Consequences of failure at banks means they can’t mimic Google too closely

Google is a master kitchen for IT innovation. Its huge real-time transaction engine is the envy of all but a few businesses.

Meanwhile its contact with consumers means that businesses offering digital services are constantly compared to it. These customers for example want their banking services to be as easy to use as their Google searches.

I recently wrote an article following an interview with a former Google tech lead who started a company offering retail banks a cloud-based end-to-end banking system. The influence of Google’s IT development and innovation principles can be seen at the company,  Thought Machine.

Thought Machine’s proposition is compelling and Lloyds Banking Group is already planning to move hundreds of thousands of its customer accounts onto Thought Machine’s platform.

While Google has influenced development of its Vault platform, it does not make a bank into Google. This is important because Google is often cited as the model for the perfect digital bank. But is it fair and realistic to compare banks to Google and expect them to follow it?

One of my contacts in the UK banking sector said in UK banking “the consequences of failure drives your approach to IT.”

“Google is mainly an advertising agency which exploits your data so it can serve up the ads. If it goes wrong, it probably won’t affect people’s daily lives in the same way a failed bank can cause financial misery and a vast amount of clean-up afterwards.”

When banks have problems, like those experienced during the 2008 meltdown the ramifications are wide. “If Google goes down for a while I doubt it will damage economies and businesses in the way a bank can,” he added.

“So I have always considered Google to be a cutting-edge innovator trying to see what it can make work, whereas the banks have to be very careful and make sure nothing goes wrong. Those philosophies are worlds apart and I fear the consequences for the banking industry if it attempts to mimic Google. It’s not in their DNA so they need to proceed with caution. It may be better for Google to set up a bank and see how it gets along before trying to Googlify the traditional banks.”

Others argue that if you get the IT right along the lines of Google then things are less likely to go wrong.