Why Banks Are Stuck In Second Gear
Despite promoting themselves as family-run, human-sized organizations that pride themselves on customer service, many customers are left disappointed when it comes to dealing with their bank. Humanizing the customer experience and building meaningful relationships on such a large scale is no mean feat, but one that is necessary in order to drive customers to action.
New Playing Field
Successful banking used to revolve around marketing and advertising, getting a brand name out into the world and in front of customers. Building a franchise with as many branches, ATMs and friendly representatives as possible. A few years ago, things slowly started to change. We were struck with closures of small-town branches and steered towards the new online and mobile banking. Purpose-built vehicles staffed with bank tellers would visit these small towns and villages, including remote areas, to accommodate customers who weren’t ready to make the switch to so-called digital banking. The transition was slow at first, gradual, ensuring that no one was left behind. All of a sudden, Covid-19 was upon us and banks were forced to adapt overnight, accelerating the “digital transformation” that had been underway for some time, albeit quietly in the background. This was an opportunity for banks to reassess their priorities and modernize the customer experience, overhauling the conventional way of doing things.
Banks have invested majorly in online and mobile banking, reinventing branches and ATMs, however, feedback showed that many customers just weren’t quite ready to make the switch from conventional banking. Community banks and credit unions who stuck to “the old way of doing things” were thriving, and an entirely new class of online banks began to gain momentum.
Method for Success
Financial institutions (FIs) must learn to humanise the customer experience, ensuring that their customers are satisfied and convert into advocates for the brand. They must focus on their customer experience as a whole rather than disjointed departments, offices and locations, fostering consistent and meaningful relationships with customers.
Banks are constantly weighing up their investments between developing digital and physical banking. These decisions are usually driven by customer demand at the time, footfall in branches, ATM usage. Bank-to-customer experience is the driving force behind customers choosing and remaining with a particular bank.
The Changing Face of Banking
The changing face of banking leads us to question how we will conduct our banking in the future, whether it will look anything like the banking we do today and whether we will use banks at all. Digital-first banking was certainly a front runner during this pandemic, with ATMs and branches quickly identified as high traffic and high touch areas. Despite this, research shows that there is still a place for in-person banking among all age groups, even those who are active users of online and mobile banking applications. This confirms that conventional banks are here to stay for now, but where will they be in ten or twenty years’ time? Is there a place for banks in the year 2050?
Invention of Cryptocurrency
In 2007, poor central banks management triggered economic decline that had knock-on effects the world over. Banks that were already in debt continued to mint excess currency, driving up inflation rates. A fully decentralized digital currency was then invented to remedy these issues. The inventor of this currency, Satoshi Nakamoto, made his code open source so that the technology could be developed further by those who were in support of creating an accessible currency and more effective financial ecosystem. Cryptocurrencies are digital assets that can be used like traditional money as a means of exchange. They are currently available to purchase through crypto exchange platforms and can be stored in highly secure crypto-wallets.
These cryptocurrencies now function better than conventional banking systems. Their only drawback is their volatility, which currently prevents them from being used day to day. It is thought that this volatility would be eliminated through widespread adoption, with many questioning if now is the right time to bring cryptocurrencies into the mainstream. Are we as a society on the cusp of something brilliant?
Cryptocurrency Compared to Conventional Banking
As mentioned above, cryptocurrencies are fully decentralized and entire systems function with very little human input and interaction. As a result, they are widely considered to be the future of banking. Cryptocurrencies are undeniably more accessible than conventional banks, banking using cryptocurrencies can be done anywhere in the world at any time.
Cryptocurrencies are free from human influence and biases, meaning people are not at the mercy of poor decision-making high up the ranks. Cryptocurrencies are inclusive, everyone has the same rights of access. Cryptocurrencies are accessible to everyone regardless of their status. Between fixed addresses? In the process of emigrating? You can guarantee that handling your financial transactions will be much easier dealing with cryptocurrencies.
Banking systems are known for marketing particular products and offers to certain groups of people, those with high earnings can access accounts with special interest rates and offers that are available only to new or existing customers. Customers are often caught in the crossfire of drawing new customers to the bank and end up being tied into a contract, caught out by the small print.
Banks are frequently the target of hacks, fraud and embezzlement. As these security breaches become more and more frequent, people are left questioning the safety of their money in the hands of conventional banks.
Conventional banking is subject to fees and taxes, transactions can also be slow, especially for large amounts of money. Cryptocurrencies use anonymous IDs during transactions, these transactions are highly secure and very difficult to intercept, making them generally much safer than banks.
New Financial Ecosystem
Cryptocurrency has long been the word on everyone’s lips. Designed to solve the issues of the current banking system, they could be used to create a more effective financial ecosystem for the world. In our eyes, the question is no longer how cryptocurrencies will outpace conventional banking, but when.