Customer experience will be more important than products in the new banking environment
The evolution of financial services will see one long-established pillar of tradition finally crumble.
The branch-based banking model, which dates to the 1800s in Canada but was already operating in Europe some 400 years earlier, is now in its dying days according to a new report.
The Economist Intelligence Unit survey of 305 global banking executives reveals that almost two thirds of respondents believe the model will be “dead within 5 years.”
Technology will, of course, be the engine room of banking services going forward, but there will also be a continued shift from products to customer service as the key differentiator among banks.
The report was written for banking software firm Temenos, whose chief strategy officer, Kanika Hope, says that banks are being forced to rethink their business models due to Open Banking and increased competition from BigTech and other non-bank entities.
“Many now aspire to develop digital ecosystems that bring more human, differentiated experiences to their customers using the power of cloud, SaaS and AI,” Hope said. “This report shows that bankers now understand that technology will be an enabler for these new business models and is critical to their competitive differentiation.”
Nearly half (47%) of bank executives expect their businesses to evolve into ecosystems in the next two years, whereby banks offer third-party products and services, together with their own, to customers and other financial organizations.
This ties in with another recent report that said that Banking as a Service (BaaS) is making rapid changes to how the banking industry operates.
