Benny Higgins, former chief executive of Tesco Bank, the finance arm of one of the world\u2019s largest retailers, is dismayed by the response of Australian bank executives to the Banking Royal Commission.\n\u201cThey are adopting tactics of denial, deflection and delusion,\u201d the outspoken Scot, who has held executive roles at Royal Bank of Scotland and NatWest, told CIO late last month.\n \nThough there have been endless apologies for the banks\u2019 misdemeanours \u2013 Counsel Assisting Rowena Orr even telling the final round of hearings she didn\u2019t want \u201cto hear further apologies, or expressions of regret\u201d \u2013 all the sorry-saying misses the point, Higgins says.\n \n\u201cJust apologising for all the single things that seem to have gone wrong, the catalogue they\u2019ve accumulated \u2013 that\u2019s the symptoms, the cause is culture. And I think an acknowledgement of the culture being at the heart of the problem is something that I don\u2019t hear them acknowledge clearly enough,\u201d he says.\n \n\u201cFrankly the Royal Commission is also demonstrating you can\u2019t talk your way out of something you\u2019ve behaved your way into,\u201d he adds.\n \nAs direct a result of the banks\u2019 attempts to deflect blame, on top of the misconduct and putting profits over customers, trust in them has nosedived, Higgins says. And that presents a huge opportunity for non-bank players; just not the ones you might think.\n \n\u201c[People] think with all the banks, one is as bad as the other. And that\u2019s what provides the opportunity if a player with a different brand, with a different set of values, with a different culture was able to demonstrate what\u2019s possible. It\u2019s a long journey but it could be embarked on,\u201d Higgins says.\n \nBeneficiaries of bad behavior\n \nWith the bad behaviour of the big banks laid bare, it is believed in some quarters that smaller players will be the ones to benefit.\n \nAccording to an EY report, start-up chiefs believe the Royal Commission will be a \u201cnet positive\u201d for fintechs and neo-banks and give them a chance to \u201cgrab consumer mindshare\u201d.\n \nHiggins \u2013 now chairman of ASX-listed real-time Know Your Customer regtech firm Kyckr \u2013 is not so sure: \u201cI\u2019m not that optimistic for many of them\u201d.\n \n\u201cI\u2019m sure in ten years\u2019 time there will be one of those little fintech banks that have succeeded. Because somebody might always succeed. But the problem is that critical mass is important in banking. It\u2019s very hard to be small and beautifully formed and successful. You do need scale, it\u2019s a scale business. That\u2019s a big ask of these smaller businesses,\u201d Higgins says.\n \nLarge financial institutions retain their \u2018transactional trust\u2019 \u2013 the consumer confidence in them to do the basics right, like debiting the right account after an ATM withdrawal.\n \nWhat they lack now, Higgins says, is \u2018emotional trust\u2019.\n \n\u201cThat\u2019s confidence that the organisation that you\u2019re dealing with will put you first and not put the short term profit and loss account first. I think there is the deficit that will take time to make up,\u201d he explains.\n \nFintechs and neo-banks \u2013 which have been busy snapping uptherecently introduced\u2018restricted authorised deposit-taking institution\u2019 (RADI) licences from the Australian Prudential Regulation Authority over the past few months \u2013 have yet to earn both their transactional and emotional trust.\n \n\u201cThe question is: is there transactional trust in smaller businesses that didn\u2019t exist five minutes ago? Building the brand, the transactional trust, the scale, is not easy,\u201d Higgins \u2013 who joined Kyckr as chairman earlier this year \u2013 says.\n \nSo who is in a position to step up? In Higgin\u2019s view the winners from the woes of the big banks will be the grocers.\n \nCheck out us\n \nAustralian retailers have an opportunity to enter the banking market in a bigger way \u2013 most already offer financial products with loyalty benefits bundled in \u2013 \u201cand bring with them the culture of a retailer\u201d.\n \nGrocers like Coles and Woolworths are far better attuned to customer needs, as the market demands it, Higgins says.\n \n\u201cWhen customers are unhappy with prices, availability, quality, any of the above, there are no barriers to switching, there is complete transparency, and they switch,\u201d he explains.\n \nCompared with banking where \u201call the products are opaque, it\u2019s very difficult to know exactly what you pay for certain things\u201d.\n \n\u201cThe future of banking might not be in the hands of banks, technology businesses might well have the opportunity to intermediate very effectively, retailers have got the opportunity to apply their brand and knowledge of customers. Different parts of the economic spectrum have different aspects they can play with. The banks could just be left with the heavy lifting like the payments infrastructure,\u201d Higgin says.\n\u201cAll of the above could play a bigger part than the banks know,\u201d he adds.