In the years of soul-searching that followed the arrival of the financial crisis the very definition of banking became central to national and international debate – and that remains the case.
What, after all, is a bank? And what have banks become?
The reflex of politicians and the public was clear – banks needed to get back to what they were supposed to be doing all along, protecting peoples’ savings and funding the “real economy” rather than engaging in dangerous and highly speculative financial engineering: in other words, traditional retail and small business banking.
But notions of a traditional approach to consumer banking have long since disappeared. Today’s consumer bank bears little resemblance to its predecessor of 20 – or even 10 – years ago.
Gone is the venerable branch manager, the individual – who was intimately acquainted with the affairs of his customer and community dispensed credit with trust at the top of his lending criteria. In his place we have science and mass centralization of the credit decision.
The branch – where it remains – is a vastly changed environment, its role as a transaction center massively diminished by the proliferation of remote channels, most significantly the mobile device. Instead, the branch of today combines two overriding roles: as an advisory center for higher added-value service and as an educator to drive still more transactions onto remote channels.
Indeed, today’s consumer banker is more likely than not a contact center representative, straitened by regulation but who within those constraints remains alive to the cross-sell possibilities that arise from precious customer contact.
Channels remain a key consumer banking conundrum. How do you account for a product sale that is initiated on the Internet, passes through a contact center, and is ultimately executed in the branch?
The conflicts of individual channel interests, and the capacity for perpetuation of the silo mentality, are challenges that are for many banks still top of the list. Add to this the enduring low interest rate environment, with consequent pressure for compensating fee income. Set this against an ever more demanding and vigilant regulatory environment, the arrival of a host of new entrants, and the challenge to the consumer banking business is clear.
Meanwhile, more stringent capital requirements have made competition for consumer deposits more intense than ever, while the fallout of the credit crunch and consumer credit aversion endures.
But in a world where traditional savings and lending business experiences pressure perhaps like never before, it is the third strand of the consumer banking offering – payments – that perhaps holds most promise.
The digitization of payments infrastructure and processes has opened up new possibilities in terms of customer information and promises to marry transactions to payments data. In this world the value of the information related to the payment frequently exceeds the revenue attaching to the transaction – often by a multiple. The only difficulty is that the organizations hoping to profit from payments digitization are increasingly from outside the banking sector.
This is the background to Intuition’s six introductory tutorials in Consumer Banking and Payments. It is an integrated suite that presents the consumer banking and payments offering in the context of escalating customer expectations, with an approach that for the learner seeks joins the dots between product, customer, channel, and the critical ingredient that links them – information.