New And Old Bank Models: More Similar Than You Think

As more and more consumers use online and mobile channels to conduct their banking every day, much is made of the distinction between “Bank 1.0 and Bank 2.0” models and their consumer appeal. But according to John Goodale, senior director of business expansion at TSYS International, those two models are more similar than you might think. spoke with Goodale about how new and old banks have the same goal in mind: generating loyalty from their customers.

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New And Old Bank Models: More Similar Than You Think

Will physical bank branches be rendered obsolete by mobile and online banking? Will virtual banking ever match the security and comfort provided by in-person banking?

Those are reasonable questions to ask at a time when banks themselves are unsure as to exactly what customers want from their banking experiences. Do they want the convenience of mobile services, the familiarity of bake branches, or perhaps some combination of both?

To find out, spoke with John Goodale, senior director of business expansion at TSYS International. Goodale recently authored a white paper titled “Bank 1.0 and Bank 2.0 Success Entails Learning from Each Other’s Best Practices,” and shared his expertise on the subject with us.

What exactly is the difference between a Bank 1.0 and Bank 2.0 model? According to Goodale, Bank 2.0 is generally viewed as a platform that relies on a combination of technology and social trends and “techniques that can be used to remove the traditional branch approach.” Bank 1.0, on the other hand, is more of the traditional retail bank, which involves both physical branches and mobile or online services.

But according to Goodale, the two bank models are not totally separate, but rather lie on different sides of a banking spectrum.

“On one side, you’ve got the traditional retailing bank model, maybe with no other approach. And on the other side, you have some of the newcomers,” Goodale explained. “But actually, the way that the products are put forward, and the way that customers are using them and demanding new services, that drives the type of way the bank can operate in each of those product areas.”

Goodale used Apple as an example of how the two models can converge, citing physical Apple stores and iTunes as successful components of the same strategy.

“What’s really interesting is, both of those are selling very different products.  And, of course, they’re branded Apple, but they’re selling very different products, and different levels of service, and different types of customers, on different locations,” Goodale explained. “But it absolutely works, and both are really successful.  And that’s exactly the argument I’m having within the paper itself, about the banking industry.”

Overall, it’s the focus on customer desire and interaction that Goodale focused on in the white paper, and which he said syncs up perfectly with TSYS’ mantra of “people-centered payments.”

“We saw, actually, much more change and development going on around the customers themselves, and particularly what sort of communication that customer wanted, and what that bank was doing to try and fuel that conversation,” Goodale explained. “It led us to look at it really, and ask, well, is this really an either or approach, the way a lot of these banks are putting it forward? Or is it actually that the banks could learn from both approaches?

Really, it’s about putting the customer in charge, and letting them divide how they want to interact with the bank themselves.”

To hear more Goodale on new and traditional bank models, people-centered payments and more, listen to the full podcast below. To read TSYS’ white paper on Bank 1.0 vs. Bank 2.0, click here.


*If you have trouble with the audio player above, click here.

To read a transcript of the audio conversation, click here.

John Goodale

Senior Director, Business Expansion, TSYS International

John Goodale is Senior Director, Business Expansion within Europe. His role covers responsibility for TSYS’ business expansion activities for processing and licensing across all European markets. John has played a lead role in developing TSYS’ proposition to banks and retailers across Europe and has gained experience within many of the major International markets. Prior to joining TSYS in 2002, John’s career was in management consulting, most recently with KPMG and before that with Fujitsu/DMR.

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