The idea in my book that information is the product comes from the work of sociologists from the early days of social media, including Yochai Benkler, Charles Leadbeater and Clay Shirky, who predicted that the economy would increasingly become a participatory one (Benkler, 2007).

Clay Shirky introduced the concept of “mass amateurization,” where platforms turned consumers into producers of the product itself. Now, bankers are totally oblivious to this idea because no matter how much interaction they have with customers, their only interest is to sell more of the same products they always have, whether these are mortgages or deposits.

Many businesses, from software to train schedules, routinely tweak their products and even produce new ones based on continuous interaction with their customers. The mountain bike is reputed to be a product created entirely by customer chatter. 

Banks have not been paying attention. not just to information generated on social media, but on all data that is generated outside the bank, of which social media is just one source. The reason for this is banks have been trained to protect and make the most of the data that sits inside the General Ledger (GL) of the bank. The entire bank is organized this way.

But GL data is static, historical and two-dimensional in providing any meaningful understanding of the customer’s profile, let alone designing new products and services that are commensurate with the customer’s needs. So, banks succumb back to good, old-fashioned ice trade in the days before electricity in the hybrid.

Today, increasingly, the data that sits outside the institution is becoming more important than the data that sits inside the bank. Advances in both the substance and speed of processing data through artificial intelligence are also making all sorts of data that usually sits outside the institution more meaningful and useable.

The greatest use of customer data is in designing products and services that are commensurate with the customer’s needs in work and everyday life. But, because banks are so inwardly focused, they are not trained to look at the data that is being transacted outside the institution. They end up commoditizing their own basic products, where players compete with each other on price, in the absence of 3G and other more recent innovations..

If they look at the data that is being generated outside the bank, they will be able to design products that are more commensurate with the new, more digital lifestyle needs of the customer — instead of pushing traditional products and services from the humble deposit account into how loans can be tailored according to the customer’s needs.

Even today, digital payments in many countries around the world have resulted in greater mobility and control over their finances for millions of people who previously did not even have access to financial services. In parts of Africa, digital payments have become a source of real income to the new fintechs that have usurped this function from the traditional banks.

This trend begs the question of what to do with bank deposits, which are static and passive, when new digital wallets are enabling users to interact with each other more closely — not just in the physical world but also in the nurture world.  

Emmanuel Daniel is the author of The Great Transition – the personalization of finance is here, launched in New York in October 2022. He is the founder of TAB Global, which is the publisher of The Asian Banker, Wealth and Society and Bankquality, which tracks the financial services industry around the world. He was rated as a top-50 influencer in the financial services industry worldwide in 2021 and 2022.