The death of conventional banking

Last year, I wrote about the impact mobile payments would have in 2015. I am now travelling around London with only my mobile to pay for buses and tubes.

After pension reform, we see advances in technology and internet/mobile banking as the consumer-led change that will have the largest impact on the banking industry over the next five years.1Ipsos MORI Personal Finance Journalists Survey Spring 2015, 168 consumer, national and trade personal finance journalists

With 38% of adults in the UK using online banking on their computers or laptops and 27% using the service on their smartphones,2Ipsos Connect Tech Tracker Q3 2015, 1006 UK adults technology has let consumers get out of the branch and bank at their own leisure. And who should handle your money? When we asked mobile phone users in 2011 about who should provide them with mobile payments services, 47% stated that it should be the bank they use the most.3Ipsos Global @dvisor, October 2011, 970 GB adult mobile users interviewed online But by 2015, only 19% stated that it should be their bank.4Ipsos Connect Tech Tracker Q3 2015, 938 UK mobile users The launch of Apple Pay in the UK in July 2015, saw a technology company leading banking into concerted cross-industry co-ordination as opposed to the latter leading the former. Moreover, it was clear who was controlling how the launch was communicated to the public – almost every print ad for Apple Pay had the image of an iPhone 6 with the provider’s card on the screen of the smartphone, and the Apple Pay logo was placed to the right of the provider’s logo in the ad.

High street banks also face new entrants such as Atom Bank, Fidor Bank and Starling, all launching in 2016. It’s about the increasing numbers of small and high growth businesses turning to peer-to-peer lenders and crowdfunders. It’s also about opening up the financial sector to FinTech companies with the Chancellor’s desired open banking API standard by the end of 2015. What this means is that customers will be able to use and share their financial information, should they choose, with new entrants who can help them make better choices to meet their needs or who can get them better terms.

Banks aren’t giving up just yet. They are out to attract new customers by offering £100, £125 or even £200 just to open a bank account. They are retaining customers by giving them automatic cashback on things they have to pay for such as council tax and utility bills, without the customer having to make any effort to make these savings. They are providing us with bank accounts and other products which are independently judged as fair because they help us make sounder financial decisions.

They are increasingly trying to connect with us emotionally, reminding us how planning better with money helps us do the important things in our lives. With this year’s Nationwide scarf ad and Lloyds Bank’s anniversary ad, we can expect the next advertising tear jerker to come from a financial provider, not just from John Lewis. 

Taking the lead from other countries, banks are leveraging their existing relationships with customers and using technology to deliver more than financial products to their customers, with an Australian bank allowing customers to store loyalty cards in their banking app. And as we already have a Canadian leading the Bank of England, our banks could take the advice of another at the Royal Bank of Canada – ensure that customers get the best possible experience using their mobile banking app, by providing them with the flexibility to use Apple Pay, Android Pay or any other platform they wish, and by using one simple app to meet all of their “RBC reports strong uptake for HCE wallet, adds support for digital receipts, loyalty and gift cards,” 30 October 2015

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