Prediction of 20 million job losses in the financial sector of banking. The future of banking in 2030. Are banks going to be extinct?
A decade goes so fast. Within the last 10 years’ technologies changed the way we bank. Mostly connected to our phones. But by 2030 the everyday banking experience could be entirely virtual. By then more than two billion people will have digital bank accounts on digital platforms and just 20 of so-called heritage financial services firms will have survived.
Some banks will be completely virtual facilitated by open banking fuelled by data stored and shared on the cloud and made faster and safer by Blockchain technology. If you want, you’ll be able to get the equivalent of a private banking service.
As data aggregators cross-reference your spending habits with other parts of your online life from your travel plans to your social media interactions creating a unique profile for your bank to provide you with bespoke services.
Look forward to an AI powered virtual banking assistant handling payments investments and instant transfers at the command of your voice as banks begin to get more personal.
So will the ways we pay in the future cash is no longer key instead paying with your phone or wearable will be the status quo rendering physical cards unnecessary. 60% of financial organizations are expected to make wearables a common payment method. Physical shops will still exist but the way you pay will change with money changing hands virtually in real time.
Cryptocurrencies may rival cash with an estimated 200 million Blockchain wallet users by the end of this decade and many currencies could digitize and even decentralize simplifying travel and trade. But none of this will happen if security isn’t every bank’s number one priority protection against cyber-crimes and fraud will be powered by predictive analytics and artificial intelligence home to 350 specialists manning state of the art.
Cyber defence tech Santander’s new global cyber security centre shields customer’s pins and passwords will be a thing of the past. There’ll be much tighter security thanks to instant biometric verification. Santander is rolling out biometric recognition for millions of customers including voice recognition in Europe and Latin America and fingerprinting at ATMs in brazil.
The pace of technological advancement means making precise predictions for what we can really expect for the future of banking rather difficult. But it’s certain the service will be personalized practical platform based and predominantly online as well as seamless speedy slick and super safe.
I’d like to share with you some insights around open banking and some predictions about what’s going to happen post open banking. There’s a huge movement towards open banking concept there’s lots of talk around consumer protection and consumer choice and also particularly in the EU and UK area.
This emergence of all these neo banks whether they’re digital banks with a very different business model and you layer on the legislative mandate of PSD to with the promise which is the payment services directive with the promise of opening up payment flows and transparency into customer access.
You have this cocktail of very interesting things that’s going to happen with banking and underlying all of the concept of open banking is the technology of open API application programming interfaces without geeking out too much on the technology aspect it basically enables access to data services and capabilities of an organisation and it just enables that to other systems.
So whether it’s a burning platform of a legislative mandate for open banking or simply a burning desire because your competitors are actually moving towards that space. It’s going to force a lot of our organisations and financial services to really make strategic choices around business model impacts of open banking.
Because I believe it’s way more than just a technology play and there’s basically three or four what I’ll call arc that they can choose in terms of business model impacts.
They can remain as product champions and be really good at creating a particular product. They can move into the utility space and compete on scale volume pricing.
They can move towards a customer segment and actually own a particular customer base and they can move towards a business model such as a platform where they provide the facilities of both creation and consumption.
Now depending on which ones they use one of the predictions if you really want to capture the value from the customers you really got to take a look at there’s going to be a fundamental shift from a product mentally much more to the distribution channel.
And many of you know that when you move towards the distribution channel everyone’s moving towards this term called the customer journey and let me just put a pin on the customer journey for a second. I have about three observations.
I’d like to share there’s a lot of conversations around the what in the last few years whether it’s around the technology aspects but one of the largest challenges in an organization is actually the execution on the how and the conversations are changing from what we need to do to.
How we’re actually going to do it. The second conversation has emerged in the last two years relative to Fintechs in 2015 it was death by a thousand cuts silicon valley’s coming and all these Fintechs are going to carve into our revenue stream.
What’s really happening now is because the challenges of the Fintechs are actually on board customers. They’re recognizing the value of this scale.
The degree of trust customers has in banks as well as the customer distribution channels that they actually have. Fast forward to 2017 we’re seeing a lot more collaboration between the Fintechs and the organization.
So we’re shifting from a compete ecosystem to much more of a collaboration of the ecosystem and the third major observation is around the shift from building things in-house bespoke and custom development towards more of a mentality of assembly and that the analogy of the Lego blocks start coming in.
So when you start linking in the concept of a customer journey, the observations that I just shared and the building blocks that allow you to do open banking starts getting really interesting.
Because you essentially can start assembling not only the customer journey but you’re assembling it within the bank itself. So getting back to the customer journey aspect of it we hear the terms reimagining, reinventing these processes.
Typically, they pick some of the most complex processes. We’ve heard of a mortgage or acclaims processing or customer on boarding and you know you’ve heard many times most people don’t walk into a bank just to buy a mortgage.
They’re trying to establish a home. You’re not investing just to get rich. You want to make sure you have a comfortable retirement. So at the end of it I think customers and for people money is very emotional.
It’s more of an ends to meet or means to an end. When I reflect back on my customer journey, it didn’t limit myself to the financial services organization just for the financing my customer journey.
I had to transverse all different merchants and companies in my personal journey and that’s kind of the point of post open banking is the fact that if an organization can actually see my customer journey through my lens and not just from the financial services end is going to get my business.
I believe the whole concept of open API is although we see it in financial services. That’s drive an open banking it’s going to be pervasive in terms of other industries and the magic which is the prediction is I think post open banking it’s actually going to be open consumer and the real exam question for each of us now is who is actually going to provide that customer journey for the open consumer.
Is it going to be one of the digital Giants like the Google’s the apples the Facebook, the Amazons is it going to be a new entrant disrupting all the incumbents and sneaking in the middle between the incumbents and the consumer or will it actually be the actual Bank of the future.