"The final volume in the Bank series, this book explores the future of banks amidst the evolution of technology and highlights the beginnings of this revolution already at work"-- Page 4 of dust jacket.
Abstract: "The final volume in the Bank series, this book explores the future of banks amidst the evolution of technology and highlights the beginnings of this revolution already at work"-- Page 4 of dust jacket
Preface
Bank 2.0 was written in 2009 when mobile had just started to become a signifi cant part of retail banking, and just after the internet had surpassed all other banking channels for day-to-day access. Bitcoin had just launched. Betterment, Simple and Moven were yet to be announced, in fact, FinTech overall was not yet even a term for most of us. Bank 2.0 was a simple exploration of the fact that customer behaviour was rapidly evolving as a result of technology, and this was creating an imperative for change within banking, which was undeniable.
By 2012 mobile was the next big thing. It was on track to surpass internet, and there was no longer an argument about whether or not banks should have a mobile application. The importance of day-to-day use of technology to access banking was clear, but most banks were still in the evolutionary mode, where mobile was considered simply a subset of internet banking and the technology team were still begging the executive fl oor for adequate funding. That was by no means an easy battle. Bank 3.0 was the further realisation that you could be a bank based exclusively on emerging technology. As I wrote in Bank 3.0: “Banking is no longer somewhere you go, but something you do.” Banking was moving out of the physical realm into the digital.
That was more than six years ago. That’s a long time between drinks, as we say in Australia. The reason for the delay in me writing a Bank 4.0 vision was simple—the future of where banking would go after the whole multi-channel realisation wasn’t yet clear. It took some incredible changes in fi nancial inclusion and technology adoption via unconventional, non-bank players for me to realise that there was a systemic shift in fi nancial access that would undermine traditional bank models over the coming decade or two. The unexpected element of this was that the future of banking was, in fact, emerging out of developing economies, and not the established incumbent banking sphere.
Over the last 40 years we have moved from the branch as the only channel available for access to banking services, to multi-channel capability and then omni-channel, and fi nally to digital omni-channel for customers exclusively accessing banking via digital. The problem for most banks was that we were simply adding technology on top of the old, traditional banking model. We can tell this primarily because the products and processes were essentially identical, just retrofi tted for digital. The application forms had just changed from the paper forms in the branch to electronic application forms online. We still shipped plastic cards, we still sent paper to customers in the mail, we still used signatures, we still maintained you needed a human for complex banking problems.
In markets like China, India, Kenya and elsewhere, however, nonconventional players were attacking payments, basic savings, microlending and other capabilities in ways that were nothing like how we banked through the branch traditionally. By building up new customer scenarios on mobile without an existing bank product as a reference point, we started to see new types of banking experiences that were infl uenced more by technology and behaviour than the processes or policies born from branch distribution. This evolution was led by technology players like m-Pesa, Ant Financial’s AliPay, Tencent’s WeChat, Paytm and many more. This combined wiThnew FinTech operators in the established economies like Acorns, Digit, Robinhood and others who were creating behavioural models for savings and investing. There was a realisation that if you took the core utility and purpose of fi nancial services, but optimised the design of that for the mobile world, then you’d get solutions that would scale better than retrofi tting branch banking, and that would integrate into customer’s lives more naturally
If we observe the trend over the last 25-plus years since the commercial internet arrived, we can see that there’s an overwhelming drift towards low-friction, low-latency engagement. Like every other service platform today, banking is being placed into a world that expects real-time, instant gratifi cation. Banking, however, is not easily retrofi tted into a real-time world if you’re used to static processes that are based on a paper application form and hardwired compliance processes. Compared with many other industries, banking has been slower to adapt when it comes to the revenue aspects of e-commerce.
When technology-first players emerged in markets where there were large unbanked populations that had never visited a bank branch, there was no need to replicate branch-based thinking, there was just the need to facilitate access to the core utility of the bank. This, combined with the design possibilities afforded by technologies like mobile, allowed for some spectacular rethinking of how banking could be better embedded in our world. It turned out that these new approaches off ered much better margin, better customer satisfaction, engendered trust that was just as good as the old-world incumbents, and businesses that held far more dynamic scaling potential.
This was when it became clear to me that the trajectory was shifting and that we were seeing an emerging template for the future of banking, one that wouldn’t include most of the banks we know today. Why? Because if you’re retrofi tting the branch and human on to digital, you’re going to miss the boat. Banking is being redesigned to fi t in a world where technology is pervasive and ubiquitous; the only way you stay relevant in this world is by creating experiences purpose-built for that world. Iterating on the branch isn’t going to be enough.
• Publisher: John Wiley
• Language: English
• Pages: 347
• Files: PDF, 18.15 MB
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