In the not-too-distant future, we’ll no longer have to drive ourselves to work each morning. Instead, a driverless car will ferry us to the office as we sit serenely in the passenger seat, catching up on the news and sipping a warm beverage.
Banking services are heading the same way. The time is coming when we will have a management-less banking experience. The plethora of tasks we now enjoy or, more often, endure -- paying bills, seeking out the lowest-cost loan, reconciling expenses, and optimally investing surplus cash will disappear from view. Those tasks will still be there, but the individual or business owner will no longer have to think or worry about them.
The journey toward the world I’m describing is overshadowed by two key questions. First, what technology will get us there? And second, how will the banking ecosystem evolve over time?
Today’s technologies, such as mobile, Wi-Fi/Bluetooth and NFC, are in common usage. But we also have newer technologies still in their infancy in terms of both use and complexity. Examples include artificial intelligence (AI), machine learning, micro services and APIs.
The ecosystem is extremely important. Many of the current players stay primarily within their own sandboxes. Banks may upgrade their services, but this often means a new user interface or customer experience based on refreshed workflows, perhaps some data analytics, payment capabilities and so on.
How can the collective value of all these ecosystem members be realized in full? The answer is that we need to get them all working together in a collaboration model where interests are aligned. Enabling this will clearly require technology – which we already have today. However, we’ll also need a new operating model.
The logical starting point for this is with banks themselves, as they own the customer-centric point of contact and the trust of customers (although this trust is arguably a diminishing asset as we look a decade ahead). But there’s a problem: Banks are the least risk-tolerant, least agile and most resistant to change in business-as-usual.
In fact, I would go so far as to say that if Big Techs, fintechs, retailers and others in the ecosystem had not challenged the financial services industry in the ways we’ve seen in the past two decades, we would still be writing checks in shops. And cash would still be king.
Phase One: Focusing on the service experience
We’re already seeing the first phase of this transformation in the dramatic changes in customer experiences that started quite a while back. Those shifts will become more pervasive. Uber changed the way we pay for a car service by making the transaction element entirely transparent. This is not just positive for the customer experience, but also accomplishes an important business objective in growing sales and revenue.
As you remove the transaction from the process, consumers become more focused on the service. And the service is key: we should really be thinking about how to make payments invisible to customers, rather than making them faster or easier.
Virtually everyone now seems to be moving to what I call a
"payless society." You want a coffee? Just stop at your coffee shop and grab one. Your phone or wearable (mostly watches today) will handle the payment.
In effect, the support systems for your entire life will become automated. AI will evolve to delight you even further as it learns your preferences and patterns of behavior, and uses these to anticipate and meet your every need. We are moving to this very quickly.
Phase Two: Technology-enabled financial services
As I sketch out this new world of seamless service experiences, an obvious question arises: What kind of “automated” world is this if we still need to reconcile our expenses at the end of the month and balance our incomings and outgoings?
To answer it, we should be thinking about technology that is used to create comprehensive financial services. This means no more transactions or reconciliation – with only anomalies or special circumstances being brought to the attention of the customer.
This seems both complex yet straightforward, as the banking services of today incorporate interoperability and logic into the way they work. But in fact, this is a huge jump forward in positioning banks favorably against other players in the ecosystem – especially for the early adopters who can win market share.
Phase Three: Transcendent banking
Beyond technology-enabled comprehensive financial services, the third and final phase is transcendence in banking services. In essence, rather than taking what we have today and making it better, this involves reimagining an entire new world where are the starting point is a blank canvas.
This means imagining an optimal customer journey and experience, and removing any barriers to creating it – whether they be technological, regulatory or something else. We start with utopia and work backwards to see what we can do today to get there, and then map out a roadmap to complete the journey.
Execution: Building the future
Banks have always been–and remain–pragmatic when it comes to this type of disruptive change. And it’s true that we must crawl and walk before we can run. However, banks can easily start the journey on the technology side today by implementing cloud, AI/machine learning, and a new open platform architecture that allows interoperability within the ecosystem.
These advances should be supported with a healthy dose of enhancements in the operating model, including an injection of new personnel and skill set, and processes to collaborate more effectively in ways that are well beyond today’s vendor management programs.
I think this is where banking gets exciting. And perhaps, in years to come, we can even achieve the milestone of being proud to tell our children that we work in the banking sector. That is a future worth building.
Robert Mancini is the head of payments at Finastra, a financial technology company based in London.