Duncan Greive argued that banks don’t need a social licence to operate. Ben Gracewood asks: what if they had one though? 

Banks desperately want you to care about their brand. They spend millions of dollars on TV commercials with weird monsters in an effort to make you feel something, anything, when you see their red or blue or yellow logo.

Constrained by a combination of regulation and market forces, they all offer the same products at the same prices with the same parameters. Which bank you join is largely just luck: which branch was nearest when your parents were setting up your first account, or which banker happened to say yes first to your eye-watering mortgage request.

If a $10m ad campaign means you’re 0.01% more likely to choose the bank with the kid looking at a watch in a store window when choosing between identical mortgages with identical interest rates, then it’s money well spent. Money that might otherwise have gone towards lowering your interest rate.

Bankers are so enamored with their brands, they truly believe that the vibe attached to their logo matters, and will survey the market regularly to check how people feel, or which logo comes to mind when you’re asked on a random phone call to recall “a bank”.

What they don’t ask in those surveys is “how badly do you want your bank to get the fuck out of the way?”

If I was the boss of a bank in New Zealand, I would simply deploy the very best banking API, eliminate marketing spend, reduce products to a few simple options, and then sit back and make all the money. The BenBank API would let anyone with permission make payments and transfers, create and update accounts, confirm receipts, download transactions, and the rest. It would also provide identity verification (in line with anti money laundering laws) and allow new account creation.

The API is free to use. Or perhaps developers can get 0.05% of any fees and interest they bring to BenBank in return for adding a “powered by BenBank” logo somewhere on the login screen.

Here’s what would happen with BenBank over the next six to 12 months:

New Zealand’s best developers and designers would build mobile apps and websites to interact with BenBank. These apps would look better and be infinitely nicer to use than any of the bank apps you use today, because the best designers & developers do not currently work at banks the environment that bank developers and designers operate within is not set up to produce great apps and websites.

Companies like Apple, Stripe, PocketSmith, and Akahu would integrate deeply with BenBank, bringing products like the Apple Card and P2P payments to market, and driving innovation between the API consumers of BenBank.

Entrepreneurs would innovate on top of BenBank’s API, creating products like micro payments, daily rent payments, instantaneous finance assessments, and ideas that are impossible to think of in our current environment, because banks are stagnant and cannot innovate.

The flood of customers to BenBank would cause panic across the industry, and other banks would race to implement similar APIs, which would further expand the range of products and processes available to kiwis. New Zealand’s free and fast interbank settlements are a huge advantage that is currently barely exploited – in a New Zealand future where every bank has an API, we get instant* P2P payments with zero interchange fees.

*Yes, bank nerds: clearing would take longer but the API could easily confirm available funds and receipt of transfer.

A couple of years after BenBank launches, you buy a Coke in a dairy by grabbing it from the fridge then walking out. Everyone has a location-based payments API on their phone, so the dairy owner just taps the icon on her phone to extract a payment from the one other phone that is currently present in her store. The APIs do the rest.

BenBank books a $2 billion dollar profit and no one gives a shit because BenBank is cheaper to use than any other bank and everyone loves the user experience. In other words, BenBank has a huge amount of social licence and people are happy to pay for it.