Our DueDil team attended the 23rd World Conference of Banking Institutes (WCBI) last month. For the past 43 years, the WCBI has brought together the central bankers, finance professionals and academics redefining the future of finance. Our Co-founder and CEO, Justin Fitzpatrick, took part in a panel discussion along with Nick Ogden, Executive Chairman at ClearBank, Natalie Ceeney CBE, Chair at Innovate Finance and Sabrina Del Prete, Founder and CEO at Kore Labs, on what banks will be doing in 2029. What do we think the future of banking holds?
What will banks be doing in ten years?
Banking, I hope! There’s been a lot of exciting innovation in banking in the past few years. While the landscape is changing quickly, incumbent banks will have a future if they can take steps to make better use of data and technology to improve the customer experience. So I don’t think the question is whether or not banks as we know them will exist. The question is what kind of changes we’ll see, and what banks will look like in 10 years as a result.
When I think about where change is likely to take place, I look at the pressures and where they exist within the current model. They come from the three main places: customer expectations, regulators and the underlying business model. Each of these pressures creates different tensions within the organisation. These tensions are the areas that are most likely to change.
Personalised decisions for small businesses
Right now, most incumbent banks and insurers make decisions at the portfolio level. This means that decisions are based on broad criteria and not personalised to the business. Currently, it’s expensive to personalise offers for small businesses because the information required is gathered manually and, thus, difficult to acquire.
DueDil helps solve this problem. Our Business Information Graph (B.I.G.) brings together billions of authoritative data points a day on companies and the people behind them. Just like Facebook owns the social graph and LinkedIn owns the economic graph, we use the B.I.G. to create a networked view of a company and its relationships. Once you have this highly contextualised view, you’re not only able to understand more about the entity you’re looking at, whether that’s a company, director or a shareholder, but you’re also able to tell a whole lot more about their industry. This allows you to make a decision that is specific to the business and the context it operates in.
We already see a number of incumbents and Fintechs who are putting technology and data front and centre in the way they interact with customers. One of our clients, a UK High Street bank, had an account opening process that meant the customer needed to fill out a 15-page application form. By integrating the DueDil API, they were able to provide a fully digital customer journey that was more personalised to the customer and allowed them to open an account in as little as 25 minutes. Delivering services this way is both more cost-effective and also creates a better customer experience. However, this has a knock-on impact on the role of the people within those organisations.
What role do people have in a more automated future?
I see them as having a role, but those roles are going to change. Before we started working with the client mentioned above, we saw Relationship Managers spending up to a day and a half a week manually inputting information. This created a terrible customer and employee experience, a huge unnecessary cost and an even bigger opportunity cost. That time should have been spent engaging with customers, forming better relationships or looking for upsell opportunities. To stay relevant, people working in some functions in banks have to transition from doers of tasks to trusted advisors. This will require a different set of more specialised skills, and a better technology and data layer to empower them.
How will banking have changed in the next decade?
There are a few different views one could take here. The first is the customer view. From the customer’s perspective, there will be an expectation that the financial services providers are available whenever customers need them and in the way that they need them, whether it’s digital or in-person. A certain level of adaptability is needed here to deliver the service through the channel most tailored to what the customer wants.
There’s also a view from the inside out - "What does the organisation look like from the perspective of someone working inside the bank?" The biggest trend here is the move to an open platform; an ecosystem style model where technology and data underpin customer relationships. There are a lot of questions in an ecosystem model around “Who owns the customer?’ But this is an old fashioned way of asking the question. In the world we’re moving into and the world of 2029, the question is “Who’s earned the customer?”
Challenger banks have made this a feature of their model from the beginning, where it’s much more of a network of alliances rather than one organisation that supports a customer’s entire financial life. We’ll continue to see a move towards specialisation within particular business lines, where partners are going to be delivering what they’re best in class in as part of a semi-open ecosystem.
Customers, whether they’re individuals or businesses, are already seeing their number of choices increase. The future will be defined by this greater choice, more digitally-enabled and personalised offerings and more transparent pricing.
The next ten years will be some of the most exciting we’ve seen in finance.