EP1018: The Gen Z and Gen Alpha battleground

1 00:00:00,160 - > 00:00:02,879 SPEAKER_02: So uh I want you to think about something before we 2 00:00:02,879 - > 00:00:03,919 really get into it today. 3 00:00:04,160 - > 00:00:09,519 Did you know that in the UK, um only about 2.5% of adults 4 00:00:09,519 - > 00:00:12,240 actually change their primary current account each year? 5 00:00:12,800 - > 00:00:13,599 SPEAKER_00: 2.5%. 6 00:00:14,560 - > 00:00:17,839 That is, I mean, it sounds almost impossible when you first 7 00:00:17,839 - > 00:00:18,160 hear it. 8 00:00:18,480 - > 00:00:18,640 SPEAKER_02: Right. 9 00:00:18,800 - > 00:00:19,920 It's completely wild. 10 00:00:20,399 - > 00:00:23,760 SPEAKER_00: But it actually reveals this incredibly powerful 11 00:00:23,760 - > 00:00:27,760 force in the financial world, which is, well, sheer consumer 12 00:00:27,760 - > 00:00:28,160 inertia. 13 00:00:28,239 - > 00:00:29,199 SPEAKER_02: Aaron Powell Yeah, exactly. 14 00:00:29,359 - > 00:00:31,440 I mean, just think about your own life for a second. 15 00:00:31,600 - > 00:00:33,920 Think about how often you upgrade your smartphone, you 16 00:00:33,920 - > 00:00:34,000 know. 17 00:00:34,399 - > 00:00:36,079 SPEAKER_00: Or cycle through streaming subscription. 18 00:00:36,399 - > 00:00:36,560 SPEAKER_02: Right. 19 00:00:36,640 - > 00:00:37,600 Or even change cars. 20 00:00:37,759 - > 00:00:40,320 People will change careers, they'll move to entirely 21 00:00:40,320 - > 00:00:42,320 different continents or like get divorced. 22 00:00:42,479 - > 00:00:44,719 But the institution holding their checking account. 23 00:00:45,200 - > 00:00:46,320 SPEAKER_00: That is apparently forever. 24 00:00:46,640 - > 00:00:49,520 SPEAKER_02: Once you pick a bank, the friction to leave is 25 00:00:49,520 - > 00:00:52,159 just um it's way too high for most of us. 26 00:00:52,560 - > 00:00:54,399 SPEAKER_00: Which totally turns the underlying math of the 27 00:00:54,399 - > 00:00:57,039 banking industry into this highly skewed game. 28 00:00:57,280 - > 00:01:00,799 The lifetime value of a single customer becomes just 29 00:01:00,799 - > 00:01:01,439 astronomical. 30 00:01:02,000 - > 00:01:02,320 SPEAKER_01: Absolutely. 31 00:01:02,640 - > 00:01:04,560 SPEAKER_00: The data basically shows that if a financial 32 00:01:04,560 - > 00:01:08,480 institution can win your loyalty when you are young, say, opening 33 00:01:08,480 - > 00:01:11,599 your first student account, they are statistically likely to 34 00:01:11,599 - > 00:01:13,680 retain you for the next 40 or 50 years. 35 00:01:13,920 - > 00:01:16,799 SPEAKER_02: And that reality, that 40-year commitment, is the 36 00:01:16,799 - > 00:01:18,879 driving force behind our deep dive today. 37 00:01:18,959 - > 00:01:22,640 Because if you only have one real golden opportunity to win a 38 00:01:22,640 - > 00:01:24,959 customer for life, then the fight for the youngest 39 00:01:24,959 - > 00:01:25,920 generation of customers. 40 00:01:26,319 - > 00:01:28,480 SPEAKER_00: Specifically Gen Z and Gen Alpha. 41 00:01:28,719 - > 00:01:30,319 SPEAKER_02: Right, Gen Z and Gen Alpha. 42 00:01:30,480 - > 00:01:33,760 That fight isn't just some niche side project for a bank's 43 00:01:33,760 - > 00:01:35,439 digital marketing team anymore. 44 00:01:35,599 - > 00:01:39,840 It is a high-stakes, basically uncompromising survival game. 45 00:01:40,159 - > 00:01:41,680 SPEAKER_00: It really is an existential threat. 46 00:01:42,000 - > 00:01:42,079 SPEAKER_02: Yeah. 47 00:01:42,239 - > 00:01:45,200 Because if these legacy institutions lose this specific 48 00:01:45,200 - > 00:01:48,400 demographic, they are staring down the barrel of total 49 00:01:48,400 - > 00:01:48,879 irrelevance. 50 00:01:48,959 - > 00:01:49,120 Trevor Burrus, Jr. 51 00:01:49,280 - > 00:01:51,599 SPEAKER_00: Because they are competing against purely 52 00:01:51,920 - > 00:01:56,400 digital, highly agile neo banks that are being built entirely 53 00:01:56,400 - > 00:01:58,560 from scratch to capture this exact demographic. 54 00:01:58,640 - > 00:01:58,799 Trevor Burrus, Jr. 55 00:01:58,879 - > 00:02:00,560 SPEAKER_02: And we actually have some incredible insights into 56 00:02:00,560 - > 00:02:03,599 how this boardroom panic is playing out behind closed doors. 57 00:02:03,840 - > 00:02:06,879 We've been analyzing a very candid interview from IBS 58 00:02:06,879 - > 00:02:08,400 Intelligence with Fernando Sandona. 59 00:02:08,560 - > 00:02:09,680 SPEAKER_00: Trevor Burrus, he's the CEO of Mambu. 60 00:02:10,080 - > 00:02:10,319 SPEAKER_02: Exactly. 61 00:02:14,080 - > 00:02:17,039 And to widen the lens a bit, we've also been looking at the 62 00:02:17,039 - > 00:02:21,199 global strategy of a universal core banking system called ICBS. 63 00:02:21,280 - > 00:02:23,039 SPEAKER_00: Aaron Ross Powell Both of these sources give us 64 00:02:23,039 - > 00:02:24,560 this rare look under the hood. 65 00:02:24,800 - > 00:02:27,919 We get to see how the oldest, most traditional players in the 66 00:02:27,919 - > 00:02:31,599 financial sector are desperately trying to rewrite their own DNA. 67 00:02:31,680 - > 00:02:33,759 SPEAKER_02: Aaron Powell Okay, let's unpack this because we are 68 00:02:33,759 - > 00:02:39,680 going to figure out exactly how slow massive legacy banks, you 69 00:02:39,680 - > 00:02:42,479 know, the institutions that built their reputations on 70 00:02:42,479 - > 00:02:45,680 century-old marble pillars and giant steel vaults. 71 00:02:45,759 - > 00:02:45,919 Trevor Burrus, Jr. 72 00:02:46,000 - > 00:02:46,159 SPEAKER_00: Right. 73 00:02:46,319 - > 00:02:47,360 The traditional heavyweights. 74 00:02:47,759 - > 00:02:48,159 SPEAKER_02: Exactly. 75 00:02:48,319 - > 00:02:50,639 How they are desperately attempting to reinvent 76 00:02:50,639 - > 00:02:53,360 themselves to win over a generation that practically 77 00:02:53,360 - > 00:02:56,159 lives inside their smartphones, and they have to do it all 78 00:02:56,159 - > 00:02:59,120 before the neo banks render those traditional institutions 79 00:02:59,120 - > 00:02:59,599 extinct. 80 00:03:00,000 - > 00:03:02,639 SPEAKER_00: Well, to fully grasp the scale of the challenge here, 81 00:03:02,800 - > 00:03:06,639 we have to look really closely at the profile of the customer 82 00:03:06,639 - > 00:03:07,680 they are trying to acquire. 83 00:03:07,919 - > 00:03:08,080 SPEAKER_02: Right. 84 00:03:08,319 - > 00:03:10,319 SPEAKER_00: We're talking about a demographic that brings an 85 00:03:10,319 - > 00:03:12,400 entirely new set of expectations to the table. 86 00:03:12,719 - > 00:03:15,199 SPEAKER_02: Zandona details this beautifully in the interview, 87 00:03:15,280 - > 00:03:15,759 actually. 88 00:03:16,000 - > 00:03:18,879 When we look at Gen Z and Gen Alpha, we are talking about 89 00:03:18,879 - > 00:03:22,080 demographics that didn't just learn to be digitally literate 90 00:03:22,080 - > 00:03:23,120 later in life. 91 00:03:23,360 - > 00:03:26,080 They were, as he puts it, born on the internet. 92 00:03:26,560 - > 00:03:27,280 SPEAKER_00: Born on the internet. 93 00:03:27,599 - > 00:03:28,560 That's a great way to phrase it. 94 00:03:28,879 - > 00:03:31,199 SPEAKER_02: Yeah, they were born straight into the seamless 95 00:03:31,199 - > 00:03:36,400 ecosystems of Apple, Google, TikTok, Uber, all of it. 96 00:03:36,800 - > 00:03:40,319 SPEAKER_00: So they have zero memory of a world before instant 97 00:03:40,319 - > 00:03:41,840 digital gratification. 98 00:03:42,319 - > 00:03:46,400 Which means their tolerance for friction is like basically 99 00:03:46,400 - > 00:03:47,039 non-existent. 100 00:03:47,439 - > 00:03:49,759 SPEAKER_02: Imagine handing a teenager a rotary phone and 101 00:03:49,759 - > 00:03:51,199 asking them to send a text message. 102 00:03:51,520 - > 00:03:53,039 SPEAKER_00: Oh man, they wouldn't even know where to 103 00:03:53,039 - > 00:03:53,199 start. 104 00:03:53,520 - > 00:03:53,840 SPEAKER_02: Right. 105 00:03:54,000 - > 00:03:56,879 But that is exactly what it feels like for a digital native 106 00:03:56,879 - > 00:04:00,319 to interact with the clunky, multi-step, slow-loading 107 00:04:00,319 - > 00:04:02,560 interface of a traditional bank's legacy app. 108 00:04:02,879 - > 00:04:04,319 SPEAKER_00: It's just entirely foreign to them. 109 00:04:04,639 - > 00:04:06,560 SPEAKER_02: They expect their banking to feel exactly like 110 00:04:06,560 - > 00:04:08,159 their favorite social media feed. 111 00:04:08,319 - > 00:04:11,199 Instantaneous, intuitive, and highly responsive. 112 00:04:11,360 - > 00:04:13,919 SPEAKER_00: If a banking app takes like three seconds to load 113 00:04:13,919 - > 00:04:16,879 a balance, or heaven forbid, requires visiting a physical 114 00:04:16,879 - > 00:04:18,240 branch to sign a piece of paper. 115 00:04:18,560 - > 00:04:19,759 SPEAKER_02: Oh, forget about it. 116 00:04:19,920 - > 00:04:21,279 They won't just complain. 117 00:04:21,439 - > 00:04:25,199 They will delete the app and move to a competitor in under a 118 00:04:25,199 - > 00:04:25,360 minute. 119 00:04:25,759 - > 00:04:28,720 SPEAKER_00: And Zandona brings up an even more radical shift in 120 00:04:28,720 - > 00:04:30,240 consumer behavior here. 121 00:04:30,560 - > 00:04:34,079 The sources highlight that in many cases, these younger 122 00:04:34,079 - > 00:04:36,319 demographics don't even want to see the bank. 123 00:04:36,639 - > 00:04:37,600 SPEAKER_01: Wait, really? 124 00:04:38,000 - > 00:04:38,800 Not even see it. 125 00:04:39,040 - > 00:04:41,839 SPEAKER_00: Yeah, that concept completely reframes the whole 126 00:04:41,839 - > 00:04:42,240 industry. 127 00:04:42,399 - > 00:04:44,959 They don't want a relationship with a big institutional 128 00:04:44,959 - > 00:04:46,079 building on a street corner. 129 00:04:46,480 - > 00:04:47,759 SPEAKER_02: That is wild. 130 00:04:48,000 - > 00:04:49,120 But I guess it makes sense. 131 00:04:49,439 - > 00:04:51,360 SPEAKER_00: What's fascinating here is how this shifts the 132 00:04:51,360 - > 00:04:52,800 whole paradigm of trust. 133 00:04:53,040 - > 00:04:56,079 The traditional 20 to 30-year-old banking business 134 00:04:56,079 - > 00:04:59,600 model relied on visible presence as a proxy for trust. 135 00:04:59,920 - > 00:05:02,079 SPEAKER_02: Like you trusted the bank because you could literally 136 00:05:02,079 - > 00:05:03,920 see the marble columns and the big vault. 137 00:05:04,240 - > 00:05:04,879 SPEAKER_00: Exactly. 138 00:05:05,120 - > 00:05:08,480 But Xandona points out that younger users are looking for a 139 00:05:08,480 - > 00:05:10,480 completely different value proposition. 140 00:05:10,720 - > 00:05:13,519 They deeply value their own digital communities. 141 00:05:13,680 - > 00:05:17,360 They value extreme transparency regarding how their data is 142 00:05:17,360 - > 00:05:17,519 used. 143 00:05:17,920 - > 00:05:18,879 SPEAKER_01: Oh, that makes a lot of sense. 144 00:05:19,199 - > 00:05:20,959 SPEAKER_00: And they're paying very close attention to the 145 00:05:20,959 - > 00:05:24,399 ethical stances and the actual real-world values of the 146 00:05:24,399 - > 00:05:25,600 institutions holding their money. 147 00:05:25,920 - > 00:05:28,560 SPEAKER_02: And neo banks are just natively built to provide 148 00:05:28,560 - > 00:05:30,879 those exact functionalities right from day one. 149 00:05:31,279 - > 00:05:31,759 SPEAKER_00: Precisely. 150 00:05:31,920 - > 00:05:34,879 They launch with transparency reports, they integrate with 151 00:05:34,879 - > 00:05:38,879 community causes, and they embed their services so seamlessly 152 00:05:38,879 - > 00:05:42,879 into the user's phone that the bank practically disappears into 153 00:05:42,879 - > 00:05:44,399 the background of their daily life. 154 00:05:44,720 - > 00:05:47,279 SPEAKER_02: So if a traditional financial institution attempts 155 00:05:47,279 - > 00:05:50,160 to operate the way it did in, say, 1995. 156 00:05:50,639 - > 00:05:52,879 SPEAKER_00: Expecting customers to adapt to their processes 157 00:05:52,879 - > 00:05:54,639 rather than adapting the process to the customer. 158 00:05:54,959 - > 00:05:57,199 SPEAKER_02: Yeah, they will completely fail to capture this 159 00:05:57,199 - > 00:05:57,839 demographic. 160 00:05:57,920 - > 00:06:01,199 The purely digital neobanks are currently flooding the market 161 00:06:01,199 - > 00:06:03,839 and capitalizing on this exact vulnerability. 162 00:06:04,319 - > 00:06:06,800 SPEAKER_00: But this brings up a massive logistical problem for 163 00:06:06,800 - > 00:06:07,439 the older guys. 164 00:06:07,839 - > 00:06:08,000 SPEAKER_02: Right. 165 00:06:08,079 - > 00:06:11,360 Because if neo banks have this incredible technological upper 166 00:06:11,360 - > 00:06:14,480 hand and they already speak the native digital language of Gen 167 00:06:14,480 - > 00:06:17,759 Alpha, how does an incumbent bank possibly fight back? 168 00:06:18,079 - > 00:06:19,120 SPEAKER_00: It's not easy, that's for sure. 169 00:06:19,360 - > 00:06:21,199 SPEAKER_02: They have decades of foundational infrastructure. 170 00:06:21,360 - > 00:06:24,800 You can't just, you know, slap a trendy user interface on top of 171 00:06:24,800 - > 00:06:27,839 a mainframe from the 1980s and expect it to work like a modern 172 00:06:27,839 - > 00:06:28,000 app. 173 00:06:28,399 - > 00:06:30,639 SPEAKER_00: You've hit on the multimillion dollar bottleneck 174 00:06:30,720 - > 00:06:31,199 right there. 175 00:06:31,439 - > 00:06:34,639 The infrastructure of a traditional legacy bank is 176 00:06:34,639 - > 00:06:36,639 almost unimaginably complex. 177 00:06:36,959 - > 00:06:37,920 SPEAKER_02: I can only imagine. 178 00:06:38,319 - > 00:06:42,560 SPEAKER_00: It is this massive web of heavily regulated, highly 179 00:06:42,560 - > 00:06:43,920 patched systems. 180 00:06:44,160 - > 00:06:47,360 Many of these banks have grown through decades of mergers and 181 00:06:47,360 - > 00:06:51,040 acquisitions, resulting in a Frankenstein's monster of legacy 182 00:06:51,040 - > 00:06:51,199 code. 183 00:06:51,600 - > 00:06:53,519 SPEAKER_02: What developers often call spaghetti code, 184 00:06:53,600 - > 00:06:53,680 right? 185 00:06:53,920 - > 00:06:54,879 SPEAKER_00: Exactly, spaghetti code. 186 00:06:55,279 - > 00:06:57,279 SPEAKER_02: So if you pull one string over here to launch a new 187 00:06:57,279 - > 00:07:00,240 feature, you might accidentally break the entire mortgage 188 00:07:00,240 - > 00:07:01,439 processing system over there. 189 00:07:01,839 - > 00:07:02,959 SPEAKER_00: Exactly the issue. 190 00:07:03,199 - > 00:07:06,959 If a traditional bank relies on that core legacy infrastructure, 191 00:07:07,120 - > 00:07:10,879 launching a single new financial product, say a micro investing 192 00:07:10,879 - > 00:07:13,680 tool or a peer-to-peer payment feature can take years. 193 00:07:14,720 - > 00:07:15,600 SPEAKER_02: Just for one feature. 194 00:07:16,079 - > 00:07:18,399 SPEAKER_00: Years of development, endless testing, 195 00:07:18,480 - > 00:07:21,360 and massive compliance checks, just to ensure it doesn't 196 00:07:21,360 - > 00:07:22,879 destabilize the whole ecosystem. 197 00:07:23,120 - > 00:07:25,199 SPEAKER_02: And in the current tech landscape, a three-year 198 00:07:25,199 - > 00:07:27,279 development cycle is basically a death sentence. 199 00:07:27,519 - > 00:07:28,240 SPEAKER_00: Oh, without a doubt. 200 00:07:28,480 - > 00:07:30,800 SPEAKER_02: By the time that legacy bank finally rolls out 201 00:07:30,800 - > 00:07:34,240 their new feature for Gen Alpha, Gen Alpha has already adopted 202 00:07:34,319 - > 00:07:36,079 like three new platforms. 203 00:07:36,319 - > 00:07:39,920 You just cannot compete with a neo bank pushing weekly software 204 00:07:39,920 - > 00:07:42,720 updates if your internal timeline is measured in years. 205 00:07:43,120 - > 00:07:45,360 SPEAKER_00: Which brings us to the strategic workaround 206 00:07:45,360 - > 00:07:46,879 outlined in our sources. 207 00:07:47,120 - > 00:07:51,600 The interview provides a really compelling real-world case study 208 00:07:51,600 - > 00:07:55,600 of a massive institution, bypassing this exact bottleneck. 209 00:07:55,839 - > 00:07:56,160 SPEAKER_02: Oh, right. 210 00:07:56,240 - > 00:07:57,759 ABN AMRO in the Netherlands. 211 00:07:58,000 - > 00:07:58,399 SPEAKER_00: Exactly. 212 00:07:58,560 - > 00:08:01,680 They recognized the demographic cliff they were facing. 213 00:08:01,759 - > 00:08:04,879 They needed to capture Gen Z and Gen Alpha, and they knew their 214 00:08:04,879 - > 00:08:08,399 internal legacy systems were just way too slow to build the 215 00:08:08,399 - > 00:08:10,319 digitally savvy experience required. 216 00:08:10,639 - > 00:08:12,720 SPEAKER_02: So instead of trying to rebuild their own engine from 217 00:08:12,720 - > 00:08:14,800 scratch, which would take forever, they launched an 218 00:08:14,800 - > 00:08:17,120 entirely new project called BU UT. 219 00:08:17,199 - > 00:08:18,399 That's B U U T. 220 00:08:18,720 - > 00:08:20,240 SPEAKER_00: And they partnered with Mambu to build it. 221 00:08:20,560 - > 00:08:20,639 SPEAKER_02: Right. 222 00:08:20,720 - > 00:08:23,759 And Mambu operates as a core banking provider, but their 223 00:08:23,759 - > 00:08:26,639 underlying architecture is entirely different from legacy 224 00:08:26,639 - > 00:08:26,879 systems. 225 00:08:27,199 - > 00:08:29,040 SPEAKER_00: Yeah, they provide what the industry calls cloud 226 00:08:29,120 - > 00:08:31,920 native API-based composable core banking. 227 00:08:32,240 - > 00:08:34,000 SPEAKER_02: Okay, let's break down the mechanics of that 228 00:08:34,080 - > 00:08:38,320 because composable core sounds like intense tech jargon, but 229 00:08:38,320 - > 00:08:40,879 it's really the secret weapon that makes this whole 230 00:08:40,879 - > 00:08:42,000 transformation possible. 231 00:08:42,399 - > 00:08:45,919 SPEAKER_00: It helps to think of legacy banking software like a 232 00:08:45,919 - > 00:08:50,159 giant sculpture carved out of a single massive block of marble. 233 00:08:50,399 - > 00:08:54,320 It's solid, it's secure, but if you want to change its shape, it 234 00:08:54,320 - > 00:08:57,039 takes an enormous amount of time, effort, and risk. 235 00:08:57,360 - > 00:08:57,519 SPEAKER_02: Right. 236 00:08:57,600 - > 00:08:59,919 You can't easily modify a marble block. 237 00:09:00,000 - > 00:09:01,919 SPEAKER_00: Aaron Powell But a composable core, on the other 238 00:09:01,919 - > 00:09:04,559 hand, is like a box of digital Lego bricks. 239 00:09:04,879 - > 00:09:06,080 SPEAKER_02: Oh, I love that analogy. 240 00:09:06,240 - > 00:09:08,720 So a bank can just pick and choose the exact financial 241 00:09:08,720 - > 00:09:11,519 functions they need, like a payment gateway here, a lending 242 00:09:11,519 - > 00:09:12,080 module there. 243 00:09:12,480 - > 00:09:12,960 SPEAKER_00: Exactly. 244 00:09:13,120 - > 00:09:15,840 And they just snap them together using pre-built API 245 00:09:15,840 - > 00:09:16,240 integrations. 246 00:09:16,559 - > 00:09:17,679 SPEAKER_02: That is so much more flexible. 247 00:09:18,080 - > 00:09:18,240 SPEAKER_00: Yes. 248 00:09:18,399 - > 00:09:21,519 And crucially, Zandona emphasizes that Mambu operates 249 00:09:21,519 - > 00:09:22,559 on a single code base. 250 00:09:22,960 - > 00:09:26,320 In the old days, banks bought custom software, meaning their 251 00:09:26,320 - > 00:09:29,200 internal IT teams had to maintain their own unique 252 00:09:29,360 - > 00:09:30,639 localized version of the code. 253 00:09:30,960 - > 00:09:33,279 SPEAKER_02: So if a new security regulation came out, they had to 254 00:09:33,279 - > 00:09:34,799 custom write the update themselves. 255 00:09:35,120 - > 00:09:35,519 SPEAKER_00: Right. 256 00:09:35,679 - > 00:09:39,600 But with a single code base, when Mambu pushes an update or a 257 00:09:39,600 - > 00:09:43,759 new feature, every single bank on their platform globally gets 258 00:09:43,759 - > 00:09:45,200 the upgrade instantly. 259 00:09:45,440 - > 00:09:46,080 SPEAKER_02: That's huge. 260 00:09:46,399 - > 00:09:48,559 SPEAKER_00: It completely removes the burden of IT 261 00:09:48,559 - > 00:09:51,200 maintenance from the bank, allowing them to focus purely on 262 00:09:51,200 - > 00:09:52,159 the customer experience. 263 00:09:52,480 - > 00:09:55,440 SPEAKER_02: And the timeline on the ABN AMRO project really 264 00:09:55,440 - > 00:09:57,440 proves the power of those Lego bricks. 265 00:09:57,679 - > 00:10:00,559 Because of this plug-and-play architecture, they went from 266 00:10:00,559 - > 00:10:04,639 concept to launching BUUT, a fully functional, modern 267 00:10:04,639 - > 00:10:07,360 financial experience, in just 12 months. 268 00:10:07,759 - > 00:10:08,399 SPEAKER_00: 12 months. 269 00:10:08,639 - > 00:10:11,919 In the traditional banking world, deploying a new core in a 270 00:10:11,919 - > 00:10:14,080 year is basically moving at light speed. 271 00:10:14,320 - > 00:10:16,879 SPEAKER_02: It allows a century-old institution to match 272 00:10:16,879 - > 00:10:19,840 the deployment speed of a Silicon Valley startup. 273 00:10:20,000 - > 00:10:22,639 But um, I actually want to push back on the branding strategy 274 00:10:22,639 - > 00:10:23,120 here for a second. 275 00:10:23,279 - > 00:10:24,000 SPEAKER_01: Okay, so let's hear it. 276 00:10:24,159 - > 00:10:26,159 SPEAKER_02: Let's look at it from the perspective of a Gen Z 277 00:10:26,159 - > 00:10:26,720 consumer. 278 00:10:26,879 - > 00:10:31,200 You have a massive established incumbent bank like ABN AMRO. 279 00:10:31,519 - > 00:10:34,000 Instead of upgrading their main app to make it better, they 280 00:10:34,000 - > 00:10:37,200 quietly launch a side project under a totally new, trendy 281 00:10:37,200 - > 00:10:38,480 name, B U U T. 282 00:10:38,799 - > 00:10:41,600 Doesn't that risk feeling incredibly inauthentic? 283 00:10:41,759 - > 00:10:45,200 It feels a bit like, you know, a corporate executive putting on a 284 00:10:45,200 - > 00:10:48,879 backward baseball cap and saying, How do you do, fellow 285 00:10:48,879 - > 00:10:49,200 kids? 286 00:10:49,519 - > 00:10:50,159 SPEAKER_00: That's a fair point. 287 00:10:50,480 - > 00:10:52,639 SPEAKER_02: Like they are implicitly admitting their main 288 00:10:52,639 - > 00:10:56,159 brand is too slow and uncool to win over young people, so they 289 00:10:56,159 - > 00:10:59,360 have to invent a proxy brand to basically trick them. 290 00:10:59,759 - > 00:11:01,120 SPEAKER_00: It's very valid critique. 291 00:11:01,279 - > 00:11:03,519 And it touches on the psychological risk of these 292 00:11:03,519 - > 00:11:04,320 spin-offs. 293 00:11:04,480 - > 00:11:08,159 But Zandona actually addresses this dynamic directly. 294 00:11:08,559 - > 00:11:12,000 He argues that creating a separate entity isn't an 295 00:11:12,000 - > 00:11:12,799 admission of failure. 296 00:11:13,120 - > 00:11:13,519 SPEAKER_02: It's not. 297 00:11:13,840 - > 00:11:16,639 SPEAKER_00: No, rather it's a highly calculated method of risk 298 00:11:16,639 - > 00:11:17,279 mitigation. 299 00:11:17,440 - > 00:11:20,799 He refers to this approach as a sidecar core strategy. 300 00:11:21,120 - > 00:11:22,159 SPEAKER_02: Oh, I love that metaphor. 301 00:11:22,320 - > 00:11:24,320 Like attaching a sidecar to a motorcycle. 302 00:11:24,720 - > 00:11:27,200 SPEAKER_00: Or, perhaps more accurately, attaching a sidecar 303 00:11:27,279 - > 00:11:28,879 to a massive, heavily armored truck. 304 00:11:29,200 - > 00:11:29,279 SPEAKER_02: Okay. 305 00:11:29,440 - > 00:11:31,200 A truck makes more sense for a legacy bank. 306 00:11:31,279 - > 00:11:31,679 SPEAKER_00: Aaron Powell Right. 307 00:11:31,759 - > 00:11:34,559 The traditional bank's legacy infrastructure is that armored 308 00:11:34,559 - > 00:11:34,960 truck. 309 00:11:35,120 - > 00:11:38,240 It might be lumbering and slow, but it provides incredible 310 00:11:38,240 - > 00:11:41,600 scale, unshakable consumer trust, and bulletproof 311 00:11:41,600 - > 00:11:42,720 regulatory compliance. 312 00:11:43,200 - > 00:11:46,000 SPEAKER_01: You definitely don't want to try and make an armored 313 00:11:46,000 - > 00:11:48,159 truck drift around a corner like a sports car. 314 00:11:48,240 - > 00:11:50,080 SPEAKER_00: Aaron Powell Because if you flip it, you crash the 315 00:11:50,080 - > 00:11:50,480 entire bank. 316 00:11:50,799 - > 00:11:51,919 SPEAKER_02: Yeah, that would be disastrous. 317 00:11:52,240 - > 00:11:52,480 SPEAKER_00: Exactly. 318 00:11:52,639 - > 00:11:54,799 You don't rip the engine out of an airplane while it's in 319 00:11:54,799 - > 00:11:55,600 mid-flight. 320 00:11:55,840 - > 00:12:00,320 Instead, the bank attaches a sleek, incredibly fast sidecar, 321 00:12:00,799 - > 00:12:02,799 the Mambu Cloud Core. 322 00:12:03,039 - > 00:12:07,120 And they run this new nimble infrastructure right alongside 323 00:12:07,120 - > 00:12:08,720 their massive legacy systems. 324 00:12:08,799 - > 00:12:10,240 SPEAKER_02: Aaron Powell Okay, that actually makes a lot of 325 00:12:10,240 - > 00:12:10,559 sense. 326 00:12:10,720 - > 00:12:13,759 They insulate their core operations from the volatility 327 00:12:13,759 - > 00:12:14,960 of tech experimentation. 328 00:12:15,279 - > 00:12:15,679 SPEAKER_00: Precisely. 329 00:12:15,919 - > 00:12:20,080 SPEAKER_02: So if the new BUT app has a bug or needs to pivot 330 00:12:20,080 - > 00:12:24,000 its interface entirely, they can do that rapidly in the sidecar 331 00:12:24,240 - > 00:12:27,279 without risking a catastrophic failure in the main bank's 332 00:12:27,279 - > 00:12:29,200 mortgage or payroll processing systems. 333 00:12:29,279 - > 00:12:30,720 SPEAKER_00: Aaron Powell It gives them the best of both 334 00:12:30,720 - > 00:12:31,039 worlds. 335 00:12:31,279 - > 00:12:34,399 Zandona points out that this sidecar method acknowledges the 336 00:12:34,399 - > 00:12:35,440 reality of the market. 337 00:12:35,679 - > 00:12:39,039 Traditional banks absolutely must move faster to survive, but 338 00:12:39,039 - > 00:12:42,320 they cannot afford to throw out a century of core compliance and 339 00:12:42,320 - > 00:12:43,039 trust to do it. 340 00:12:43,440 - > 00:12:46,639 SPEAKER_02: And if you want proof that this isn't just like 341 00:12:46,639 - > 00:12:50,480 some localized European experiment with ABN AMRO, you 342 00:12:50,480 - > 00:12:52,799 just have to look at the global marketing landscape right now. 343 00:12:53,120 - > 00:12:53,840 SPEAKER_00: Oh, it's everywhere. 344 00:12:54,159 - > 00:12:56,159 SPEAKER_02: We see this technological arms race 345 00:12:56,159 - > 00:12:57,279 happening worldwide. 346 00:12:57,440 - > 00:13:00,960 The promotional materials we reviewed for ICBS, that's the 347 00:13:00,960 - > 00:13:03,919 Universal Core Banking and Financial Solutions provider, 348 00:13:04,159 - > 00:13:05,600 they illustrate this perfectly. 349 00:13:05,919 - > 00:13:06,720 SPEAKER_00: They really do. 350 00:13:06,879 - > 00:13:11,120 They market themselves globally as a partner for this exact type 351 00:13:11,120 - > 00:13:12,399 of successful transformation. 352 00:13:12,799 - > 00:13:15,679 SPEAKER_02: You see a massive scramble to digitize financial 353 00:13:15,679 - > 00:13:18,879 infrastructure extending far beyond the traditional tech 354 00:13:18,879 - > 00:13:19,440 hubs. 355 00:13:19,600 - > 00:13:23,279 I mean, just look at the hubs ICBS lists in their materials. 356 00:13:23,519 - > 00:13:26,480 Dubai, Malta, Beirut, Paris, Iraq. 357 00:13:26,799 - > 00:13:27,679 SPEAKER_00: It's truly global. 358 00:13:27,919 - > 00:13:29,679 SPEAKER_02: This isn't just a Silicon Valley trend. 359 00:13:29,759 - > 00:13:32,559 The realization that legacy systems are a bottleneck is a 360 00:13:32,559 - > 00:13:33,840 worldwide phenomenon. 361 00:13:34,000 - > 00:13:36,559 And the way these companies are marketing their solutions tells 362 00:13:36,559 - > 00:13:38,639 us a lot about where the entire industry is heading. 363 00:13:38,960 - > 00:13:41,200 SPEAKER_00: Visual language they use is incredibly telling, 364 00:13:41,279 - > 00:13:41,600 actually. 365 00:13:41,919 - > 00:13:44,159 SPEAKER_02: Oh, the marketing imagery is wild. 366 00:13:44,320 - > 00:13:47,519 If you look at older banking advertisements, it was all about 367 00:13:47,519 - > 00:13:49,600 physical presence and human connection, right? 368 00:13:49,840 - > 00:13:53,759 Smiling tellers, shaking hands, a family standing in front of a 369 00:13:53,759 - > 00:13:57,840 brick and mortar branch, heavy steel vault doors conveying 370 00:13:57,840 - > 00:13:58,159 security. 371 00:13:58,559 - > 00:13:59,440 SPEAKER_00: Very tangible stuff. 372 00:13:59,759 - > 00:14:02,639 SPEAKER_02: But if you look at the ICBS materials, the human 373 00:14:02,639 - > 00:14:05,440 element is almost entirely removed from the transaction. 374 00:14:05,600 - > 00:14:09,279 You see people wearing full VR headsets, looking out over these 375 00:14:09,279 - > 00:14:12,399 glowing, hypercomplex digital cityscapes. 376 00:14:12,720 - > 00:14:14,399 SPEAKER_00: It looks like something out of a sci-fi movie. 377 00:14:14,639 - > 00:14:15,200 SPEAKER_02: Exactly. 378 00:14:15,440 - > 00:14:18,799 The visuals are full of intricate, swirling blue 379 00:14:18,799 - > 00:14:19,840 structural patterns. 380 00:14:20,000 - > 00:14:22,080 It looks like a cyberpunk movie, not a bank. 381 00:14:22,399 - > 00:14:24,720 SPEAKER_00: Well, if we connect this to the bigger picture, it 382 00:14:24,720 - > 00:14:27,600 speaks directly to a concept we could call architectural 383 00:14:27,600 - > 00:14:28,399 erasure. 384 00:14:28,639 - > 00:14:32,240 The fundamental concept of what a bank is is undergoing a 385 00:14:32,240 - > 00:14:33,360 profound visual shift. 386 00:14:33,759 - > 00:14:33,919 SPEAKER_02: Right. 387 00:14:34,000 - > 00:14:36,480 The marble columns and the physical vaults are basically 388 00:14:36,480 - > 00:14:38,639 turning into invisible API calls. 389 00:14:38,799 - > 00:14:41,679 The bank is being erased from the physical street corner and 390 00:14:41,679 - > 00:14:44,159 completely rebuilt inside the code of our devices. 391 00:14:44,480 - > 00:14:47,360 SPEAKER_00: The neon data blocks and VR headsets in those 392 00:14:47,360 - > 00:14:50,639 marketing materials aren't just flashy graphics designed to look 393 00:14:50,639 - > 00:14:51,440 futuristic. 394 00:14:51,600 - > 00:14:54,879 They represent the ultimate strategic goal for these 395 00:14:54,879 - > 00:14:55,360 institutions. 396 00:14:55,679 - > 00:14:56,240 SPEAKER_01: Which is what? 397 00:14:56,320 - > 00:14:56,720 Exactly. 398 00:14:56,960 - > 00:14:58,879 SPEAKER_00: The partnership these core providers are 399 00:14:58,879 - > 00:15:02,559 offering to legacy banks is not just about upgrading their 400 00:15:02,559 - > 00:15:03,519 internal software. 401 00:15:03,679 - > 00:15:06,720 It is about innovating on behalf of the customer to build an 402 00:15:06,720 - > 00:15:10,960 immersive digital reality where financial transactions happen 403 00:15:10,960 - > 00:15:14,159 flawlessly and largely invisibly in the background. 404 00:15:14,399 - > 00:15:16,559 SPEAKER_02: It's essentially about building the financial 405 00:15:16,559 - > 00:15:19,519 plumbing for the metaverse or, you know, whatever the next 406 00:15:19,519 - > 00:15:20,960 iteration of the internet becomes. 407 00:15:21,200 - > 00:15:21,440 SPEAKER_00: Exactly. 408 00:15:21,759 - > 00:15:23,600 SPEAKER_02: The user just turns on the faucet, totally 409 00:15:23,600 - > 00:15:26,159 frictionless, and the legacy banks want to make sure they are 410 00:15:26,159 - > 00:15:28,799 the ones supplying the water, even if their name isn't stamped 411 00:15:28,799 - > 00:15:29,519 on the sink anymore. 412 00:15:29,759 - > 00:15:32,080 SPEAKER_00: They want to be the ubiquitous, silent 413 00:15:32,080 - > 00:15:35,279 infrastructure powering the digital lives of Gen Alpha. 414 00:15:35,600 - > 00:15:37,759 SPEAKER_02: So think about your own digital habits going 415 00:15:37,759 - > 00:15:38,159 forward. 416 00:15:38,399 - > 00:15:42,080 The next time you download a seamless, frictionless financial 417 00:15:42,080 - > 00:15:46,000 app, maybe one that promises a community-focused, values-driven 418 00:15:46,000 - > 00:15:49,440 way to manage your money with a slick, minimalist interface, 419 00:15:49,600 - > 00:15:52,480 take a much closer look at the fine print at the bottom of the 420 00:15:52,480 - > 00:15:52,720 screen. 421 00:15:53,039 - > 00:15:54,559 SPEAKER_00: You might be surprised by what you find. 422 00:15:54,879 - > 00:15:58,720 SPEAKER_02: Because behind that trendy, Gen Z-friendly exterior, 423 00:15:58,960 - > 00:16:02,720 you might just find a massive century-old traditional bank. 424 00:16:02,879 - > 00:16:06,399 They are quietly running a high-speed sidecar operation, 425 00:16:06,639 - > 00:16:10,320 utilizing cutting-edge cloud architecture to invisibly win 426 00:16:10,320 - > 00:16:12,000 your loyalty for the rest of your life. 427 00:16:12,159 - > 00:16:14,960 And they're doing it without you ever needing to step foot in a 428 00:16:14,960 - > 00:16:15,600 physical branch. 429 00:16:15,919 - > 00:16:18,559 SPEAKER_00: To trace the arc of what we've uncovered today, we 430 00:16:18,559 - > 00:16:21,840 really began with the staggering reality of consumer inertia, 431 00:16:22,000 - > 00:16:25,919 that 2.5% switching rule that transforms early customer 432 00:16:25,919 - > 00:16:28,879 acquisition into a literal life or death metric for banks. 433 00:16:29,200 - > 00:16:30,639 SPEAKER_02: A terrifying metric, honestly. 434 00:16:30,960 - > 00:16:33,440 SPEAKER_00: From there we explore the immense friction of 435 00:16:33,440 - > 00:16:36,320 legacy systems and the existential threat posed by 436 00:16:36,320 - > 00:16:39,759 agile neobanks catering to the uncompromising demands of 437 00:16:39,759 - > 00:16:40,559 digital natives. 438 00:16:40,799 - > 00:16:41,919 SPEAKER_01: And then the solution. 439 00:16:42,240 - > 00:16:42,480 SPEAKER_00: Right. 440 00:16:42,559 - > 00:16:46,000 We unpack the ingenious sidecar workaround, the composable 441 00:16:46,080 - > 00:16:49,759 cloud-based cores that allow ancient institutions to suddenly 442 00:16:49,759 - > 00:16:52,639 move with the speed of tech startups, deploying entirely new 443 00:16:52,639 - > 00:16:54,159 ecosystems in a matter of months. 444 00:16:54,399 - > 00:16:56,639 SPEAKER_02: It completely changes how you perceive the 445 00:16:56,639 - > 00:16:58,559 financial tools on your phone, doesn't it? 446 00:16:58,720 - > 00:17:01,279 You start to see the hidden architecture behind all that 447 00:17:01,279 - > 00:17:01,759 convenience. 448 00:17:02,159 - > 00:17:02,720 SPEAKER_00: It does. 449 00:17:02,879 - > 00:17:06,319 And this evolution leaves us with a fascinating and somewhat 450 00:17:06,319 - > 00:17:09,279 provocative thought to ponder long after we finish today. 451 00:17:09,599 - > 00:17:10,000 What's up? 452 00:17:10,240 - > 00:17:14,319 If Gen Alpha truly desires frictionless embedded finance 453 00:17:14,480 - > 00:17:18,319 and actively prefers not to see the bank, will the very concept 454 00:17:18,319 - > 00:17:22,720 of a bank as an independent, visible, consumer-facing brand 455 00:17:22,720 - > 00:17:24,799 completely dissolve during their lifetime? 456 00:17:25,119 - > 00:17:25,759 SPEAKER_02: Oh wow. 457 00:17:26,000 - > 00:17:29,440 Could tomorrow's bank simply become a faceless, invisible 458 00:17:29,440 - > 00:17:32,319 piece of code running quietly in the background, executing 459 00:17:32,319 - > 00:17:34,799 microtransactions while they play their favorite video game 460 00:17:34,880 - > 00:17:36,720 or scroll through a social platform? 461 00:17:37,039 - > 00:17:40,319 SPEAKER_00: The infrastructure will remain, but the identity 462 00:17:40,319 - > 00:17:41,440 might vanish entirely. 463 00:17:41,759 - > 00:17:43,920 SPEAKER_02: A future where the bank is everywhere, but 464 00:17:43,920 - > 00:17:44,880 completely unseen. 465 00:17:45,279 - > 00:17:47,359 Thank you so much for joining us on this deep dive. 466 00:17:47,519 - > 00:17:50,480 Stay curious, keep questioning the systems operating just below 467 00:17:50,480 - > 00:17:53,119 the surface of your screen, and we will catch you next time.