We are observing a development. Banking is altering in so many ways, the change away from cash, and even cards, the crucial acceptance of online banking, and a rising interest in personal capitalizing. The slow and steady pace of the commerce has been quicker and accelerated more in the last year than in the whole decade prior.
The consequences of this changeover are previously becoming visible as the Treasury has elevated the supreme contactless spend, hundreds of bank branches from the likes of HSBC and M&S Bank tolerate to close, and record statistics of people who are opening investment accounts, with Hargreaves Lansdown broadcasting a 40 per cent hedge in late 2020, taking down its average age of depositor by 7 years. Similarly, opposing platform AJ Bell also saw its buyer base grow by 30% last year, to practically 300,000. More than half of its new workers are under the age of 40.
All of it will stir up the status quo in turn putting the customers in the center of the banking sector once again. Now that it is becoming extremely apparent that over the next era that banking will definitely be put back into the people’s hands by the year of 2023.
The democratization of the bank is nothing but digitization of it and the recent introduction of the user friendly and mobile based banking apps have shortened the distance between the customers and their money. This is also an indicator of the largest financial trend, that most people now want to be actively involved in their finances and that the customers want a bank that they feel it belongs to them, thus the success of the challenger banks like Monzo or Starling, where the personalization and the ownership is integrated into every interaction. But this extends far beyond the mobile banking apps and the annual spending roundups. Banks now have an opportunity to capitalize on this urge for a more involved banking, creating new products and services which support their customers 24/7. This shift may take its shape through shares or trading platforms, board mortgages, loans and credit card offerings, loyalty and voucher schemes, may be even Buy Now Pay Later (BNPL) services. But one thing that is certain is that the banks are going to be a bigger part of our daily lives by offering services and products that converge to enhance our entire lifestyles and not just our finances. In order to make this diversification into a reality, the technical foundations should be laid at the earliest. For example, if the challenger banks have a large stack which incorporate latest tech and digital estates can move faster in the market where the traditional banks also have an upper hand as their huge cash reserves are their loyal customer base.
The competition between the new and the old banking systems continue to grow fiercer and the big banks will not have any choice but to start innovating. May be in the past, when the banks innovated, they did so from inside out which created a lot of disconnection between the product, process and that platform which in turn diluted the impact of the changes they made. For the innovation team, the current approach will be inverted in the year 2030 as the new products and services will be led by the customer and not the other way around. The mining and the analysis of the customer data will be the key for it which is enable the outwards-in approach. It’s on banks both big and small to make this a reality.