I have been receiving these podcast alerts from Gartner and one of them caught my eye-“What Banks should know about Web2.0”. The podcast available here talks about how Web2.0 will inevitably impact the banking industry. The analyst talks about how money will change hands in MySpace, how banks are using podcasts and that RSS feeds can be used to disseminate information. I am sceptical about the MySpace, don’t much care for podcasting or its supposed impact on banking but agree that podcasting and RSS are useful technologies. Although it is hard to understand how this is specific to banking vs. retail or healthcare. The analyst then refers to CircleLending, a peer-to-peer lending enablement startup. A very interesting startup amongst the ranks of Zopa and Prosper.
Meanwhile in Brazil, HSBC seems to be everywhere. On my latest business trip to Mexico and Brazil, I saw HSBC truly dominate the marketing landscape in the two countries. And they seem to be doing well in India too with over 50% growth in profits. Citibank is probably the only other bank that has had so much success in its global strategy and its claim to be “the world’s local bank” rings true. So how does this relate to Web2.0- it does not and that is the point. In my view, the future of banking is not Web2.0 but Brazil, Russia, India and China. I would like to coin the term BRIC2.0 and propose that more opportunity and growth is to be found by following the advice of CK Prahlad than by doing a mashup of Bank of America site with LendingTree!
For example, customers of banks in India can check their balances and pay bills by using text messaging on their cell phones. And text messages in India cost lower than 1c per message. In fact, over the next few years as banks from India and other low-cost high-capability countries set up shop in the USA, they may end up giving the US banks a run for their money. If Infosys can run IT operations of large European or US banks at a lower cost, then their friends at HDFC Bank or ICICI Bank may one day be able to provide banking services that can compete with the large US banks. And that may be the logical conclusion of outsourcing. You only have to look at how the PC industry started with outsourcing manufacturing of minor parts, then chips and now Lenovo owns IBM to wonder if one day the same could happen in other industries from banking to healthcare.
BRIC2.0 is the next generation of developing economies that are the engines of growth for banks, automotive, steel, etc. Indeed, IBM is moving its global procurement offices to China from New York. A sign of times to come… forget Web2.0, focus on BRIC2.0!