Are banks ready to embrace invisible banking?

By Neil Harris | 4 December 2017

The traditional banks of bricks and mortar have made way for the invisible bank of the future. Customers no longer revolve their time around banking, they want services that integrate into their lifestyle and provide a seamless banking experience - more convenient, faster and enjoyable - “invisible”. But what is invisible banking, and how did we get here?

Invisible banking is about consistent and frequent interaction

Invisible banking enabled by the development of AI, allows the interaction to be bespoke, meaningful and hands free. 

The evolutionary history of banking has paved the way for invisible banking from its inception with bricks and mortar; where the customer visits the bank approximately four times per year to the age of mobile banking where the bank comes to the customer.

Giant leaps in technology enabled the banks to embrace internet banking and the age of glass introduced the mobile phone, which has become the form factor for managing our busy lifestyles. Now, we are entering the age of invisible banking where the bank of the future will integrate seamlessly into customers’ every day lives.

It provides transparency

Invisible banking is transparent, with simple terms and conditions. It engenders trust, supports the consumers’ lifestyle by providing insight into their finances whilst giving them value added services to help them achieve their goals through financial freedom.  

It pushes the limits of innovation through collaboration

Innovation in invisible banking relies on finding the right ecosystem of partners and building seamless banking solutions to meet the desires and needs of the consumer – and this is where the age of invisible banking is truly making a difference in the banking ecosystem.

How does invisible banking differ from the traditional bank?

The introduction of fintech challengers has not only disrupted the traditional banking model, putting pressure on banks and financial institutions to digitally transform themselves but it has also significantly shifted the focus of consumers’ expectations. Consumers expect more from their bank and this is clearly evidenced when comparing statistics between “traditional” and “invisible banking” in five key areas:

(1) Onboarding The process for a bank to board a customer traditionally took 10 days, today onboarding can take place on the same day or in as little as four minutes for both personal and business banking account setups. This is largely due to the next generation of KYC processes and the immediate issuing of virtual cards, whilst the consumer waits for the plastic version to arrive.  

(2)  Interactions Fintech banks such as Monzo have realised the importance of customer interactions in building relationships, and are now proactively reaching out to create online communities around their services, and in some cases ‘interacting’ with their customers on average eight times per day. Traditionally, customer driven interactions by banks were limited to three times per week. For example, Revolut has a sophisticated app that provides general spend and FX data all in one, with real-time notification of FX rates and in-app chat for support. 

(3) Giving customers control Cutting edge features provided by fintechs are giving customers’ high visibility and control over their financial data in the palm of their hand. This control will increase with the upcoming implementation of PSD2 and GDPR that are giving control back to the customers.

(4) Notifications By leveraging social media and in-app communications, the fintech banks can react real-time to customer activity to provide advice to improve financial wellbeing, acting like an invisible financial advisor. Currently, customers receive notifications two times per day in comparison to the traditional one notification per week by banks. The likes of Loot and Pockit offer real-time notifications of spend, cash back earned, daily budget updates or pin charge notification, all before the card is lifted from the terminal or returned from the ATM.

(5) Speed of Innovation Speed and agility are key for the successful implementation of fintech solutions powering invisible banking.  Traditional banks can take up to 18 months to develop new technologies whereas fintech banks and their partners are delivering projects to market in three months!

Traditional banks have inherited from old legacy frameworks, which have limited their capabilities to innovate fast and keep up with the rapid changing pace of the current banking landscape. To be able to continue to compete and remain relevant to their customers, they will need to accelerate their innovation speed in the age of invisible banking, where the fintech approach is ‘fail quick and evolve’. So, “Will traditional banks embrace the age of invisible banking or disappear?”

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