"The world needs banking, but it does not need banks." - Bill Gates
Today, we are living in the Renaissance era of banking and this transformation that we see is from disruptive changes across regulations, technology, and the very manner in which banking is consumed as a service. The opportunity to transform banking is now the top agenda for most nations globally, as they seek to make banking inclusive and accessible to billions.
There are quite a few enablers driving this Renaissance in the banking industry:
- Humongous market: Roughly, 3 billion people do not have access to banking and are bankable.
- Regulatory impetus: Globally, regulators are innovating and rewriting guidelines to enable inclusive, transparent, and accessible banking services.
- Banking technology: Digitalisation of banking and the API economy is enabling and connecting millions at increasingly lower price points.
- Cloud and device: The mobile-first generation and cloud adoption are signalling speed and scale.
- Risk capital: In 2015, VC funding for fintech hit a record high of $13.8 billion, and 2016 continues the momentum with $7.4 billion in funding till H1 2016, according to the KPMG and CB Insights report: Pulse of fintech, August 2016.
" Competition makes us faster, collaboration makes us better." - Fyrefly
The events of the last decade left the banking systems across the world shaken and stirred. Banking failures and bailouts have had a domino effect across nations. The future, as it evolves, is even more connected and intertwined. The next decade, we anticipate, will be driven by collaborative partnerships across industries and nations as banking becomes more pervasive.
Banking as a collaborative service is not just a trending future but the rebirth of banking for the world:
- Unlicensing of banking: Regulators will seek increasingly stronger and better candidates to deliver banking. Telecom and retailers with strong balance sheets and expertise in handling more customers, transactions, and money movement will be newer vehicles of banking delivery.
- Unthinking trust: Technology like Blockchain will replace how trust will work in banking within and across borders.
- Unlocking the bank: Banks will open API and their hoods to the world to collaborate on services and commerce.
- Unlimited capital: Banks will invest in technology companies and incubate ideas to win in better service.
- Unlocking of borders: Regulatory collaboration to ensure low cost of service for trade and banking will revolutionise border-less banking.
"You have got to start with the customer experience and work back towards the technology - not the other way around." - Steve Jobs
To bank a billion, banking is making tremendous advances in becoming more intuitive and natural. Design principles and deep research on customer engagement methodologies are being applied to latest technologies to enable superior experiences. Banking regulators and governments are working to improve accessibility by accepting Digital technologies as change agents and sponsoring new-age identity (Aadhaar in India) and payment systems (UPI).
It just may be that in the next five years the world will see many financial brands in the most lovable brand experiences.
A Renaissance in customer experience is in the making:
- Shift in branch: For the next billion, mobile is the branch. Go digital, mobile, and personal.
- Shift in UX: Conversations on messaging and voice on mobile is the new UX. Much closer and more interactive with the user.
- Shift in RM: From in-person to intelligently enabled robotic and virtual.
- Shift in identity and security: From pins to biometrics.
- Shift to cashless: Money is becoming virtual and portable across borders.
“Innovation distinguishes between a leader and follower.” - Steve Jobs
The future of banking involves re-thinking the human capital strategy-starting with banking boards.
- Boards will need to re-equip themselves with deeper bench strengths on technology and risk management as increasingly intelligent machines start taking over customer management.
- Bank boards will increasingly look at acquiring fintech companies as they try to defend market share and bring in talent.
- Fintech challengers with efficient and smart capital will continue to unbundle banks and banks will be challenged to retain their best people.
- The challenge for traditional banks will be that their customers are already digital and the banks are not. So, training their teams to think digital and serve digitally will be a paradigm shift.
- With customers shifting to digital and robots replacing processors in back offices, banks will have to let go increasing number of people from their branch banking and operations teams.
There has never been a more exciting time for banking and we are truly entering an era of Renaissance, led by machines.