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The world’s best banks, according to Forbes

Forbes just launched a list of the world’s best banks, based upon a survey of over 40,000 consumers in partnership with Statista. I’m always wary of such surveys as, like influencer lists, they often reflect the world they want and miss a lot of what’s really happening.

Nevertheless, there are some interesting comments in the dialogue here. For example Citigroup, who were not on my list of top digital banks, have been doing some interesting stuff:

When Citigroup opened 2020, the most ambitious projects at the $2.2 trillion in assets lender involved major partnerships with technology companies best known for their internet, social media and ecommerce platforms.

In China, nearly 70% of the payments that Citigroup handles for customers are done through AliPay, the payments business spawned by Alibaba. Citigroup’s digital payments technologies are also present on other popular social messaging platforms like LINE and WeChat. The mega-lender recently launched a credit card partnership with fintech Paytm in India and in Singapore it uses chatbots on Facebook Messenger to help answer customer service inquiries. In November 2019, the bank made a big splash in the United States by unveiling a digital checking account with Google Pay …

In the U.S., Citi saw an 84% increase in daily mobile check deposits in May and a tenfold surge in activity on Apple Pay as quarantined customers used digital and contact-less tools to handle their financial activities. The lender’s Mexican operations saw an 80% increase in mobile app logins in March. Downloads of its mobile app surged 116% from February to April, while digital bill payments rose 78%.

Interesting. There’s also a comment from one banker (Aris Bogdaneris, head of challengers and growth markets at ING):

“Where we have physical distribution and literally closed branches, when the crisis abates – are some of them still needed?”

Great comment and question. It strikes to the heart of distribution and was a question I was asked the other day: will banks still need physical distribution operations? or, in short: do banks still need branches?

My unequivocal answer is yes. Yes, yes, yes. I wholly expect Monzo, Chime, Revolut, N26, 86400 and other challenger banks to open branches eventually, if they get big enough. Why? Because human contact is still important, even in the age of digital. More importantly, it’s not about human contact for advice or service; it’s human contact for trust.

I keep coming back to the idea that most banks will invest in physical outlets for marketing. Where there is a physical contact point, it increases trust and therefore increases deposits and assets. Where digital banks have physical outlets, the get almost three times the amount of assets as compared with where they do not.

This is the critical point. Branches are no longer about transactions or advice or service; they’re about trust and marketing. In this context, they are still important.

The issue is: do banks know this? Do bank decision makers understand why branches are there and what they are there for? I wonder. In closing branches, do bankers make the decision on rationale and common sense, or purely on numbers and cost? And how many physical contact points does a bank need?

Going back twenty years ago, most UK banks had 1,000-2,000 branches. Today, they cut these back to 800-1,000. My view is that the average UK bank needs about 200 branches to serve customers effectively and, reiterating this point, the branches are not there to serve the people; they are there as a marketing investment in trust.

A physical contact point is important in banking as it’s all about the money. Show me the money. When Google goes wrong, who you gonna call? If Facebook lost the payment, where’s the human?

In banking, it’s all about contact so yes, show me the money. Can you show me the money when my app goes wrong? In a branch, yes; online, no. Show me the money. Give me a branch. Share me a human.

About 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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