I’ve been at the Money2020 conference in Las Vegas this week, which is a financial industry trade show of epic proportions. It’s a show where thousands of payments geeks and financial futurists talk over coffee and beer with bankers and technology integrators. To put it mildly, the way you bank will change.
I’m proud to play a small role in helping consumers and small businesses deposit checks using their mobile phone. What starts as a purely physical process – the receipt of a paper check – is quickly transformed into a digital process where the check image is accurately captured and perfected, data is extracted from the check, and the paper instrument is transformed into pure data and ultimately, money in your account.
I thought I’d take a few minutes to share a few dominant themes that you’re likely to see in your banking relationships in the coming years. As (I think) Bill Gates said, we tend to overestimate how much things will change in the next five years and underestimate how much they’ll change in the next ten years. That may be true here, but assume these changes will be evident to you soon, if they aren’t already.
Personalization – Let’s face it – apart from not mixing up your money with someone else’s, you bank doesn’t know that much about you. In the small bank/physical branch era, your favorite teller might have known you. But as the physical branch network reduces in size (caused by the usual intersection of technology disruption and cost pressure), the emphasis on digital tools increases.
The two sub-categories that will drive increased personalization is that a) your digital interaction with the bank is easier to track and understand since it’s data-oriented and you’re logged in, and b) the banks are moving away from one-size-fits-all products (Free Checking!) to financial services that are tailored to where you are in life and what you’re trying to do.
Mint was acquired by Intuit a few years ago for a princely sum because, in part, Mint’s clear user interface appealed to young female millennials – a demographic that the male-centric financial product world had not been thinking about.
Here’s an example of how “personalization” in the digital world might impact you: after a purchase in a store or online your wearable fitness tracker buzzes to indicate you’re approaching the budget you set for yourself.
My Bank Teller Looks Funny – Banks and technology companies are making big strides in leveraging video servicing for their customers. Many banks are building branches without employees where you walk in, use the ATM, and interact via video with bank employees who are remote. There are even private rooms for more personal video chats concerning financial matters – a loan you’re interested in, an investment account you’d like to open, etc.
Also, seemingly from a sci-fi movie, there is experimentation with holographic tellers who can interact with you and react to your movements and questions.
Are You My Bank? – Think of your bank as a massive financial and data integration machine. Much of what your bank does is actually done for them by someone else. As a banker once said to me about the vast network of vendors his bank works with, “I don’t think we even count our own money”. This approach will be amped up in a major way as banks partner with fast-moving fintech companies focus on specific problems.
When you put your savings in Lending Club instead of your bank account, bankers take notice. Look for more third party capabilities showing up from your bank.
One of the areas of fintech that is getting some much-needed attention is the creation of services for the elderly population and the people who love and support them. In an era where scammers target that population, there are companies creating services that help caregivers be notified when unusual financial behaviors are noticed.
Conclusion – Watch your bank and how it evolves and changes the way you interact with it. Watch also how young people – the future of any long-term industry like financial services – flock to the banks that “speak digital” and address their unique needs. They don’t care if the bank has been in existence for 150 years – they have deep affinity to brands like Starbucks, Instagram and others that didn’t exist 20 years ago – so they care more about the bank’s perceived sophistication in the digital world.
The reason why you should watch these things is because they will help you better understand how your own world is changing, and how you might be able to leverage smart ideas to your benefit.