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Building “Babysitters’ Bank”

Creating the institution calls for more agility than being a sitter

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  • Written by  Dan McKinney, Finxact
Imagine an app that means no more worrying about cash for the sitter after a late evening out—and tipping as easy as on a ride-share service. Imagine an app that means no more worrying about cash for the sitter after a late evening out—and tipping as easy as on a ride-share service.

Let’s say someone in your marketing department came up with a brand-new concept: “The Babysitters’ Bank.” Could your institution pull it off, and quickly?

Banking agility is about evolving the banking business model. The industry needs to become one that scales up—and down—with operating leverage that drives higher percentage scale at higher margins.

Banks need to be able to cost effectively and rapidly satisfy the market, current trends, and even future, unknown trends.

By contrast, under the legacy ways of doing business banks often had to balance the status quo against the reputational risk, cost, and time of launching new initiatives. And despite the cost and risk of converting systems, banks were forced into long and costly efforts.

However, now innovation that was once too costly and risky has become a strategic imperative for banks.

Creating an innovation platform

Fortunately, modern, open banking architectures provide a low barrier to entry for banks. The path forward to an agile banking model starts with creating an innovation platform that becomes the keystone for launching new initiatives.

Establishing and running this platform in parallel with a bank’s existing operations minimizes disruption. The low barrier to entry means nominal cost duplication. From there, banks can scale this innovation platform to serve more customers with additional products and services, all while incorporating more of its existing operations.

Over time, as banks prove this new platform can in fact run all operations, the economic advantages and operational flexibility will compel banks to migrate their legacy customer and transaction data.

If done properly, what was once a big bang is now more like the flick of a switch.

Letting fresh ideas fly

Entrepreneurial bankers understand that a new architecture is ultimately required, not just at the edges of the bank, but also at its heart. The modern customer expects Alexa-like ease and Uber-like seamlessness. And every bank executive I speak with is shifting the bank’s focus from innovating solely at the edges to modernizing the core of the institution. Modernizing the core is required to truly differentiate customer experiences, improve operational efficiencies, and evolve the bank business model.

“Babysitter’s Bank”

Going back to my opening point, I have spoken with many bank executives and fintech entrepreneurs and often the conversation evolves into a brainstorm around what an innovation platform might look like. One idea that may be exaggerated, but makes the point, is “The Babysitters’ Bank.”

The “Babysitter’s Bank”—a concept but not yet an actuality—is not a new savings or checking account, but actually a newly branded bank—specifically for babysitters.

Consider the low barrier to entry, minimal disruption, low risk, and low-scale consumption based economics. Plus, according to, babysitters earn over $5 billion per year. Once a customer, they will become transacting college students, young professional savers, and eventually among a bank’s top prospects for loans and investments.

The innovation platform provides a testing ground for launching novel services. A babysitter’s mobile-only bank app could geo-locate the babysitter’s job site, automatically create invoices, and message invoices to the babysitter’s client. A simple tap would allow the client to send an ACH payment in any currency, in real time.

And, as we’ve seen from Stripe, Square, and Uber, the bank could offer various tip buttons for increasing a babysitter’s bill.

Finally, the bank could offer other integrated tools such as calendars for scheduling, P2P, and integration into a free 1040EZ tax prep service.

Viral ideas require agility

I was at the table when Venmo was conceived and can say with certainty that its founders clearly understood the viral potential of P2P. What they underestimated was the value of these young customers who graduated college, are responsible earning adults, and now Venmo more than just bar tab IOUs.

The Babysitter’s Bank is an exaggerated example of how eliminating the cost and complexity of entire stacks of IT and obtaining customers virally through low-cost social networks, can potentially lead to a lucrative $5 billion market, and customers with high lifetime value.

About the author

Dan McKinney is co-founder of Finxact LLC, maker of a virtual core system.

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