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What does the future bank look like?

I keep asking dumb questions like: if the tech giants give away payments, lending and credit for free, how will banks make money? As I’ve regularly blogged, the tech giants don’t want to get into banking per se, but they do want to encourage more traction through their platform by making buying and selling easier. If that means giving away activities that banks make money from, then they will. So, how will banks make money? And what is the role of the future retail bank?

I have a view on this, which is that the future retail bank has three major areas of activity and focus:

  1. They are a secure data vault for the data that consumers believe is valuable;
  2. They are a curator of apps, APIs and analytics which can deliver the best customer experiences around that data; and
  3. They are a life events manager who focus on the things that give me the most value or most stress, and blanket those experiences for me so that I can focus on the outcomes and not the details.

Each of these I’ve explored in depth but, to give each a nutshell elevator pitch:

1) is all about locking data for me that has value. If Facebook deleted my account tomorrow, I would lose over a decade of memories. But most of what I have on Facebook is rubbish, except for the photos. Those photos I have backed up on a hard drive, but what if that hard drive was corrupted. OK, I have them backed up in Google too, but what if Google lost my photos? What guarantee do I have with Facebook, Google or anyone? And how valuable are the 15 years of digital photographs I’ve taken to me? A bank can secure those digital assets and it’s not just my photos, but any digital asset: intellectual property, contracts, media, ideas … for more:

2) For some time everyone talked about the unbundling of the bank. Interestingly, the banks have now woken up and rebundling the FinTech. This is unsurprising as most consumers cannot be  arsed changing bank, let alone researching 1,000 FinTech firms doing one thing brilliantly well. But if their bank partnered with and collaborated with 1,000 FinTech firms doing one thing brilliantly well, and integrated them all into an amazing customer experience, then that would be good. Specifically, consumers cannot be expected to do the due diligence on the trust in a FinTech start-up firm, but a bank can and should.

3) This is something that banks have recently woken up to, and it has a world of opportunity. Instead of focusing on just processing my financial transactions, look at the bigger picture and focus upon supporting my financial life. I have these big events like moving home, having children, getting divorced, losing my job and such like. Manage the whole of these events by partnering with the marketplace of activities that need to be integrated for these lifestyle events. Bring me the removal firm, decorators, gardeners, designers and insurance for my home move, not just the mortgage. Bring me the counsellors, recruitment firms, job opportunities, payments protection and career planning when I lose my job, don’t just bank the redundancy cheque. You get the idea …

The thing is that the three roles above are intermingled and play off each other, which means that if banks lose #1, can they really expect to do #2 and #3? And, as I’ve been blogging about a lot lately, if they’ve already lost #1, what future does the bank have?

 

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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