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September 17, 2012

Bury Old Banking Service. Bring on the New.

Posted by Rajashekara V. Maiya (View Profile | View All Posts) at 5:48 AM


The ATM for cash withdrawal. The Internet for a checkbook request. The mobile for account balance. An app that deposits checks, transfers money and pays bills on the go. And now, the online automated investment advisory platform that promises an optimized, customized portfolio. Seems like there's no end to what self-service can do for banking.

Responding to a survey conducted by a leading consulting, technology services and outsourcing company, a senior executive at a European bank dramatically declared, "Product is dead". Will the same be said of banking services (as we know them) in the not too distant future? The signs, at least, point that way. In another study that it conducted last year, the aforementioned consulting firm discovered that of all the changes in customer behavior, the use of direct and self-service channels would impact banking the most in the near future. Bestselling author Brett King, an avowed champion of the digital channel, goes a step further to predict the "destruction of the physicality of banking from branches, checks, cards and cash..." Services could well be part of that list.

The multi-channelization of banking has also contributed to the disintermediation of banking services from the physical bank. Banking customers are increasingly using more than one channel to do their business. They are demanding the freedom to consume any service (or product) over any channel, at any time, or even over multiple channels simultaneously. (For instance, register a complaint using IVR and follow up using Internet banking). Other technologies have reinforced the trend. In the countries where it is available, the highly popular Mobile Remote Deposit Capture facility has broken down one of the last standing bastions of physical banking services. Social lending platforms are emerging as an expedient alternative to cumbersome bank loans. In future, it is highly possible that Augmented Reality technology will infiltrate the humble account statement to enable customers have an instant discussion on its contents with a virtual bank advisor, on demand.

In fact, I'll go so far as to say, it can get as radical as 'no service required', once sold. "No service" will become a self-assured display of the bank's absolute confidence in its "need-no-service-ever- products" Seems improbable? Well, there is a bicycle company in North America promising  life-time warranty and replacement. Why can't a bank go that extra mile?

So, yes, traditional banking service is perhaps ready to be buried. But it's technology-led avatar - self-service has already taken birth. Here's to its long life!

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