In the year 2020, it should not come as a surprise that my bank and credit card provider for the past 25 years no longer exist. No, they did not go bankrupt overnight because of yet another financial crisis. They were slowly forced into extinction over a period of five to six years and they did not even feel a tremor. Just like Kodak, Nokia, RIM and taxi cab drivers across the world, they did not see it coming.
A century of success with paper money caused by globalization forced mass exodus of people, opening up of new markets and redefined political boundaries brought about complexities associated with moving money across such boundaries. Banks and credit card companies thrived in this complexity.
The banks and credit card providers were designed to influence a “spend before you save” mentality. They innovated and introduced rewards as a way to cling onto customers. They aggregated deals with merchants to offer discounts on purchases and influence spending. Rewards were cleverly steeped into all engagement points.
To support the spend behavior, the financial institutions were designed to sell services instead of servicing their customers. We have all experienced trying to buy a car, a new home theater, a new TV and getting upsold on easy financing. We were double-sold every time. The beauty of such an upsell was that the product we were trying to acquire masked the financial sale.
The card providers, on the other hand, designed their interactions as transactional, not intelligent. The plastic in our wallet contained zero intelligence. I mean, the card displayed our name, expiration date, a card security code, the signature, a magnetic strip, and sometimes an EMV chip. However, these features only did one thing: Validate our identity. They did not tell us whether we could afford what we wanted to buy, how much we were spending in each category, or any additional context.