Why banking is changing for good

Banks who fail to embrace this are in for a rough ride. Imagine having instant and total control of your money. To spend, save, invest and pay whenever you need just by tapping your finger or saying the word. 

Contactless payments via smart phone will become ubiquitous, meaning you won’t have to carry cash in your wallet. Virtual agents, enabled through Artificial Intelligence, will be able to fulfil your every banking need around the clock. Mobile technology will allow you to do more and more banking on the go using features such as speech recognition. 

For consumers these developments are good news as they will have greater control of their money than ever before. For banks, however, they represent one of the biggest and most fundamental shifts in the rules of engagement that we have seen in a lifetime. In the future the basis of competition for banks will not be products or channels, but how well they understand the needs of their customers. It will be about how much value they can add to people’s lives.

The implication of this is that banks cannot continue as before and expect business to stay the same. To put it bluntly, the industry has to start thinking less like banks and more like Apple, Google or Facebook. Banks have to become not only innovators but also proactive in coming up with solutions that meet customers’ needs, predicting those needs before customers know they have them. This means banks have to transform from utilities into service organisations that offer a great lifestyle experience. 

Design and usability is no longer a “nice to have” in financial services, but a core requirement. This doesn’t just apply to the digital channels – though these are set to dominate banking in the next decade – but to the entire distribution chain.

The banks now face a choice. Either to continue as they are and see new competitors infringe upon their core business – or innovate and become market disruptive, expanding those same boundaries to take banking into new territory. There is real scope in the next few years for banking to evolve beyond the basics of savings and lending to a much broader set of services. One obvious example is unlocking data in order to offer customers personalised, value-added services – alerting them to nearby deals or new and better ways to grow their wealth.  

For banks, this means changing their approach to innovation, recognising that the best ideas won’t necessarily come from the top or even from bankers. At Standard Chartered our mobile banking platform Breeze was developed bottom-up by a small staff team of mobile and social media enthusiasts – not by senior executives or people with a long experience in banking. 

It also means changing the approach to the customer, offering financial services in ways that matter to people’s lives. When we developed Wishlist, a savings feature for Breeze, we integrated it with Facebook and bulk discount aggregators to let people share their saving goals with friends and get great deals on what they are saving for, be it a new pair of shoes or a trip around the world. You don’t even have to be a customer of the bank to benefit. 

The point is innovation now is about adding value to customers’ lives, not about what products we can offer. Going forward, the industry has to pay more attention to how banking fits into different contexts – what it lets people do. In many ways, we have only just scratched the surface of how banking is going to change. As the boundaries of consumer banking become increasingly blurred, banks will need to forge new partnerships to meet customer demand. Banks need to study not so much each other, but other industries more adept at engaging and inspiring consumers. 

 

Steve Bertamini is Group executive director and CEO of Consumer Banking at Standard Chartered Bank.