Chris Kneen, Business Development Manager
Today’s banking experience is very different to what it used to be. The attitude and behaviour of the youngest segment of the workforce tells us that tomorrow’s bank won’t look like the bank of today. They don’t go into branches; they interact digitally; they value apps. This shift in consumer behaviour has led some commentators to predict that the bank of the future will in fact be a facilitating back-end; one that customers will hardly notice at all. The question isn’t therefore will there be change, but rather just how big will that change be and how soon will it happen?
KPMG has predicted that by 2030 banks and banking will be “largely invisible” to customers. To demonstrate their vision they created a hypothetical Siri-like personal assistant with an almost omniscient presence, accessing data from a range of sources and making decisions on the consumer’s behalf based on its deductions.
In one example, EVA (Enlightened Virtual Assistant) proactively moves savings to get a better interest rate and suggests a yoga class having noticed an increase in junk food purchases and a downturn in health data from a wearable device. Having solicited the user’s agreement (EVA knows to pick the best moment to talk – it checks the user’s diary and jumps in when they’re not active on any devices), it books the yoga class and pays for it.
It’s a vision of a future that many of us wouldfind hard to believe. If it should come to pass, will we forget to have independent thought at all? Will technology indeed start to make our choices for us?
EVA is a hypothesis; a fascinating aspect of the concept though is the blurring it suggests between banking and other services. Money management is a means to an end; merging it with aspects of our daily lives that we manage money for makes some sense.In that case, the bank would indeed take much more of a back seat and it’s hard to see how, in such a future it would own the customer relationship.
In KPMG’s vision there is no banking interface – it’s just one part (an “invisible” part) of a platform that the customer uses to manage aspects of their life. In this future banks occupy a middle layer – “just as invisible, but just as vital, as the manufacturers of 4G base stations.”
It’s pause for thought. Consumers don’t know who provides the base stations they rely on for their mobile service. They generally do know who they bank with but since price comparison sites and regular switching,quite a few of them might find it hard to name their car insurer without checking. It’s not beyond the realms of possibility that in a few years’ time it’ll be the same with their bank.
To the customer, it’s the front-end that’s all-important. The interactions they have so that things happen. Providers of financial services have been making in-roads into creating an improved user experience for customers. Atom Bank is not only 24/7 banking anytime, anywhere, but customised to the individual, right down to their own logo and choice of colours that drive their visual experience.
On Atom Bank’s website, the answer to the question “where’s my nearest branch?” begins, “on your nearest tree.” Fair enough. It states that they, “don’t have high street branches because they’re unnecessary, no one wants to visit them and no one likes queuing.”
It’s a viewpoint echoed in The Digital Disruption of Retail Banking report which suggests that bank branches will become obsolete. For the report, Business Insider Intelligence surveyed millennials and found that almost three-quarters visit a bank branch (for something other than to use a cash machine) once a month or less, with 38 per cent of them never visiting. With 71 per cent saying it’s very important to have a banking app, it is clear that mobile is the future.
This says a lot about the future of the bank branch. Millennials have been called the “largest living generation” – their habits, preferences and behaviour are shaping the future of our products and services.
It’s not news to the banks or any other financial institution that the expectations of the youngest segment of the workforce is important. A wealth of research – and conjecture – exists on this much examined generation. What will be interesting is seeing who within the industry will respond in a truly significant way to change the course of financial services. Will it be a slow progression of digital services replacing traditional means of money management, or will the industry have its ‘iPhone moment’ from which some institutions won’t recover?
Whether or not financial service providers will continue to ‘own’ the customer relationship in the future remains to be seen. However, one thing is abundantly clear – manual, stove-piped processes in the back-end will have no place in any version of the future bank you choose to believe in. Speed, digitisation and automation won’t be essential just for growth but for survival.