Why banking has to change with the times

Imagine having instant and total control of your money. To spend, save, invest and pay whenever you need to just by tapping your finger or saying the word.

Today, by and large, you still have to come to your financial service provider, be it online, on a mobile phone or in the branch. But mobile device sophistication, network speed and innovation are converging to place banking straight into your hands.

Contactless payments via smartphone will become ubiquitous, meaning you won't have to carry cash in your wallet. Virtual agents, enabled through artificial intelligence, will be able to fulfil your every banking need around the clock. Mobile technology will allow you do more and more banking on the go using features such as speech recognition.

New territory

For consumers these developments are good news as they will have greater control of their money than before. For banks, however, they represent one of the biggest and most fundamental shifts in the rules of engagement we have seen in a lifetime. In the future the basis of competition for banks will not be products or channels, but how well they understand the needs of their customers. It will be about how much value they can add to people's lives.

We live differently now. Together, technology and customer demand are driving a transformation of how banking is done. There is a growing global tribe of consumers who want anytime, anywhere access to services and banking is no exception.

The implication of this is banks cannot continue as before and expect business to stay the same. To put it bluntly, the industry has to start thinking less like banks and more like Apple, Google or Facebook.

Design and usability is no longer a ‘nice to have' in financial services, but a core requirement. Plenty of new players are lining up to offer what banks will not or cannot provide. The core of consumer banking — lending, wealth management and protection — is still heavily regulated with strong barriers to entry for new competitors.

However, in areas such as cash transactions and the user interface, there is no denying banks are confronted by increased competition. Look at Africa where telecommunication companies such as Airtel and Safaricom have bypassed the need for bank accounts or internet connections to provide mobile wallets for millions in the space of just a few years.

I believe banks now face a choice. Either to continue as they are and see new competitors infringe upon their core business — or innovate and become market disruptive, expanding those same boundaries to take banking into new territory.

There is no point pretending a transformation on this scale is going to be easy. Banks are large and complex organisations not traditionally focused on innovation or speed-to-market. In the future, banks will have to become serial innovators, move with the urgency of start-ups and look for ideas everywhere.

For banks, this means changing their approach to innovation, recognising the best ideas won't necessarily come from the top or even from bankers. At Standard Chartered our mobile banking platform Breeze was developed bottom-up by a small staff team of mobile and social media enthusiasts — not by senior executives or people with a long experience in banking.

Value

It also means changing the approach to the customer, offering financial services in ways that matter to people's lives. When we developed Wishlist, a savings feature for Breeze, we integrated it with Facebook and bulk discount aggregators to let people share their saving goals with friends and get great deals on what they are saving for, be it new shoes or a trip around the world. You don't even have to be a customer of the bank to benefit.

Some of our most recent innovations let us engage with consumers in ways that aren't just about banking. The point is innovation is about adding value to customers' lives, not about what products we can offer. The industry has to pay more attention to how banking fits into different contexts — what it lets people do.

The writer is CEO of Consumer Banking, Standard Chartered