Rethinking Banking for the Post-Digital Age

By Tom Goodwin

The world has come a long way with digital transformation. We can now order food from apps and bypass the line. With a couple of phone swipes, flights can be rebooked. And yet, a key question to ask is: are we rethinking an industry or merely applying new technology to it? Is technology oil to lubricate what we’ve done before, or does it genuinely allow new business models to flourish?

The internet has changed consumer behaviors and expectations for what seems like forever, but we’re still in the mid-digital age. We’ve taken processes, units, measurements and assumptions from the past and applied new technology to them.

The post-digital age is where we don’t just adapt, but rebuild.

Technology has brought us to the point where we can no longer build on the foundation of the past. Instead, we must re-engineer the entire model of how we deliver products and services. Netflix, for example, isn’t just a better way to watch shows you like—it has rethought the fundamentals of an industry. Self-driving cars change the fundamentals of car ownership and use (who needs a 5-seater for the commute?). Technology, when applied at the core, changes the relationship and role we have with products, services and business sectors.

The most powerful question you can ask yourself is: “What would your business look like if you started it today?” It’s such a provocative question that it often draws a defensive reply. Nearly everyone on the planet knows that they would have done things differently, given what they now know, and what is now available to them. And yet, the reality is that the role that businesses play in people’s lives has also changed.

Over its long history, banking has moved from being a place to deposit wealth for safekeeping to one to borrow money. It then became a highly complex place where all manner of intricate financial transactions took place. It started as a local and physical business, requiring the storage of items with intrinsic value. At the same time, banking as an industry was rooted in personal customer service. A bank branch would be the finest building on Main Street, showcasing the architecture of trust and solidity.

The changes since then have been dramatic.

Deregulation allowed banks to cross state lines and huge national banks grew quickly. The notion of money also changed. Once, money held intrinsic value before becoming promissory notes, then morphing into digitally created wealth stored and created in spreadsheets. In the last 20 years, the internet, mobile phones and cryptocurrencies have changed the world in ways that seem incredible.

When WeChat Pay in China offers loans and interest on digitally held currency on a smartphone—but isn’t considered a bank—we have to ask what banking really means in the future. What is the role of credit cards when we have payment solutions like Klarna or Venmo or PayPal being built into of existing systems? When we have Lemonade offering personal property insurance in a chat interface on an app, we need to think more boldly about how we can serve people better. Is Apple Pay really the end of Apple’s forays into banking? What will Amazon do with Amazon Pay?

We’re at a defining moment for the future of banking. mPesa allows the unbanked in Kenya to undertake day-to-day transactions. People can now use nude selfies to collateralize debt in China—rather extraordinarily—and loans are based on social media reputation scores. Transferwise is changing the dynamics and assumptions of the foreign exchange marketplace. Banks like Monzo and Starling in the U.K. are both insurgents challenging the marketplace but also adhering to all current regulation in the market. What will blockchain really mean for banking?

So what becomes of the bank?

There are four ways to start your banking transformation journey:

  1. Consider the role of the bank in people’s lives.

What happens if you elevate your role beyond banking to becoming the gateway between people and all their financial matters? When you monitor and measure people’s spending and wealth, what is the effect?

  1. Map out new consumer behaviors and expectations.

What happens when we rethink everything we do around the demands of contemporary consumer expectations? Why can’t we pool resources as we would in a flat-share, or a civil partnership, or a marriage in order to more effectively handle our finances? When people travel or move across countries, why can’t they take their accounts with them? When bitcoin becomes a currency of the internet, why do we have national currencies and exchange rates that are merely on the internet?

  1. Build a new solution around new tech.

Let’s consider what new technology can be layered in to produce game-changing results. Don’t think about solutions based on old ways of working—although for incumbent banks, it’s hard not to. Many of them still run on mainframes from the 1980s, if not before then. For those businesses, don’t try to replace that old technology as-is—build a new bank around new systems, new propositions, and new ways of doing business. Put simply, it’s not just old technology that keeps businesses back, it’s old thinking.

  1. Re-personalize the brand.

Bank emails often finish with a “Do not reply to this address” footer—because it comes from a generic address that no one ever checks. Money is personal, so banking should be personal. This doesn’t mean the awarding of a personal banker in a 1980s handshake-and-office desk style. But it does mean shining a light on real people in the bank who can understand your situation and offer the feeling that they can handle it better than anyone—including an algorithm. Empower your staff, personalize your staff, and humanize customer service. It was lost when banks moved away from being local centers of security and commerce, and yet no one asked for that loss to occur.

The reality is that if you were to start a bank today it wouldn’t look much like one. It would have new technology at the core, and be based on future use cases. Banking is set for more change than most sectors, so what would you rather do? Make the smallest changes you need to do to stay relevant, cut costs and hope for the best? Of course not. Understand what’s coming, invest in the latest thinking and technology, and propel yourself into the future.

Tom Goodwin is the executive vice president and head of innovation at Zenith, part of Publicis Media, and the author of Digital Darwinism. He is the number-one “Voice in Marketing” on LinkedIn, and has been named one of 30 people to follow on Twitter by Business Insider and a “must follow” by Fast Company. An industry provocateur, keynote speaker, and commentator on the future of advertising, marketing and business, Goodwin has been quoted in the Economist and The New York Times. He is a frequent contributor to the Guardian, TechCrunch, Forbes, British GQ, Advertising Age, Adweek, MediaPost, Inc, Digiday, and the World Economic Forum.

Hear more about how you should be rethinking banking for the post-digital age at the ABA Bank Marketing Conference in Baltimore, September 23-25.