The Future of Retail Banking Is Not Just Digital

Up until the 20th century, banks had a fairly elementary role in people’s lives: They stored money and lent money. Their business model remained fairly simple and so did consumers’ relationships with their banks. Today, people have a much more nuanced dynamic with their retail banking system, and banks too are starting to recognise that they’ll have to go beyond their role as just storage lockers and lending entities, and understand non-financial aspects of their consumers’ life if they wish to thrive.

Banks are not only going to need to act as a trusted advisor of all things money but also reach all touchpoints of a person’s financial journey and provide tangential services to stay relevant in the current ecosystem. To do this, banks have started to adopt cutting-edge technology so they can offer more personalised services, improved payments, and participate in the current digital revolution. They’ve started to engage in purposeful collaboration and technological innovation, to usher in the next phase of banking that’s not just digital but also digitised- Enter Internet of Things (IoT).

IoT is simply a network of interconnected digital devices to exchange data. From temperature controls and lighting to fleet management and security devices there are billions of IoT devices coming into use around the world right now. For retail banking, this is an especially important innovation to invest in because of the amount of personalisation it will enable.

RETAIL BANKING WILL USE IOT TO ACHIEVE PERSONALIZATION AT SCALE

Let’s back up a little to the hypothesis we made above: People not only want their banks to help them spend and save better, but they also want their banks to aid them to make better financial decisions. A feat that banks can achieve only through extreme personalisation, at scale. They’ll need to make use of open APIs and marketplace technologies to connect banking services with homes, wearables, smartphones, vehicles, and other devices. So what does retail banking IoT look like for the foreseeable future?

Contactless ATMs – This is the next banking innovation on the horizon right now. With mobile payments on the rise, banks will start allowing you to withdraw cash or use ATM services with their smartphones via codes and OTPs. An extension of IoT ATMs will be that the ATMs connected to an app will use location data to help consumers find the nearest one.

Funky wearables – From smartwatches to jewelry and smart glasses to tattoos, wearable tech is all set to transform the way companies interact with you. This is especially true in the case of retail banking, where wearables can eliminate the need for passwords by using biometric authentication and eliminate the need for people to remember multiple passwords- a major grouse that a lot of people currently have with the digital banking system.

Wearables are also going to revamp the meaning of ‘customer care’. Take for instance the idea of voice chatbots in smart earphones that can answer your queries. Banks will start investing in creating UX that’s optimized for such devices.

Smart gadgets – With a gamut of banking innovations coming up, this one is seriously interesting. Think about home appliances; what if you could set limits on their usage to reduce electricity bills? Like a device that alerts you when you’ve gone beyond your AC-usage limit for the month and helps you cut down spending.

Amazon already has a ‘Dash program’ that allows devices to be connected to Amazon accounts. When the device needs to be replaced it signals that a payment needs to be made, like when it’s time to replace your electric toothbrush.

Another IoT smart gadget to look out for is home speakers that allow opening bank accounts, checking balances, and paying credit card bills (“Alexa, open a bank account for me and make sure I’m never broke”). This technology can also be used if you’ve lost your card or need billing reminders. Most companies are building payment options directly into the app of their IoT devices.

Bluetooth beacons – With 5G being the new rage, bluetooth beacons that connect with smart devices to perform specific actions are on the rise. How can retail banking take advantage of this? Quick, automated, and contactless payments of course! Think about auto-serve at your local Starbucks, pub, or restaurant as you’re reaching the location because you’ve set a time to place the order and pay via your banking app. No more long wait times.

Interbranch bots – This is an interesting application of banking IoT- to improve communication between bank branches themselves. Wearables can help bank employees communicate with each other without needing to physically be present. It’s also going to enable information exchanges between various departments and specialists.

Connected cars – With most cars being built with an internet connection, connected cars will mitigate pain-points such as getting out of the car to make payments at petrol pumps or ticket counters. Cars will be connected to a digital ‘token’ and allow people to make in-car payments when they travel. Both Visa and Mastercard are already involved in this developing market. Another interesting offshoot of IoT cars is insurance companies tailoring their plans based on consumers’ driving data such as speed and location by placing a transponder. Then, they’d use this data to provide custom insurance plans.

THE NEW BANK WILL NOT JUST BE A BANK

Banks are going to start investing in adjacent services and products. Like a home loan product that can also provide a service that helps people shortlist suitable homes or fitness bands that help you set aside money every single time you work out. They’ll start to develop a customer-centric business model and engage in partnerships and collaborations that will help them give consumers a rich, frictionless, and seamless banking experience.

In an era where boundaries between tech and humans are becoming increasingly blurred: Internet companies providing banking services, food delivery apps giving loans, and Elon Musk trying to insert wires into your brains, it’s not long before our banks start tracking our weight gain to prevent us from buying more food, and also save some bucks.