“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10.” This quote by Bill Gates aptly sets the context for projecting what retail banking may look like in 10 years! In my opinion retail banking as it exists today (including even the Digital Banking) will be largely disrupted by the coming-together of the following forces:
- Demography: Millennials, with their expectations and comfort with newer/digital technologies, including FinTech, mistrust of legacy banks – especially the large Tier I banks — global mobility, and on-the-go lifestyles, will put emphasis on an ubiquitous banking experience potentially provided by nontraditional banking companies such as FinTech. Digital natives born after the turn of the century and growing up with smartphones and tablets would have entered the workforce and will demand highly sophisticated ‘gaming-like’ experiences for their banking needs just like that offered by FinTech – potentially giving rise to virtual personas and universal digital identity.
- Technology: The Rapid increase in wireless bandwidth and network speeds (5g and beyond) will open new doors in digital customer experience by leveraging cloud-based quantum computing for extreme personalization and contextualization. Intelligent and voice-enabled digital banking personal assistants with holographic projections from multiple integrated devices (personal and shared – such as smart home/office/building) will potentially become popular for interacting with and executing your banking transactions. The maturity of blockchain platforms will disintermediate several banking functions to speed up the transactions (such as real-time cross-border payments and smart contracts for real-time processing of insurance claims).
- Regulation: The rise and ensuing maturity of RegTech and SupTech will help reduce the regulatory burden on the banking industry by creating standardized industry utilities. Regulators will embrace more innovation in the best interest of consumers and adopt a common regulatory framework across multiple jurisdictions for facilitating a more seamless experience for highly mobile customers while they benefit from digital banking. There will be increased stability and adoption of cryptocurrencies as a store of value and a means to raise capital.
- Community/Co-working spaces: While physical banking industry branches will not entirely go away, their numbers will reduce drastically and the role they play will evolve. The banking industry branches will become shared spaces for co-working or building and curating a community – almost like village or town squares. Imagine a shared space that has a trendy yet relaxed café atmosphere where you can talk to a small-business banking consultant, a financial advisor, a tax advisor, a home loan specialist, or an insurance product specialist. Banking industry branches will also be places to meet other like-minded people to do business with – local folks looking to invest in community businesses or raise money to solve local issues.
- Marketplace banking: Recent rise of fintech startups and unbundling of products and solutions will give way to re-bundling through aggregation and marketplace banking platforms. Just like one can select a restaurant for a meal on Yelp!, select a hotel on TripAdvisor, select a flight on Kayak, or Expedia, one will be able to select a financial product or a solution for one’s need on community ratings based marketplace banking platform. FinTech-as-a-Service with pay-per-use pricing will emerge to create API-based ecosystems.
The current prevalence of digital banking is largely focused on the customer acquisition and customer experience domains. In the future, this will evolve to a more holistic ‘financial well-being’ focus with banks potentially becoming utility players providing an infrastructure that is unburdened from legacy architecture and processes and more dependent on digital technology. Modern digital technology and process will remove inefficiencies from the middle and back offices. Design thinking will be used by putting digital natives at the center to develop product and services for their needs. Contextualization and personalization will evolve to hyper-relevance embedded in every aspect of a digital native’s lifestyle. Banking will become the invisible ‘lubricant’ that will facilitate the lifestyle of the customer with convenience of digital interaction (voice and chat) and seamless integration with thousands of commercial entities, as opposed to focusing mostly on the consistent omni-channel user experience across most functions that current digital banking initiatives are striving to achieve