Disrupting the retail financial scene
Banks in High Street locations, where customers come to a person at a screen to conduct a transaction or a Bank Robber issues a demand for the cash will be going the way of bookstores and video rental libraries.
Already, Capital One has integrated ‘coffee bar’ with ‘bank branch’. Digital FinTech removes the need for some personal interaction, and only ‘Know your Customer’ and other anti-money laundry(AML) measures absolutely require a measure of face to face — but the advanced Automated Teller Machines(ATM’s) or Cashpoints can provide a certain amount of that, and end-to-end encrypted communication can bring this interaction with real customers and convincing ‘bots’ or automated order takers and escalate to a real person where decisions, verifications and validations are needed. So what are Banks good for ?
Well, interaction at a greater level with customers other than just merely holding money deposits or granting loans with interest is indicated. How can that be achieved ? Not all Banks could become coffee bars !
Alignment with some business processes is a good indicator of a new level of activities, that is being done in some cases such as taking on the Payroll and tax collection processing from integrated business customers, in addition to managing treasury functions and international payments and receipts. This could move into taking over all the accounting functions for a business- as that is not a core function of a business that makes and sells a product or service. As well as the coffee bar business, some other alignments and mixed -used location utilization could begin -such as aligning with a local e-commerce niche business that has great product and order fulfillment but apart from online presence, there is nowhere a customer could touch, feel and try on or try out a product or service. So an alignment with an on-line household goods entity, pet supply entity, fresh food and prepared meal entity, on-line clothing entity would disrupt the single-use brick and mortar vendors.
What is already chipping away at the point of a retail or commercial bank includes a number of recent trends, one being the mobile payments phone applications, that do not need checks, bank cards and run the transactions through a single point, rather than through a clearance system base on a National Central Bank. These have a lower cost overhead point as they are absolutely virtual with few administrative overheads. Zelle is a fight-back approach by a consortium of retail banks.
Smart Budgeting and Personal Finance management is a less served customer need, especially with high net worth individuals, but the mechanisms could apply to a broader group of customers. For example, a person may have collected a number of investments over a working lifetime, and would consider an option other than an Annuity to manage their investments and provide an income in retirement. It might be easy enough to calculate what amount and when is needed to be withdrawn from 401ks, Roth IRA’s, investment accounts but all assets are not equal, and a tax efficient map may be complex and outside the normal abilities of retirees. The rules are pretty simple to apply a tax-efficient retirement withdrawal so can be automated and offered at multiple price points based on complexity and amount of assets managed. The customer may still make investment decisions on the remaining capital. Some of this is being addressed by the Wealthfront Financial planning and management service, linked to GreenDot bank — https://www.wealthfront.com/, with the ‘Self-Driving Money’ concept.
The emergence of Digital Currencies, that do not require central banks and are not subject to any Government policy and control, need to have access points for Customers as the systems mature and are not so volatile, and give some opportunity for reporting and AML, so offering an entry to this concept to customers may assist in customer loyalty and potential future direction of national and regional currencies being no longer significant.
Price Waterhouse Coopers (PWC) issued a report in its global fintech series, ’Financial Services Technology 2020 and Beyond: Embracing disruption’ that showed the leading thought makers on what a Bank needs to consider, including a flexible model of customer interaction and operational infrastructure.
CapGemini are touting highly focused customer interactions customization driven by AI and massive customer data that assists in segmentation and tailoring interactions to meet their needs exactly, supported by digital platforms allowing greater access to deposit and loan facilities without the need for direct human interaction. A greater collabarative environment is requred with customers both commercial and private. https://www.capgemini.com/resources/infographic-top-trends-in-retail-banking-2020/
