It can’t have escaped the attention of many people that the way that most retail banks operate has changed hugely over the last few years. Today, the old business model of physical branches forming the backbone of banking services is truly a thing of the past.
The smartphone revolution
It’s been an accelerating process that was put into overdrive by the arrival of the smartphone, and the accompanying banking apps, which have started to produce some truly astonishing statistics For example, around 90% of customers use apps for some aspect of their banking, and the figure is even higher for millennials. Research by Google has also discovered that 60% of people they interviewed said that they preferred to use a mobile app over a website to check on their money. Balance checking is the most usual reason for using the app accounting for 56% of all interactions. Second to this, at 48%, comes transferring money either to another account or another person.
This has been led to a complete sea change in the way that banks approach their customers today – and one that relies heavily on technology for its delivery.
Always open for business
Not only do all of the major banks now offer a range of different bank accounts, there is also help online to answer any questions those customers may have, as well as to make switching accounts to them as easy as possible at any time of day. These changes mean that some regard banks as now being more like tech companies than retail ones, and there are several reasons for this.
The first, and most obvious of these, is the enormous effort and investment that is being put into the technology that allows customer interactions of every kind. In many banks, it’s the IT departments that are becoming some of the most important to their successful operation.
A second feature that banks now have in common with big tech companies like Google and Apple is the sheer amount of data that they are able to harvest about their customers and their behavior. This, in turn, means that the services and offers that they provide are gradually becoming more and more tailored to customer needs.
Opportunity or threat
Ironically, according to a report published by the World Economic Forum, it’s these big tech giants who may pose the biggest single threat to the traditional banking sector.
So one can only conclude that banks now need to be just as agile as the most forward-thinking tech company, if not even more on the ball. Because, if they fail to respond quickly and effectively enough, customers may well switch either to a competitor who does or one of the big tech companies moving into the financial sector.
While these considerations obviously make it challenging for banks today, they also present huge opportunities. And the winners will undoubtedly be to ones who take advantage of them most effectively and harness tech to achieve their aims.