What will be the future of bank?
Author, speaker, futurist, entrepreneur and known by several other title, Brett King is known for envisioning the future of the banking world.
Presenting my team's work on Banking System
“During my second semester of Master of International Business at IAE Nice Graduate of Management, our team of three had done presentation of Banking system based on the book of Brett King". Therefore, I am publishing the work of my group here since we acknowledge the fact that information is worth sharing.
Content of the work: Introduction of Brett King- Bank 2.0-Bank 3.0-Future Bank
Concept
Bank 1.0 is our assumption about the traditional banking since Brett King has not written the book, Bank 1.0. Our work as discussed in the content, Bank 2.0, Bank 3.0 is based on the books of Brett King. And, Future bank is our envision that technological disruptions will bring many chapters of Bank if it has to be presented by Brett King.
So, Are You ready to Start with Us?
About Brett King
Born on April 24, 1968 in Melbourne, Australia. He is an Australian futurist, Speaker, Startup Founder, Author, Radio Host and TV Commentator.
Speaker: Focuses on how technology is disrupting business, changing behaviour and influencing society. Brett’s TED TALK: "Banking is something you do, not somewhere you go"
Startup founder: He is the CEO and Founder of Moven, a $200m mobile bank start-up, with the world’s first smart bank account.
Amazon bestselling Author:
•BRETT KING Bank Series: 2.0,3.0,4.0
•BRETT KING Augmented
•BRETT KING Breaking Banks
Before 2.0(Assumption as Bank 1.0)
1990s: Dot-com era, 1995: Internet Banking, 2000(post dot-com era) where Customer Feedback= value branch(trust), 2003:Internet banking in developed economies, 2007 Crisis=Cash Shortage in Europe and USA, 2007-2010: App Phone, iPhone wifi, 3G, ipad
Bank Offerings: Deposit at desk, withdrawal at ATM, desk, ATM Networks, cheque, debit and credit card, wire transfer
Customer Relation: Face to Face Interaction
Bank 2.0 , How Customer Behaviour and Technology Will Change the Future of Financial Services, 2011
«Banking is necessary; banks are not» - Bill Gates.
Changes in Customer Behaviour
Behavioural shift: In this phase, customers started feeling that they have choices because of the online services bank offer. Customers perception is that, I am better control, I save money, I get a Better Quality Solution, I get better deals because service provider has to work hard to get my Business, so, Yes I DO it Spirit in Customers.
Let's see the spirit of bank in Bank 2.0," “We trained our customers to believe that they needed the bank more than the bank needed them”.
Total Customer Experience: There is diffussion of technology through technology innovation and acceptance. Therefore, bank require to emphasize for total customer experience(TCE), which is the sum of customer experience and customer empowerment.
Three phased of disruption according to Bank 2.0 are Phase 1: arrival of Internet and dot com, Phase 2: smart phone and app phone, Phase 3: mobile wallet and NFC payments.
Therefore, Bank 2.0 stressed that bank should adopt service model for profitable customer relation, financial viability and optimal Customer Experience.
Conclusion of Bank 2.0, Bank=Channel + Branch, therefore bank should move to channel management from channel development. Bank 2.0 talks that bank should look at their organizational structure to address the future needs.
Bank 3.0,Why banking is no longer somewhere you go but something you do?
2012
External changes in Customer behaviour are through hyperconnected customer( People expect more connection also by smartphone, internet, social network and so on because they want to do work from home and on the go). The other reason is customer want experience targeted to them. Customer could interact with banks by electricity much more than branch. Therefore, Banks should invest most technology than it does to people. The growth of technology meet customers’ self-actualisation needs and shifted the way they value their time. Doing finance by internet or phone for saving time will increases our self-esteem because customers are using their time more wisely.
Self-servicing gives them a feeling of control and self-achievement that cannot be achieved in a traditional interaction.
Process of diffusion which means new technology can be spreaded rapidly in the modern society, and people can accept new things more easily and quickly.
Development of technology: For example, smart devices/ a mass of new mobile phone apps have been created, included banking application. Payment platform/online bank service since bank connect with financial technology company (Applepay, Samsungpay, Alipay). Similarly, Big data, Cloud can estimate customer’s requirements; offer service against money laundering and drive insights to aid real-time decision making. Similarly, competition comes from emerging digital banks and withoutbank-banking apps (N26 and Alipay).
Internal changes are inevitable to cope the external pressure and to offer better customer service. Bank 3.0 presents the banking scenario that the organization structure of most banks has not caught up with this reality of consumer behavior. The manager of branch network owns too much power while manager of Internet is on much lower position, but he is responsible for 90% transaction. Extra Internet Public Site for marketing department is required, because banks can collect customer’s information and behaviors from it.
Bank 3.0 also talked about the channel strategies,internet channel development and improvement. More contents that were done in branches can be done on internet. There is also reduction in the number of branches, for example, 7000 branches in UK have been closed in past 20 years which is almost a half of the total umber. About customer relation, customers can choose which way they want to use rather than buying bank’s way. Bank should follow social media because Social media provides fantastic opportunity to listen to what your customers are saying and form useful strategies.
Bank 4.0,
Banking Everywhere, Never at a Bank by Brett King
Future Banking world:
Let's talk about the banking trends and predict the future of the banking world analysing this timeline of banking trends:
2015: NFC contactless phone exceeds debit/credit card payment
2016: EU and UK government announce support for physical credit card to be phased out due to fraud issues.
2017:Value of P2P payments via mobile exceeds ATM cash withdrawal globally
2018:The UK, Australia, and other stop supporting cheques, the US follows within two years
2019:Use of ATM machines is in terminal decline in the west
2020: Physical cash makes up less than 2.5% of retail payments
Now, we are in between bank 3.0 and bank 4.0. Therefore, Bank 4.0 will be a time, where everyone is a bank. Bank 4.0 is about banking positioned for disruptive innovation. Internet, mobile apps, social media, and other such innovations are no longer special, and have become the new normal.
Customer are becoming hyper-connected, using multiple channels to meet their various financial needs. Non-banking financial institutions and digital payments posing serious threats to banks. Branches will not disappear, but their current main role must end and shift to a new role and form. About organizational structure, it will be all-in one digital and the goal is to eliminate any friction and design an organization that is digitally ubiquitous. This design redefines traditional organizations into a forward-leaning digital architecture that drives an agile work environment. Product development and distribution outcomes ensure seamless experiences across all touchpoints.
Bank 4.0 and growth through technology: Cognitive analytics is a new approach to information discovery and decision-making. It is able to bridge the gap between the intent of big data and the reality of practical decision-making.
Artificial Intelligence & Cognitive technologies will improve customer understanding and activation through
personalization, influencing desired actions. This technology will also build a deep understanding and knowledge of company, market dynamics, and disruptive trends to shape strategies.
Similarly, blockchain technology will also revolutionalize the banking world. Blockchain technology is based on the distributed network of computers (nodes) that maintains a shared source of information. Transaction data is immutable and trust is enabled by cryptographic.
Biometric technology will becomes an integral and strategic part of financial service security platforms acting as a strong authentication tool to help secure ATM, brick and mortar, and online transactions and will help to increase customer trust and improve brand reputation.
Example: Biometric payment cards
Gemalto, the global leader in digital security, has already run successful pilot projects with fingerprint authentication authorizing payments with biometric cards, rather than a PIN. Biometric payment cards reached the point of widespread testing in 2018, and 2019 will see the commercial launch of biometric payment cards. Goode Intelligence forecasted that there will be 579 million biometric payment cards in use by 2023.
Conclusion
Banking is an industry undergoing fundamental changes due to changing customer behaviours and also due to increasing threats from new entrants.
FinTech is shaping the Banking industry and customer behaviour which includes,
•Virtual Currency •AI •Biometric technology •Blockchain •Cloud Computing •Robotic Process Automation
It is inevitable that banks need to understand and integrate the new technologies into the channel strategy to meet customers’ demands.
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