The Weekly Extract: August 3, 2020

  • Alex Jimenez
  • August 03, 2020

The Weekly Extract from Extractable is a condensed roundup of digital experience news for financial services institutions, and our take from San Francisco.

This week, we cover discussions about the future of remote work. We also look at the buzz generated by Neobank Monzo’s annual reports. Finally, we continue to follow the growing number of partnerships within the industry as digital transformation heats up.


The Radical Reimagination of Work

As the effects of the pandemic continue to impact the U.S., more businesses are announcing extended or permanent remote work policies. As noted in a collection of announcements from Business Insider, at least 15 major companies have made such announcements; including Google, Zillow, Twitter, and Square.

According to a survey by IBM “54% of adults want to work remotely most of the time after the pandemic.” According to Jesus Mantas, Senior Managing Partner, IBM Services, “the study provides further evidence that COVID-19 is permanently altering U.S. consumer behavior. There are long-term implications of this new consumer behaviors for industries like retail, transportation, and travel; among others. These organizations must adapt their business models quickly to serve the new consumer behaviors in order to survive and thrive.”

This week Siemens, announced a policy allowing “employees worldwide to work from anywhere they feel comfortable for an average of two to three days a week,” according to an article in Inc Magazine by Justin Bariso, Author of EQ Applied.

Bariso makes the point that while the announcement isn’t earth shattering, the idea behind the change has strategic underpinnings that should be lauded. The announcement reads in part:

“The basis for this forward-looking working model is further development [of] our corporate culture. These changes will also be associated with a different leadership style, one that focuses on outcomes rather than on time spent at the office. We trust our employees and empower them to shape their work themselves so that they can achieve the best possible results.”

The novel points highlighted by Bariso are:

  1. Focus on outcomes rather than time spent in the office.
  2. Trust and empower your employees.

Bariso believes organizations that truly follow these principles “find that remote work not only allows (a) company to survive, but also to thrive.”

Bhaskar Chakravorti, dean of global business at The Fletcher School of Law and Diplomacy at Tufts University writes in an opinion piece in Barron’s that:

“the radical redrawing of the geography of tech work,” resulting from remote work, “is potentially liberating, exciting, and inclusive.” However, he notes that “there are many barriers including gaps in digital readiness that heavily favor the status quo. What may be surprising—shocking, really—is the conflicting understanding of the depth of the problem.”

Chakravorti points that rural areas continue to lack broadband, which then favors the “status quo states” such as Maryland, Massachusetts, and New York. The problem is even larger if we look at the global picture. He describes conditions that would be required to truly disperse work. He expects that “superstar cities,” like our own San Francisco will continue their position.

As we talk to our clients about their experience with remote work, we hear many success stories, but we also hear a few challenges and downright failures. Claire Cain Miller, Staff Writer at The New York Times wrote an article examining the situation. She notes that organizations that have adjusted best have cultures that allow them to identify and change techniques on the fly.

Miller catalogues some of those techniques including:

  • Fewer longer meetings
  • Flexible work hours
  • New ways to socialize remotely

At Extractable, we have found these specific techniques work quite well. Also, as noted by Bariso, a focus on results and employee trust works wonders.


Neobank Darling Monzo Stumbles

This week we were surprised to hear about the possible demise of Monzo, one of the Neobank darlings of the London fintech scene. According to a story in Finextra, “Covid-19  casts significant doubt on the ability to continue operating.” The article does say that their new CEO, TS Anil,

“insists that he is confident that the problems are short term and the bank stresses that it has a strong liquidity position and that things will operate as normal for customers.”

While this may be surprising, it isn’t entirely new news. In mid-June, PYMNTS noted in an article that due to the pandemic, Monzo had laid off a significant number of employees and their valuation was “40 percent lower than its valuation last year.”

“Monzo’s precipitous drop in value was revealed when the virtual bank recently landed $75 million in new funding to weather the coronavirus crisis from a group of investors that reportedly includes Vanderbilt University and Swiss fund Reference Capital.”

More details about Monzo’s troubles were detailed in an article by Tech Reporter Ryan Browne in CNBC. “Monzo reported an annual post-tax loss of £113.8 million in its 2020 accounts, up from the £47.1 million it lost last year.” Browne quotes Matt Clifford, founder of London-based start-up investor Entrepreneur First: “such statements aren’t typical of young tech companies with access to venture capital, or VC, funding.”

However, all might not be lost. PYMNTS writes in another article that Anil maintains that Monzo has “a solid foundation on which to survive.” He points to “new services like business and premium accounts as ways Monzo would be able to weather the pandemic and still come out solvent.”

The premium accounts “give customers new options to create budgets and stick to them. The feature lets users create personalized categories for spending, round up charges to send extra money to one’s savings account, and split up single transactions between numerous categories for maximum accuracy. Users can also create and delete virtual cards, a way to protect users’ actual card numbers while shopping online.”

The Finance Lead at London’s Flux, Robert Collings, had an excellent explanation for Monzo’s Annual Report statements in a tweetstorm. He noted that the statements are not “quite as serious as it’s being made out to be.” He gives examples of other similar startup statements that haven’t resulted in similar reactions from the financial press. He continues: “We all know startups that are lossmaking & VC funded are risky. It’s not the first we’ve seen this in the audit report and it certainly won’t be the last!”

Whether Monzo survives or not, it is clear that the current situation is teaching lessons to all types of organizations within the industry. We maintain that sound strategy is needed to weather the storm, regardless of whether an organization is a legacy financial service firm or a fintech start-up.


Partnerships Soar in Effort to Accelerate Digital Transformation

We often write about fintech and FI partnerships in the Extracts, touting it as an effective strategy for expanding capabilities and accelerating digital transformation. Lately, we are seeing new kinds of partnerships crop up in the industry.

According to an article in CNBC by Kate Rooney:

“Chase’s commercial cards team is partnering with Bay Area start-up Marqeta to launch digital-only credit cards. The new function will allow JPMorgan corporate cards to work in mobile wallets such as Apple Pay or Samsung Pay immediately — without having to wait for a physical version in the mail.”

I recently obtained a new consumer Chase card and had the virtual card on my iOS wallet immediately — much like the Apple Card. If the process is the same for these commercial cards, I’d expect Chase to gain a leg up over other card issuers.

Another interesting and much more innovative partnership we saw this week was between DBS Bank and Singapore’s GovTech department (a government run technology body) to use SignPass identification. According to an article by Irene Tham in The Strait Times:

“bank account holders can now scan their faces on their phones to apply for an online banking account with the launch yesterday of a national facial identification service.”

This is possible due to Singapore’s national biometric database. While something like this is likely not possible in the U.S, it points to the increasing adoption of biometrics in financial services — and ultimately the desire to eliminate all friction in a customer’s banking journey.

As technology embeds itself more deeply within the industry year after year, there are endless ways to imagine the future of financial services. Sonia Sedler, Diebold Nixdorf’s global head of managed services and banking strategy, discussed how that future may look for the humble ATM in an article in PYMNTS this week. The article claimed that:

“the days of the ATM serving as just a quick cash dispensary are numbered.”

Sedler noted that Diebold is offering an outsource service to FIs to manage advanced ATMs that could act as a replacement to the bank branch as we know it today.

Sedler says banks should “really start looking at the ATM channel and its capabilities in terms of its geographical footprint and its ability to act as a brand ambassador and brand representative. I think financial institutions [should] begin to see that the ATM can actually be repurposed into a mini-branch … all by itself.”

Sedler adds that ATMs are “a really critical digital alternative and important to the omnichannel delivery strategy.”

Whether partnering with fintechs, governments, or traditional bank tech vendors; we expect to to see a continued rise in partnerships of all kinds as the industry seeks to accelerate digital transformation with a newfound urgency.


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