The Future of Banking
Strategic threats, through disintermediation, new market entrants and evolving
models around the world are ushering in a third digital revolution that will see
declining costs in tandem with rising efficiency. The mental models that underpin
current banking models will need to change thanks to technology, shifting human
behaviour and the ways in which the two interact.
Artificial intelligence is chief among these technologies, leading a transformation
happening 10 times faster and at 300 times the scale, or roughly 3,000 times the
impact, of the Industrial Revolution. Whether banks have the flexibility and change
management prowess to change at speed remains an open question. They
have access to many of the tools that new entries threaten incumbents’ positions with.
Access to data will enable banks to form and leverage a more complete picture of the
individual customer, allowing more personalisation - whether in the form of offers,
real-time lending decisions or through adding value by providing gleaned insights back
to the customers.
Companies like Amazon and Baidu have helped heighten consumer expectations to
the point that 76 percent of consumers now expect organisations to understand, and
presumably act upon, their individual needsiii. Leveraging technology will be critical in
achieving this, but the larger and tougher form of systemic change lies in cultural and
strategic change. Banks would be wise to prioritise consumer-centric offerings and
practices with regards to collaboration, technological adoption, and the crafting of
new business models.