clicking a button, or just saying it aloud — and that's when it doesn't already knows what you're going to want before you yourself do.
That's not retail: that's magic (and this, together with the fact that "buying things" is, although not everything, a big part of what "money" means, should make both fintech startups and banks quite worried about Amazon's plans to enter consumer-facing banking). Regardless of how mundane online shopping and social networks have become, they still satisfy emotional needs in such a frictionless way that their temporary disappearance can be psychologically distressful. You don't build that kind of aspect of the world — the term "experience" suggests something shallower; you need to actually be able to do the magical thing, and that takes some real changing of the world — without having the bleeding edge technological expertise to know what intuitive yet seemingly-impossible thing is actually doable. "Seemingly-impossible" both to your customers and behind the curtains: if it doesn't sound like magic to the middle managers you already have, it's going to look obsolete to the ones you're going to hire tomorrow.
And you also need to know that this is exactly what you're trying to do, and that anything less than that will be something to be tolerated as long as it has no replacement, and not a second after that.
What's the search box of money? What's the "everybody's on Facebook" of doing things with it? The first company to figure this out will win. It could even be a bank.