Founder Opinion
What has your Bank ever done for you?
When did you ever come out of one and say wow, the customer service was exceptional or felt like you have received tremendous value for money? If you’re anything like me the answer is never.
Not even once.
Someone’s going to do to Banks what Uber done to the Taxi Industry
Taxi’s were never sexy — Uber changed the game. The power isn’t in existing technologies, it’s in re-imagining entrenched institutions while making use of the days available technology. Overthrowing something which has operated in the same way for so long is never easy. People think banks need to operate in the same way as they always have because they can’t imagine anything different. The purpose of this post is to challenge that perception while challenging you to expect more from the people who look after you money.
Banks have operated in the same way for a century!
- They still operate over a time horizon of days instead of instantaneously.
- They still want to charge you a fee based on a % of the money you transfer instead of charging you what it actually costs to clear a transaction.
The fat cats at the top are still enjoying the cream while the rest of us suffer. Banks are an illness and the only remedy is purging them from our system entirely. To rebuild it we must burn them to the ground.
The Reality is Banks Take Without Ever Giving Back
Future banks will offer you the same value back that you give them
A challenger has a route to domination based on something no bank in the world has been able to achieve — viral growth. This could be achieved very simply through the anonymization of data you already possess while releasing it back to your customers.
Some challenger banks have tried to build businesses based on the instantaneous transfer of capital, whether that is for payment for goods, conversion of currency or transfer to other individuals. What they have failed to make use of so far is their unique opportunity to exploit all the data they are afforded. To do so they need a niche. There are already hints through the offering of insurance etc. but they should already be doing much more for their customers. In many ways they have already become complacent. They have become profitable without having to alter the paradigm. They have become marginally better than traditional banks without altering the playing field. They are playing the same game instead of destroying the competition.
Right now these challenger banks are pleasing customers which has allowed them to grow very quickly — what would happen if they amazed them and gave them value beyond anything they imagined was possible? My Grandmother currently pays £89 a month for the same Sky subscription my Father pays £34 for. If both individuals paid for this through the same bank they would possess that comparative data for every person on the platform that subscribes to the same service.
What this enables them to do immediately is build a product which becomes a transparent database showing customers how much they can save based on what other people on the platform are paying. Simultaneously this would incentivise users to expand the data they provide due to the tremendous value they receive in return in the form of detailed analysis about the recurring monthly expenses where they could make huge savings. They can make substantial savings based on the market intelligence released to them while the Bank accruse masses of valuable and actionable data differentiating them from any competitor.
A bank is the perfect vehicle for this system because their goals aren’t misaligned with their customer (like comparison engines are due to a referral fee business model). From there the Bank would become a platform that allows it’s customers to operate together, utilising the power of solidarity to collectively bargain together and influence the prices available to everyone.The influence grows in line with the number of users, allowing the company to negotiate deals with suppliers individuals could never achieve on their own.
Eventually, this model would evolve to not only advise users how much they can save but negotiate this reduction in cost automatically on their behalf. Information for most services change little from year to year, your Bank could automatically renew your car/home insurance at the lowest price without the need for you to waste time on comparison sites. The transparency of the service gives you comfort that you pay the lowest price possible for all your recurring expenditure, users simply sit back and save as a by-product of utilising the platform.
How would the Product Roadmap look?
The initial step is to create an accessible database which provides transparency for consumers. Releasing figures that state the lowest value consumers are paying on the platform for every recurring expense would tremendously useful. How do you ever know you are getting the best price for anything? You have a point of comparison with your friends and family — but out with that how do you know you pay a fair market price for anything when compared to the wider public as a whole — the simple answer is that you can’t. In my opinion, traditional banks have been derelict in their duties. Modern banks can analyse the data they are offered then reflect that back to the platform and provide tremendous value to users instead of exploiting them.
Sky is the most interesting niche for me initially due to the ease in which you can save a large number of users a significant amount of money each month.Just providing this information allows users to renegotiate their costs based on the evidence you provide. Imagine how pleased customers would be to realise they could save up to £720.00 a year based on thier banks advice. This might not have value for things like airline tickets, but anything which is a recurring expense — house insurance, car insurance, mobile phone contracts — this becomes a tool which differentiates the new Bank from it’s competitors.
The horizontal expansion is almost limitless
The next step is taking this a massive step further. Instead of simply providing the information to users on the platform, you automatically negotiate the deal to the lower cost on their behalf. I realise initially this involves a lot of human labour negotiating individual deals with service providers, but think of the benefit to users? This is an opportunity for massive growth based on something that won’t scale to millions of users — but it doesn’t have to. This has a real opportunity to be the Banks growth hack like Airbnbs offer of professional photography. Once they have achieved a cost which is adopted by all users they can begin offering that service to new consumers at a far lower price than they can get elsewhere — gaining customers who never even used the service originally incentivises service providers to collaborate. Better yet, every new user who come to the platform provide an independent check against the prices the platform is achieving as anyone who pays less offers a fresh opportunity to negotiate costs lower for everyone.
I foresee a time where you sign up to this new bank, transferred all your payments, and they immediately infors me that they have saved me £50 a month on my Cable TV subscription. I sit back and save as a by-product of having an account. The first thing I would do is tell every person I know. For absolutely no effort, if you switch to this bank account you save a lot of money every year. No catches.
That is revolutionary
For those interested Below is a more detailed overview of how I imagine this bank would operate and how you would be rewarded
Rationale
The GDPR regulation opens the door to a potential revolution for consumer data — which enables banks to operate as a transparent intermediary that is a consumer champion rather than simply exploiting its users. The relaxation of laws, if permission is attained, opens the doors to comparative aggregation allowing a platform which highlights to consumers any costs where they are overpaying in comparison to other users. Initially their data would only be used to analyse their spending against others, reflecting back instances where other individuals pay significantly less than they are. It has to be a bank because they already possess this information simply by operating. A comparison site’s incentives are misaligned as they operate on a referral fee model. They can’t indicate that you are paying significantly more than other people because they depend on the revenue from the companies they would be outting. Eventually, this would evolve to shape the costs you pay based on the influence of a platform intelligently acting as a swarm together in order to achieve the best costs. The bank works on your behalf to achieve better overall costs, while each new users acts as a check that the bank is achieving the lowest cost possible. While this initial foray into collective bargaining only enables the sharing of data — the final step is an autonomous negotiator that analyses everything you purchase and negotiates any costs down to the lowest levels where you are paying more without you doing anything.
Crypto
Bitcoin is yahoo, ethereum is google and bitcoin is the internet in 1994. The reason I believe this is fairly simple, the underlying incentive to mine bitcoin long term is relatively low. The bounty for recording the next block halves every 4 years so eventually the value for mining will be so low in comparison to energy usage that it will become infeasible to continue doing so. At this point the whole network will be forced to consider the possibility that the blockchain will become dilapidated as too few users will be working to mine the next block, whereby ensuring the ledger remains up to date. Either this will occur devaluing the currency significantly or every holder of bitcoin will have to contribute a tiny fraction of coin to pay a decentralised network to keep the blockchain up to date. A more interesting alternative to this, in my opinion, is rewarding individuals for participating in the upkeep of the blockchain. Instead of a proof of work as a product of payment, a proof of service becomes the way payments are made. Every individual is paid a fraction of a coin according to how much money they have in their account for each month of service they provide. To ensure constant uptime, each individual is charged a tiny fraction of their CPU, which runs poof of work calculations collectively resulting in the mining of new coins. Each coin mined is distributed to the individuals involved while 20% is kept for the bank. This is re-purposed later as a management fee and the carry from the investment fund.
Interest
Interest on the account isn’t payable in a traditional sense, but interest is currently terrible anyway. Instead, it forms the investment fund. The interest is reinvested in companies as a Venture capital vehicle, while the holders of the accounts are partners in the fund dependent on the amount of coin held.This unique model creates a ‘network-as-a-service’ as a by-product of investment. Not only do the companies invested in receive capital, they also receive the support of the partners in the fund who are incentivised to assist the companies invested in by any means possible as they are the direct beneficiaries of their growth. The tokens you hold amount to fractional ownership of the fund during periods of liquidation.
Market
A liquidity element would also be required. This would allow individuals to sell their coin at a price decided by a secondary open market whenever they wanted. The economic element of this isn’t quite clear to me yet, but there would be a mechanism to purchase coin which would give you proportionate ownership of the fund comparative to what individuals accruing coin in the above interest method were. This could work under the basis that at the time of investment, new coins are created proportionally to the amount of capital in the account.
Bring it all together and what do you get?
Let me introduce you to Nexves
Fundamentally, Nexves provides you with a bank account that will replace your current account. Potentially, it becomes an essential platform that saves you money while letting you invest and earn more simultaneously. To understand it’s potentially you are required to view it as the hub at a centre of a wheel of services. From this will come spokes which identify as separate businesses all tied back to your account, which enable them to bring you incredible value, security and opportunity.
The First Spoke — Own revolutionary Companies
Interest rates are worse than terrible. On Nexves you forego interest in return for Cryptotokens, accrued in relation to the percentage of total funds you have on the platform for a calendar month, which entitle you to ownership of startup companies the Nexves venture fund invests in.
How this breaks down in practise is simple: if 10 people have £1,000 in their account they each get 10% of the tokens at the end of the month. If someone came in the next month and put £10,000 in he’d get 50% of the tokens, the other 10 would get 5% each.
If we invest in a company worth over a Billion £/$ the first 10,000 users on the platform would receive between £/$8–10,000 each, on average.
The Second Spoke — Earn Significant Capital
Bank’s offer you no opportunity to increase your wealth, outwith derisory interest payments. The first spoke of Nexves decentralises the beneficiaries of success from the bank itself to the people like you who form it. The profits created won’t go to fund outsized bonuses to oversized bankers, they go into your pocket.
The second spoke let’s you earn money while increasing the likelihood that the investments the venture fund makes succeed.
On the platform there will be a marketplace where you can complete a task and receive additional tokens, increasing your entitlement to future profits from the fund. This could be something as simple as sharing a message on your social media profile or requesting that your supermarket begins stocking a certain product. The power of this is only realised through the power of a large network. One person completing these tasks might not make much of a dent, but imaging the influence of 10,000 people sharing this at the same time, or even 1 million.
Collectively everyone benefits by acting together in mutual self-interest. You influence the growth of your investment and you are paid for it’s success.
Simultaneously, you will be rewarded for discovering potential investments or acquisitions. Make a recommendation that leads to investment and you will be rewarded with a large number of tokens. Had you referred Facebook to Nexves under this model, you would now be a Millionaire. Only problem is that if you had discovered facebook at this stage there is nothing you could have done. Nexves changes that.
What it enables is universal access to asset classes which the 99% cannot get access to. This prevents you from benefiting from the most succesful investment opportunities of the last 30 year. Nexves is a democratisation of access, and due to the model we are going to employ it encourages these companies to take our investment over traditional venture capital funds.
What you become part of is a network-as-a-service which lets companies grow at a far lower cost while increasing your own profits.
The Third Spoke — Save lots of Money
The third spoke is a collective bargaining platform which uses the data you provide to save every user a large amount of money. Take a minute to visualise all the information banks have on your spending and every other users on their platform, what do they do with this to help you save money? Absolutely nothing.
At Nexves we will analyse the recurring monthly spending of every user and benchmark it against the platform. Where you aren’t the lowest paying user for the same service we will tell you how much more you are paying, and provide you with the contact information required to lower your costs. For individuals we have already analyses, they save £600 a year on average.
The next step will be to do this all automatically and negotiate these costs down on your behalf without you having to do anything. You save as a by product of having an account — all for free.
From there we will expand to conduct the renewals of your car and home insurances, gas and electric supplier, broadband and mobile phone providers. We realise how time consuming and frustrating entering the same information year after year can be — so we will do it for you and make sure that you always pay the lowest price possible for every service you need.
The Remaining Spokes — How we will Evolve
Spokes to this system will be introduced gradually — we have a large roadmap of features we intend on implementing in the next 18 months.
What Nexves will become is the foundation layer of infrastructure required for the development of web 3.0. We let you participate in this new world.