The future of banking | Jornal de Negócios

The perception of banking

A twitter user tweeted his concern with his move to the OSX – Apple´s operating system. His question was simple “What happens with all those home banking sites that only work with IE (Microsoft’s Internet Explorer)?” What was most intriguing was the swift reply from a follower: “If you need a particular browser (IE) to talk to your bank, that’s already enough reason to change bank.” The conversation continued: “That’s a bit harsh. There are workarounds, the bank is great otherwise”. Obviously differing opinions exist and the reply left no doubt as to how in this case, some customers perceive banks: “To be honest, online banking is sort of becoming a commodity! So to me if they’re not accessible, that bank doesn’t exist”.

So where does that leave banks exactly? Social Media permits the restyling of a bank’s online presence fulfilling the long time objective of being where your customers are before they even get there, offering them solutions they did not yet know they needed whilst also simplifying their increasingly complex lives.

Instead of having customers log in occasionally to check their balances, pay some bills and exit without fully appreciating the

relationship they are in, would it not be better for them to remain discussing money issues and concerns with dedicated financial experts or with the community sharing their experience and knowledge whilst reaping the benefits of the collective wisdom of the network? This is the very real benefit now driving brands to build online communities.

This is why the Deutsche Bank Group is on YouTube, Bank of America and Santander are on Twitter (along with countless others) and HSBC and Chase are on Facebook. Whilst most banks rushed online to secure their presence (albeit a logo and short text) in order to protect their brands from being hijacked, only a few had the courage and sense to use these new channels to build trust – one of the most prevalent traits of a meaningful relationship.

In true disruptive fashion, other players have emerged that truly understand where the future of banking is headed. Whether it is Wesabe, Geezeo or Mint, less than traditional names by all accounts, all have something in common: understanding the software-as-a-service approach to banking offering personal financial management functionality to their customers.

Others, such as HyundaiCard, are run more like a luxury retailer than a credit card company focusing on design and detail, blended with research, into lifestyle segmentation, spawning a range of differentiated credit cards.

Wouldn’t it be great if banks took the BMW approach, instead of starting with graphs and blueprints, BMW asks what drivers really need – the big question in design for them is “who is this for and how can it make their life better?

In most cases, the biggest barrier for a bank is their long tradition and hierarchical maze often ensuring that any and all innovation is hindered at conception. The notion of having anything resembling a conversation on their sites is enough to send shivers all the way to the board of directors.

New entrants remain in perpetual beta, pushing new versions out weekly and in some cases daily, learning from the community then feeding the new and improved content back to their customer base. Banks, on the other hand, with their more rigorous development requirements, seem to suffer from an acute case of paralysis serving up a diet of incomprehensive and sanitised content of little or no use to their customer.

The future bank may actually look nothing like a bank at all. Customer centricity implies being where customers are, empowering them to aggregate their data from across all financial institutions with which they have a relationship, integrated with their other services such as email, messaging, photos and feeds.

Banks as resource centres would build trust and goodwill with their customers, whether extending their services far beyond basic banking. Added value such as personal-finance classes for your teen or complimentary retirement and credit counselling programs would not only fortify any existing relationship whilst ensuring that the new generation follows in their family’s footsteps.

The successful bank of the future will recognize that value must be added in some way that goes much deeper than the pitiful Internet banking deployed today. Even if banks fear Social Media and the conversational aspect attached to all 2.0, there are simple improvements that can be rolled out immediately. The way in which banks provide their rates and product information, along with customer online documentation, would improve greatly through social media deployment. All rate and product feature information should be available in XML which would allow services to automatically gather data for rate/feature comparison databases.

The physical branch will become less of a central point of business. The main driver for this change is the fact that less and less people use the branch, whether because most mundane transactions are now performed online, or because banks still send the majority of staff to lunch at precisely the same time that most customer have time for physical banking.

Customers want more. Some demand more. Though it may be hard to believe, customers are now beginning to search for banks that provide a true banking experience online. For customer less than 30 years old, internet banking, online payment of bills and mobile banking are the bank.

What a great time to get on board and produce your own iPhone and Desktop banking application. It has to be cheaper than opening a branch and guess what; people are actually paying for these applications.

As Tim O’Reilly once said “The future is here, it’s just not equally distributed.”