The way we manage money is about to change beyond
recognition. Banks who fail to embrace this are in for a rough
ride, predicts Steve Bertamini, CEO of consumer banking
and group executive director at
Standard Chartered
Go deeper with GlobalData
Imagine having instant and total control
of your money. To spend, save, invest and pay whenever you need to
just by tapping your finger or saying the word.
Today, by and large, you still have to come to
your financial service provider, be it online, on a mobile phone or
in the branch. But mobile device sophistication, network speed and
innovation are converging to place banking straight into your
hands.
Contactless payments via smartphone will
become ubiquitous, meaning you won’t have to carry cash in your
wallet. Virtual agents, enabled through Artificial Intelligence,
will be able to fulfill your every banking need around the clock.
Mobile technology will allow you 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.
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By GlobalDataIn 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.
We live differently now. Together, technology
and customer demand are driving a complete transformation of how
banking is done. There is a growing global tribe of consumers who
want anytime anywhere access to services and banking is no
exception. These consumers are looking for personalised experiences
and they want to be treated as individuals, not aggregated
together.
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. Branches, too, must offer an experience similar
to those on offer in the retail industry, not just function and
efficiency.
Plenty of new players are lining up to offer
what banks will not or cannot provide. The core of consumer banking
– lending, wealth management and protection – is still heavily
regulated with strong barriers to entry for new competitors.
However, in areas such as cash transactions and the user interface,
there is no denying that banks are confronted by increased
competition.
Look at Africa where telecommunication
companies such as Airtel and Safaricom have by-passed the need for
bank accounts or Internet connections to provide mobile wallets for
millions in the space of just a few years. Airtel money for
example – for which Standard Chartered has held funds in trust
since 2008 – is now used by over 20 million people to make or
receive payments in real time.
I believe that 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.
There is no point pretending a transformation
on this scale is going to be easy. Banks are large and complex
organisations not traditionally focused on innovation or
speed-to-market. Today, many face issues getting the right
technology for their customers.
It is a long leap from there to the brave new
world of banking. In the future, banks will have to become serial
innovators, move with the urgency of start-ups and look for ideas
everywhere.
The task is not only to meet customers’ needs
but to capture their imagination. It is a challenge but – in an
increasingly digitised world – not one exclusively faced by banks.
Other sectors have gone through similar transformations, a very
good example being the electronics industry where companies such as
Samsung have led the way.
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.
Some of our most recent innovations let us
engage broadly with consumers in ways that aren’t just about
banking. Breeze Living, for example is an augmented reality
Smartphone application that we developed to let people capture and
share merchant discounts on the move.
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.
They will need to be prepared to form
strategic alliances outside of the traditional confines of banking
to reach people in the spaces where life is now
led.
As I see it the changes now underway in
technology and consumer demand represent not so much a threat but a
great opportunity for banks to move to an unprecedented level of
closeness with the customer.
If we embrace it now, more than ever, we have
the chance to make banking a true enabler in people’s lives,
helping to change the industry for good.
