The Adjacent Possible for Banks

What could the near future hold for consumer banking? It seems that anything is (adjacent) possible.

From a boring black and white bank statement to a full colour, multi-branded monthly record of how where and when you spent that hard earned cash? From a ‘customer base’ to a fully engaged focus group, actively involved in and enthusiastic about product refinement, naming and even pricing? Or going from designing Donkey Kong to creating online investment scenarios? Are these just ‘fantasy futures’ for consumer banking? Or could they be a delivered reality within a couple of years?

In fact, that’s a trick question. All the examples referenced above are already active, live services, being utilised by consumers today. If they appear fanciful, then appearances are clearly deceptive. The reality is that they have been designed, developed and delivered by a process that leverages the concept of the adjacent possible.

As an idea, it’s been around for over a decade. The basic principle is that breakthrough moments don’t happen in isolation. Nor do they come about by discarding current technologies and reinventing the wheel. What can be radical, revolutionary even, tomorrow is almost always based on looking creatively at what exists today. And what does exist today, in every industry including consumer banking, is a wealth of digital potential to create ever more personalised customer experiences; experiences that place new products and services at the heart of the consumer’s day to day life.

The adjacent possible has some impressive proof points, including a couple of operations you may have heard of called Google and Amazon. Google started out with the modest ambition of creating the world’s best Internet search engine. Amazon had an idea that retailing could be revolutionised online. Of course, they are both serial innovators. But at first, if you look at the trajectory from search engine to driverless car, or from online bookseller to cloud computing giant, there appears to be no single ‘red thread’. Look more closely however and what you do see is the adjacent possible at work.

The apparent gulf between an online search entry seeking a new car and providing a driverless car is really a series of highly imaginative, yet eminently possible next, oradjacent, steps. Google has always been in the business of collating and managing information. Search engine led to Google Earth. Google Earth in turn led to the technology context where a driverless car suddenly stopped being fantasy. There is a pattern of relentless service experience innovation that delivers the extraordinary, but always moves out logically from the company’s starting point.

The net impact on the market is the ‘disruptive’ choice of a new generation of consumer options. Whole industries are transformed. But they are transformed not typically by grand visions. Instead, real progress is made based on a very clear-sighted picture of how the next achievable step can be taken. So what are some of the directly applicable lessons of the adjacent possible for consumer banking?

The first is that, even after years of crisis and reputational damage, banks still command ‘trust equity’. Consumers trust them with their money. That’s a hugely advantageous starting point. The second lesson is that you don’t have to throw away product and service models that consumers have a long familiarity with, just to innovate something ‘wacky’. The bank statement has an important basic function and it still does its informational job well, today. The third lesson is that an adjacent possible-led future can take the first two elements – trust and a proven format such as the statement – and then make an innovative yet achievable next step. One that surprises and delights customers.

The adjacent possible can do this because it doesn’t force the pace of technology development. It doesn’t wait for years to hit the market with a ‘big concept’ that it may instantly reject. Instead, it leverages existing digital technology - start-up bank Monzo uses information derived from the Twitter API to link brands and logos to relevant lines on the bank statement – to create a new and engaging service experience. Monzo’s customers now receive a piece of real communication from their bank. The adjacent possible has transformed the bank statement into a ‘lifestyle statement’.

The rise of digital, the proliferation of financial technology – fintech –expertise and the range of de-risked partnering and development models now available mean one thing. Service innovation in consumer banking has never been a more accessible reality for financial institutions. Today the possible is all around us, and much closer than you might think. In fact, you could say it’s adjacent.