As we come to the end of another interesting year in retail banking, it is time to fish out the crystal ball and predict some of the key trends that will continue (or emerge) in 2020.
In An Ideal Husband, Oscar Wilde wrote ‘to expect the unexpected shows a thoroughly modern intellect’. This may be true, but it also highlights the challenges of making forecasts. For example, in September 2018 Accenture suggested that industry was on the verge of a critical mass moment in artificial intelligence and that organizations would have to manage its ‘unstoppable progress’.
More than 12 months later the robots have yet to assume control with the mantra ‘It’s for your own good’. Indeed, the same could be said for other technologies such as blockchain, IoT and cryptocurrencies – which have all generated interesting applications and use cases during 2019 without making their big breakthrough.
So allowing for the usual ‘unknown unknowns’ here are my predictions for 2020.
Innovation must equal experience
Marketers still get excited about the potential of freemium services even though this model has been widely used in financial services for more than a decade. For example, over the last 12 months, mobile-only banks N26 and Revolut have both introduced premium accounts (rather confusingly with the same name).
But customers are increasingly wary of innovation from their bank, especially when they feel that these initiatives are designed to generate publicity rather than meet the actual needs of their customers.
The potential rewards for those banks that take the time to really understand what their customers want and how best to provide it are considerable. This could mean the bank becoming a facilitator of non-financial products and services, which could be as important as car insurance or as trivial as a ticket for a concert.
Even if banks don’t see themselves as facilitators, they can still curry favor with their customers by making sure their transactions are as painless as possible.
It’s good to talk – but it ain’t cheap
It’s almost 30 years since Bruce Springsteen lamented that there were ‘57 Channels (And Nothin’ On)’. While banks have spent the last few years focused on becoming omnichannel and making sure there is always something ‘on’, consumers have realised that the channel is less important than the message.
There is nothing more jarring than disjointed communications across multiple channels, which belies a compartmentalized approach to dealing with customers. In 2020, banks will bring down the walls between the siloes of data generated by different channels and platforms.
This will shift the choice of communication channel from the bank to the customer. Banks better get ready because these customers will expect the same level of customer service whichever channel they choose and won’t be slow to vote with their wallets if they don’t like what they get.
Information you can take to the bank
In 2006, mathematician Clive Humby coined the phrase ‘data is the new oil’. Thirteen years on bank customers know that it is not only their money that has worth – their data is also valuable, both as a means of getting better service but also as a vehicle for fraudsters to rip them off.
In this environment, banks have an opportunity to become our ‘data vaults’, acting as the guardians of our personal data and managing how this information is used.
Banks that aspire to become a trusted advisor over data as they are for cash and credit will need to significantly rethink their business models in order to capitalize on these opportunities though. Open Banking has led to the emergence of apps such as Cake, but this is just the tip of the iceberg.
As technologies such as machine learning are more widely adopted, banks and other financial services providers will collaborate to build new, relevant services and make on-demand expert financial advice available to all. The ultimate objective is to help customers across all aspects of their financial lives based on their needs rather than simply pushing out new products.
Money can’t buy you love
Financial institutions are well aware that in many countries the average person is more likely to leave their spouse than leave their bank. But this does not weaken the business case for brand purpose in the financial services industry at a time when consumers increasingly want to deal with brands that they see as sharing their own priorities and social interests.
There is plenty of research out there to support the view that consumers expect companies to exercise their influence over the world responsibly – and that when it becomes the foundation of everything a company does, that company will be more financially successful.
The message to banks is clear: evolve or die. With an ever-growing number of competitors emerging from a variety of industries, in 2020 the financial services sector will be challenged to show its worth to the customer by letting go of its traditional inflexible approach and focusing instead on positioning itself as a trusted advisor to customers – irrespective of platform, channel, or industry.