The expected changes in the assistance and distribution models will finally happen during the next decade: in fact, some are in progress now; others will be much more noticeable near 2025, and the rest will be clearly outlined for 2030.
From this perspective , banking will be invisible, in the sense that it will accompany its customers and be omnipresent, but the customer will not perceive its activity until the moment the financial entity needs to make a proposal. Leading entities will use technological solutions and customer insight at a much larger depth, with the purpose of inserting financial services when the customer needs them, often at the expense of their own brand´s visibility.
Given that distribution models are evolving to make use of markets and technologies such as open API and 5G – to connect finances with homes, machinery, vehicles and other devices – many banks will notice that their retail brands are becoming each time more invisible when facing the final consumer. Nevertheless, the challenge of this new Customer Strategy will be to become each time more present in peoples’ lives – in an invisible manner – to “appear” at the right moment, providing an answer to a need or specific financial issue.
The report we are reviewing anticipates as well that banking will be connected, in the sense that sometimes it will not be the protagonist and customer´s owner, but will be part of something larger. Nowadays, in fact, with an advanced digital transformation, those banks which are more evolved are thinking themselves as a digital financial services platform, which at the same time, brings them to offer their own products and open up so that others can offer their bank´s services, and/or connect as a link in a third party financial services chain.
In order to continue being relevant, entities will have to be present in the ecosystems and products their customer’s use. For that purpose, they will have to stop seeing their brands intermediations and associations as a threat. Banks will work with agile methodologies with the purpose of obtaining the longed for business agility, and will assemble in value constellations: they will integrate in interoperable and dependable environments which will allow suppliers from beyond the banking business to weave value in affluent customers´ travels, and without friction. What will differentiate the banks from other points of contact offering integrated financial services? Their “trusted advisor” status.
This turn towards an open banking model will take place with an evident background of banking services becoming commodities. In a study carried out in 2019 in the USA, for example, 66% of the surveyed stated that banks offered the same services and 75% said that products and banking services were the same in all banks. With that scenario, open banking “allows banks to widen their ecosystems and to offer a wider range of services to their customers, advancing towards a full service banking experience”. In fact, in the mentioned research , 53% of the surveyed said they would like to receive offers for combined products (for example, real estate services with a mortgage loan).
Focus on the customer
Another characteristic that will define future banking – always from the perspective we are reviewing – is that it will be firmly backed by perceptions: the premise will be to get to know the customer and their context, to adapt, and, if possible, to anticipate their behaviour and expectations. Under this customer focus, it will be key to understand the desires and environments in which people move, with the purpose of anticipating their needs and accompany their financial decisions. This way, the customer´s trust will be the fundamental asset: banks will need to take a firm step in advising “and generating financial intimacy with their customers, who will expect an “RfC” (return for consent) for that trust”.
Banking will also be useful and aligned with the purposes of the people it serves, within a frame in which the relation of people with brands will be profoundly signed by the way in which brands feel construed. From this standpoint “customers will prefer banks that are aligned with their environmental and social values in a more determined era, where local and cooperative principles will be associated to global responsibility business”. Open cultures which build and heal communities “will distinguish their leaders, as they develop values fostered ecosystems. Open innovation and commitment through principles, content and knowledge, will create communities boosted by a shared purpose, which will collectively develop products for everyone´s benefit”.
In the article we are reviewing, it is noted that we live in a world where limits are more diffuse every time, “where intelligent devices and platforms can channel the banking experience”. In such a context, banks will have to redefine their profile and take advantage of their strengths.
In the future, entities will have clear options: they will be able to be their customers´ “owners” or develop a digital financial services platform. Few will be able to manage both paths.
In times of open finances, no bank will be able to do it all alone. Some entities will turn over completely to become the platform and the rails on which other businesses run; other banks (larger) will compete against the titans of technology for customer primacy and commitment; and some will do both things.
In any case, as the consulting firm that elaborated the report concludes, entities will have to selectively prop up and extend the trust they have, and choose carefully their key productivity areas. To delve into this vision of the future of banks, we invite you to read this article.