For banks, the biggest challenge and their biggest opportunity is how to reinvent themselves and find a new place in this modern and much more complex value chain.
— Through our banking applications, we have a bank at our fingertips.
— We ask for a taxi, a trip and when we get out of the vehicle, the payment has already been made.
— Our checking account can automatically move inactive funds to a savings account.
The more financial services become integrated into our daily lives and thus become more important, the more they will fade into the background and become invisible. In turn, invisibility is the result of several factors:
— The abundance of data, as a result of an infinite number of interactions that have been digitized (and therefore easily stored).
— The ability for non-owners of this data to access them, under what we call open banking. (Open Banking)
— Deeper interconnection and interdependence than ever between providers and applications of all kinds through APIs, which have become the connective glue and rails of the modern economy.
— Technologies like the cloud, big data analytics and artificial intelligence that enable what we call mass customization or hypercustomization.
In the same way that other industries have been reshaped from the ground up (eg mobility, commerce), banking is now being redefined by the same trend: experiences.
It’s no longer about products or features, but about being in a position to sell experiences. Look at how Big Tech has been able to take the bottom line and reverse build seamless, seamless customer experiences. The same is happening now in the financial sector, driven by two main forces:
— The rise of the platform economy that has shifted the full weight of infrastructure ownership to the forefront, an immediate effect of the growing importance of controlling the customer relationship.
— Integrated banking, which is making it easier for platforms to integrate financial offers in non-financial environments.
For banks, the biggest challenge of all of the above coincides with their biggest opportunity: how to reinvent themselves and find a new place in this modern and much more complex value chain.
Staying the same is not an option, simply because the environment in which they operate has changed drastically.
However, it should be noted that invisible banking does not refer to the role of banks (becoming invisible), but rather to the way in which they will play, how. And regardless of the approach to the model, this will be shaped by a few common factors:
1) your ability to generate income in new indirect ways
I encourage you to share some alternatives in which banks can generate income in new indirect ways, including:
• Fees for additional services: Banks can offer additional services to their clients, such as insurance, financial advice or investment services, and charge a commission for these services.
• Collaboration with Fintechs: Banks can collaborate with financial technology startups (Fintechs) to offer new services to their customers. For example, they can offer mobile payment services or loans through Fintech applications.
• Data monetization: Banks can use the data they have on their customers to offer personalized services or to sell information to third parties. For example, they may sell information to credit analysis companies.
• Offer B2B services: Banks can offer financial services to other companies, such as payroll services or payments to suppliers.
2) your ability to provide valuable services
To offer value-added services, banks must think beyond their traditional products and services and consider how they can add value to their customers’ financial lives. Here are some ways the bank can do it:
• Offer personalized financial advice: Clients today expect personalized financial advice that takes into account their specific needs and goals. Banks can offer this service through highly trained financial advisors and digital tools that allow clients to create personalized financial plans.
• Provide access to non-financial services: Banks can offer non-financial services to their customers to improve their overall experience. For example, a bank might offer travel assistance services or shopping discount services to its customers.
• Incorporate innovative technologies: Banks can incorporate innovative technologies, such as artificial intelligence, to offer cutting-edge solutions to customers. Artificial intelligence tools can help customers make informed financial decisions and provide a personalized experience.
• Develop attractive loyalty programs: Loyalty programs can be an effective way to improve the relationship between customers and the bank. The bank can offer attractive rewards and unique experiences for its loyal customers to encourage retention and engagement.
If we put a completely different focus on the customer and their data, the bank can offer value-added services by incorporating innovative technologies and offering personalized and unique solutions.
By doing so, they can improve the customer experience and differentiate themselves from the competition, and believe it or not it is the only way to get out of the invisible side of the customer relationship.
