Banks are currently facing a transformation unlike any their sector has ever seen. This phenomenon is rooted in the democratization of the internet, which occurred at the start of the 2000s and picked up pace in 2007 with the arrival of the first smartphone. The banking system needs to reinvent itself to integrate the new business paradigm which is emerging.
A technological revolution
In the early 2000s, the internet became more widely available and banks developed an online presence, initially offering clients the opportunity to simply check their accounts online, then to conduct everyday operations, such as transfers. New players also appeared: online banks, introducing consumers to the idea of 100% online banking services.
Consumer behaviour evolved: access to information became easier, clients could compare different offers, and process some of their everyday operations from home. Some of the consequences of this included a drop in the number of clients passing through traditional branches, more discerning customers, and a change in the relationship with advisors.
This phenomenon accelerated in 2007 with the arrival of the first smartphone, which would trigger a digital revolution. The new, permanently connected clients became better-informed. The competition from “pure players” became even tougher and, in conjunction with enhanced regulatory constraints and lower rates of interest, bank profits began to decrease.
More recently a new threat has appeared - Fintechs. These are start-ups specializing in financial technology, challenging the banks on their own turf.
Traditional banks must react through a profound metamorphosis which will lead to a new operating model.
Development of the traditional model
Within this context of systemic change, it has become clear that clients remain attached to their local branches. This is surely what has kept the system ticking over until now, despite the development of online banks. However, the relationship has changed. While clients prefer carrying out their everyday operations from home, they prefer, for the most part, to get in touch with their advisor when it comes to more complex products (investments, loans, etc.). Banks must therefore develop in several directions. First, by transforming their branches, turning them into more attractive and welcoming spaces, and integrating digital technologies: advisors will ask clients to sign contracts on tablets, they will be supported by “artificial intelligence” in their proposals and clients will be able to consult interactive terminals. The other part of the transformation relates to advisors, who will need to develop their skills to achieve the level of expertise required by customers.
Development of the digital model
In parallel, traditional banks must remain connected. The development of their online banking systems will continue to free advisors from certain tasks. Clients will be able to prepare loan applications online and receive advice remotely on complex investment issues. The digitization of documents means several pages can be signed in a single click, without consuming any paper.
Finally, banks must continue to invest in social networks and make better use of the considerable quantity of information generated by their clients.
A new era is dawning for traditional banking. Banks must enter this era in partnership with all the players in this market. Some banking groups have enthusiastically taken to this new path, building close ties with Fintech companies and incorporating others such as FIDOR GROUP, PLAYPLUG and S-MONEY.
