How Banking is Becoming More Accessible

Almost 25 years ago, Bill Gates referred to traditional banks as “dinosaurs,” and predicted that technology companies will trigger dramatic change in the financial industry. However, the evolution is taking much longer than anticipated. The evolution today is less focused on the replacement of established banks, but more on enhancing how banks interact with clients, and what services they offer.

Modern banks fighting fossilization are becoming more digital and more personal. From a global digital ledger to robot advisers, the financial industry is becoming more accessible. How is this happening?

Digital Banking

Banking was once considered an industry that was resistant to the digital revolution occurring in all other sectors. In fact, some people went as far as arguing that the in-person services offered inside a banking hall would never be replaced by computers – much less a mobile device. Moving forward to 2017, about three-quarters of millennials already prefer interacting with their banks over digital means, rather than stepping into the banking hall.

While customers are ready to go for the digital banking experience, are businesses ready? 60 percent of small businesses actually prefer applying for their business loans online. This is an important figure considering that only 9 percent of banks have initiated truly digital sales capabilities. This indicates that there is a vast opportunity for banks to align themselves with the digital demands as required by their customers.

For personal banking customers, digital is the new normal. Financial services and traditional banks looking to survive have to weave digital processes into all their processes.

More Personal Banking

In 2015, while 47 percent of banking executives rated their institution’s ability for offering personalized customer service as excellent, only 8 percent of their clients would describe their experiences as “average.” This clearly indicates a huge disconnect between bank customers and banks.

Half a century ago, few customers had neither the time nor the educational background to invest in complex financial instruments or the stock market. Financial advisors then set up shop close to local banks to help customers create individual financial plans based on their personal goals. In time, financial instruments investment became more accessible.

The internet made it possible for a host of day traders to buy and sell commodities, futures and stores from just about anywhere in the world – beyond Wall Street. Today, 15 million individuals in the U.S. are active participants in stock trading via online stock trading or investing services. The internet has also made it easier for such investors to find investment advice, significantly reducing the cost of financial literacy.

The result is that banks are not just competing with each other, but they are also competing with the fact that their customers are self-reliant. In order to add value to their services, banks, just like unlimited cell phone plans from certain providers, are offering omnichannel and consistent experiences across mobile, online and in-branch interactions. In addition, customers want to start an application in one place and continue where they left off in another device – avoiding the risk of becoming what Bill Gates termed as dinosaurs.

It’s next to impossible to predict what will happen in the banking industry’s future, but two things are certain. Banks are and will continue responding to customer demands, meaning they will be more digital and more personal. However, when it comes to larger transactions like buying businesses or buildings, many people will choose to do them in person – something that is not likely to change for quite some time.

It will always be a part of the human need for interaction and confidentiality when there is a real person sitting behind technology. However, the banking industry will get 80 to 90 percent of the way there for the simplest of tasks via artificial intelligence.

 

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