The future of banking in the digital age

By Alex Nash

Thanks to tech-driven innovation, banking is to undergo a seismic amount of change over the coming decade. It has been predicted that technology will drive a deep fundamental shift in banking by 2030, meaning the ‘Big 4’ of HSBC, Loyds, RBS and Barclays may no longer hold the banking power or prowess they currently possess. These big names in the industry could be in for a big shock over the next decade should they fail to adapt to the new digital age.

With the likes of FinTech, Challenger Banks, Alternative Finance Solutions, Payment Processing Solutions knocking on the door, here are the two most important questions that the ‘Big 4’ need to answer:

How do they adapt to the digital age?

I was recently at a Pro Manchester event where the ‘future of tech and banking’ were closely discussed and explored via the panel.

A senior executive from an American Bank noted the potential takeover of FinTechs and Challenger Banks in the market should traditional banks fail to incorporate the new digital age into their systems and processes.

The world has changed significantly since the crash of 2007/08, and the banking world is perhaps one of the biggest examples of that change. Technological advancement and regulatory amendments have allowed a new wave of alternative FinTech and Challenger Banks to not only infiltrate the market, but alter it forever.

In my view, the biggest difference is the cultural understanding and approach to how we conduct banking transactions in the modern world. For example, you only have to look at how Atom, Starling and Monzo are pushing the boundaries of providing a more consumer-driven banking solution.

These game-changers in the industry are providing fast, personalised and intuitive customer engagement. This is achieved through data-driven insight and proactive, dynamic interaction. The consumer is positioned at the heart of the business, and feels special as a result.

In order to stand out from competitors, the Big 4 will need to modify their approach to incorporate superior customer engagement through data-driven insight. This starts by an overhaul of their ‘archaic tech’ systems which are so outdated, whereas the FinTech driven companies start with a blank canvass and can create a system which allows current marker trends and data to steer their concepts and USPs to the consumer.

Does this mean they need to spend millions of pounds on new ‘state of the art’ systems?

Personally, I believe the only way for the Bigger Corporates to survive in the digital age is if they buy out a Challenger Bank or FinTech business and incorporate their systems and dynamic data driven processes to provide far better and quicker solutions to their target market.

Why do they need to change?

Over the last decade consumer behaviour has significantly changed and diversified. We have seen a significant shift in how many individuals actually utilise the internet for access to insurance policies, mortgage advice and online banking.

I believe that the ‘Big 4’ as we know it will change drastically over the coming period of time, adopting tech and consumer-driven business models from outlets such as Amazon, Facebook, Google and Apple.

In comparison to traditional banks, digital companies such as Amazon, Apple and Google have a far superior marketing and consumer-focused strategy. These businesses utilise a number of AI platforms and techniques to reach their consumer in a variance of methods to improve the customer experience.

Much like how the introduction of supermarkets provided an opportunity to purchase a variety of items within one retail space, Amazon, Google and Apple could ultimately provide a comprehensive transaction solution that enables consumers to bank, shop, lend and purchase insurance from a singular digital outlet.

Given how tech-savvy millennials are driving the demand for increased efficiency to enhance the consumer experience; this wave of transactional innovation will most certainly be welcomed with open arms!

About the author

 

Alex Nash is a dynamic and professional recruitment specialist at Search Consultancy. In his role, he is responsible for providing recruitment solutions to the Risk, Financial Crime and Compliance market. His strengths lie in being a trusted advisor for small to medium size (SME) businesses. Should you need to appoint a risk and compliance professional, create a risk management team, or if you're simply qualified and looking for your next role, feel free to contact him on [email protected]

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