The future of personal banking might not be with Institutional Banks

At the end of 2014 one of our clients from the financial industry launched a project — the idea was to offer a unified interface to manage a user’s investment portfolio. And from that moment onward, we started discovering the amount of nonsense and outdated ways of working in the financial industry.

My client wanted to clear this non-sense and finally offer what clients have been expecting for years — a singular interface for investments of financial providers and products (Life Insurance, Bonds, Stock Market, …). Furthermore, since knowledge is power, they wanted to educate the client to have more control on his investment strategy. I understood that this could be the silver arrow for the financial industry if we could execute it well.

Time passed and we discovered the inconsistency in this industry that generates billions per year but relies on decades old solution or fully outsourced average IT department. Aggregating information from all stakeholders became a nightmare, often talking to an entire organization to merely get a step or two ahead.

Since these financial institutions seems so outdated and lack agility to make required changes, it made me think of the future of that industry.

Will the current financial institution be a part of the future of personal and investment banking?

What is my problem with Institutional personal banking

Lack of personalized service

When is the last time you faced a bank teller, a “dedicated” account manager or even spoke over the phone with one of these overseas banking phone platform? I look at my interactions with banks like the last thing on my to-do list.

  • It’s a confusing experience
  • It lacks workflows or straight forward process:
  • The person on the other side is often under-trained or unable to answer all the range of questions at once.
  • You end up having to talk to X amount of departments and people to get the information required.

Furthermore, I can’t stand anymore to be called several times a month by random sales agents from my bank trying to sell me additional services, often service that I already subscribed too (travel insurance, online banking, additional credit card).

Poor online experience

Online banking experience is one of the most striking proofs of the lack of modernism. As a security consultant, I do understand the restrains banks have when it comes to offering online access to clients. But putting aside complex integration with third parties and focusing solely on the user front end experience currently available, online and mobile app often offer poor security while bothering you with endless amount of security questions and RSA token but miss to offer a highly secure connection via a 2048 Bits or above SSL certificates — CNN Money article — Banks are skimping on website security

CNN Money article about US based banks and their lack of modern security policies

And let’s face it, the online experience is poor to say the less, why can’t I cancel my credit card online and request a new one to be sent? How difficult it is to have a knowledge center Wikipedia-like with terms related to the banking world to understand the forms/contracts they request you to fill? Online tools to calculate your income/expenses and manage your mortgage budget?

What I am looking in Personal Banking

Services

My vision of personal banking, for the average consumer like myself, would be a fully online and mobile. A solution that would emulate a personal experience without the need of the workforce to manage medium income clients. A solution between the mobility of Paypal and the understanding of clients needs of Google, Mobile UX of an apple product.

I would like a bank that would offer me more than just being interested in me for my future loan requirements, a one-stop solution to cover all my financial needs:

  • Being able to see my balance across all my accounts, including oversea account within the same bank
  • The possibility to send or receive money instantly — no more overseas transactions that requires days to clear out
  • An interface like Mint to forecast my personal budget with online storage like Dropbox to store my invoices, bills, client contracts
  • Operate simple tasks without having to talk to several people — cancel my credit card, request a new bank account, subscribe to new services
  • Connect and grant access to third parties and automated bill payment — Water & Electricity company could have access to your main account or credit card to automate your bill payment, thirds parties electronic wallet (Paypal, Google wallet,,) could have access to your bank account to withdraw money when a threshold has been reach on your electronic wallet.

Type of access

Mobile

Mobile access is vital across most industries, now more than ever users access via a mobile device (browser or mobile). Why would banking institutions refuse to be a part of that trend?

In early 2014, the landscape in which businesses operate changed forever when Internet usage on mobile devices exceeded PC usage. It’s just a fact, end-users require mobile access now more than ever — and for the personal banking industry this means offering secured mobile application.

Cross frontier

I tend to travel a lot and I can’t count the amount of time my credit card ended up being block as soon as I land in a new country because my bank believed it was stolen. On the other hand, I had to cancel my credit card 3 times over the past 5 years due internet purchases from various parts of the world I never did.

This makes me think that the algorithm and human workflow behind the credit card compliance and fraud process is broken. With mobile localization, couldn’t we mix mobile payment (RFID or QRCode) and localization to know where the end-user is located when processing a payment and block a transaction accordingly?

Who will be the one

Over the weekend, I read a well written article from Pieter levels (Levels.io) about how technology is shaping our future, one of his point is on the obsolescence of Personal Banking services. I do suggest everyone to have a look at the article as he makes many fair points on the ongoing automation revolution.

The institutional banks will most probably not be a part of the future, I foresee a battle between online banks, tech giants and disruptive startups. It will be a glorious fight, and the result will be a tech giant absorbing disruptive banking startups to produce a global online payment solution that offer banks services as well as bring the startup unconventional approach to a rigid industry. I am looking forward for the time when I do not have to carry a wallet or credit cards, a world where my expenses and payments is managed by one central device.

A mobile solution with API that would allow deployment of third party system through the same hardware interface, a visit to the hospital covered by your mobile connected directly to your insurance to know your coverage level. The possibility to send funds to a kid you are sponsoring in East Europe without having to pay 20% fees to Western Union or waiting for 4 days for a transaction to clear. We are so close to that moment and so far at the same time.