For some time, retail banking has been going through radical changes, with online and mobile channels increasingly favoured by customers and new players and products entering the market. Inevitably this process is also leading to a fundamental re-examination of the role and value of the bricks-and-mortar branches of traditional banks.
Against this backdrop, the address given by the conference’s guest keynote speaker Brett King will focus on the changing preferences of banks’ customers and how this demand can be met. An international best-selling author, King’s books include BANK 3.0, which looks at the trends redefining financial services and payments. He is also the co-founder and CEO of Moven, a New York-based mobile banking startup, and a regular media commentator and contributor, providing thought-provoking analysis and challenging ideas on the future of fintech and digital banking.
According to King, advances in digital technology are making it evermore possible to “embed experiences, like banking, in our life and make them available when and where we need them the most.” Given this, a branch network will clearly not be the primary channel for delivering a frictionless banking system that makes financial services more accessible - something consumers increasingly desire.
“If you’re saying that the only way to get this product or service is to come to the branch and sign this piece on paper, then you’ve got a problem,” he says.
Even the fulfilment of regulatory and security requirements, such as ID verification and know-your-customer obligations, may be done much more accurately and efficiently in the future using multiple forms of technology, including biometrics, rather than through a face-to-face meeting in a branch, he believes.
So what steps would King advise traditional banks to take to transform their branch strategy for the digital age?
“First, at least for retail banking, and to some extent in a market like Hong Kong, for SME banking as well, you need to be able to deliver your core products in real time across a digital platform – whether that’s mobile or an internet browser or voice.”
The second step involves redefining the services that will differentiate branch banking from frictionless digital experiences – such as the passing on of advice. This, though, will take a different form than currently, and will be less product- and more solution-oriented.
“When you walk into a branch today to get advice on, say, a mortgage, what usually happens is you end up getting sold a mortgage - not advice on buying a home,” King explains. “In the future, the sort of advice delivered in branch will be based on the bank’s relationship knowledge of the customer and it will aim to make that individual customer feel very special.”
The provision of day-to-day technical support is the third area in which branches will have a role to play, he says.
In terms of the physical design and scale of branches in the future, King imagines these will probably divide into two categories. On the one hand, we could well see ”flagship stores”–essentially the brand space – a big branch in the centre of town, and, on the other, very small satellite branches with just one or two staff.
But, fundamentally, he believes, “in the future, we won’t need a bank in order to bank.”
Despite the much diminished role he envisages for the branch, King thinks that due to their inherent advantages, traditional banks that are willing to embrace bold thinking and experiment with new models will continue to thrive in the era of digital retail banking.
“With their deeper pockets, they can afford to spin off a concept on the side and see if it works. I think you will see more of the big players increasingly experiment with brands on the side, and you’re going to see them investing in fintechs through venture funds.”
King sees collaboration between fintech businesses and traditional banks as, potentially, a natural fit.
“Fintechs struggle in the early stages to get scale and grow enough their revenue enough.” One solution to this problem, he suggests, would be for them to partner with banks. “While, for banks, the reality is that fintechs will be available to deliver technological innovations at a fraction of the cost, and in a fraction of the time, it would take the banks to develop those technologies themselves.”
With or without such collaborations, King urges banks to focus on meeting the demands of the digital future. “They need to start smartly restructuring their businesses around new skills such as data science, experience design, behavioural psychology and blockchain integration.”
In addition, King concludes, they can exploit opportunities by using their access to capital, as well as their channels for engaging their customers, to diversify and offer much more than financial services – e-commerce platforms being one such possibility.
