‘If you are not a digital business, you will be a dead business’
Brett King is a bestselling author and an award-winning speaker. He is the Founder and Executive Chairman of neo-bank Moven. He advised the Obama administration on the Future of Banking. In an interview with The Business Standard, he talked about how technological disruption is changing the way we do banking
If you want someone to tell you that the banking that you are doing now is not the 'banking' that you should do - Brett King is your man.
This bald-headed Aussie banker – who is often regarded as the messiah of modern banking – would casually swagger in his business flannel suit and tell you that "Banking is no longer somewhere you go but something you do."
By the way, that is the tagline of his latest best-selling book 'Bank: 3.0'.
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In his earlier best-seller 'Bank: 2.0', King explained why customer behaviour had changed, why cheques are disappearing, and why our mobile phone will eventually replace our wallet within the next 10 years.
Citing differences between the two books, King, in an interview with The Business Standard, said that Bank 2.0 was an awareness raising effort but and in Bank 3.0, he provides solutions to everyday banking problems. Here he discusses how consumers are less likely to view their retail banking provider in terms of capital adequacy, branch network, products and rates.
Instead, customers are more likely to determine their banking partners by how easily they can access their accounts when they need to, and how much they trust their provider to execute business on their behalf.
Change in engagement with financial institutions
King believes that the marketplace has changed significantly around how consumers are engaging with their financial institutions. Compared to just three years ago, traditional banks are challenged more than ever from a distribution perspective because of the movement to mobile and digital channels, and because they are not well positioned with their current brick and mortar networks for a positive customer experience.
This 51-year-old banking expert realises the impact of Generation-Y on the banking industry, and on the wider economy better than any other contemporary experts concerned. The particular issue that came into his discussions for time and again is how are businesses going to attract millennials?
"If you don't think they will make much of an impact, think of the verbs that did not even exist five/ten years ago: I whatsapp'd you; I Uber'd to reach here; I will tweet her and ask her…dare we even suggest I will snapchat you. Millennials are the biggest new customer base coming down the track, and they're digital natives," he said.
In multiple lectures and talks across the globes (many are available on YouTube) and many times in his critically acclaimed weekly show on banking and financial technology- 'Breaking Bank,' King said that he has long been trying to raise awareness that multi-channel banking is not an option or an add-on, it is going to become the primary way people bank, so banks have got to get the infrastructure in place.
"It's only going to get harder for you to engage customers if you don't have a competent digital strategy," he told The Business Standard.
Digital evolution
"The fact is," King said, "If you are not a digital business, you will be a dead business." He believes in that mantra because he is a strong observer of the changes that is happening in the banking industry.
Referencing data of the Federal Deposit Insurance Corporation (FDIC) of the USA, King said, the number of cheques written each year has dropped by 70 percent since the year 2000. In light of this, fintech startups such as PayPal or Paytm (along with 500 other mobile payments startups listed on AngelList) have stepped up and are revolutionising the payments industry.
As King said, "What is happening today is that (the payments startups) are all trying to create a new, better, faster, simpler mobile front-end to the payments system. If the existing system worked 'just fine,' then none of these companies would exist. Clearly, things are changing."
King believes that banking has to work when and where people need it. The best advice and the best service in financial services happen in real time and are based on customer behaviour, using principles of big data, mobility, and gamification.
It's a myth that you can visit a banker and get great advice. We surveyed customers and 95% of them said they couldn't remember ever receiving any advice from a bank in a branch
"It's a myth that you can visit a banker and get great advice. We surveyed customers and 95% of them said they couldn't remember ever receiving any advice from a bank in a branch." King said that customers just want solutions to their day-to-day financial problems. For most financial issues, people need a bank product or service to be very contextual.
"Right now, banks have the luxury of saying – you can't buy that car or house until you come to us, fill out this paperwork, let us complete this risk assessment and then we'll decide whether or not to take you on as a customer - that's not efficient and it's not a friendly process; it's focused on Know Your Customer (KYC) and traditional distribution mechanisms."
He said that banks have to be able to offer a compelling digital experience, not only responding to customers but anticipating their needs in real time. Over reliance on long, paper filled processes will not help to attract digital natives.
"Banks have much inherent strength and they have to figure out how to use the digital disruption as an opportunity because with technological disruption, the banking business will not only survive but thrive in the digital age."
