Banking is necessary but banks are not

By Nicole Miskelly | 31 October 2014

Senior banking executives and industry experts have called for banks to become their own disrupters and agree that in the future there will be fewer bank branches. Opening The Economist’s European Retail Banking Summit 2014, Ralph Hamers (CEO, ING) said that banking is necessary but banks are not and the question that banks should be asking themselves is how they can stay relevant for their customers.

Hamers said that the banking environment is like a rollercoaster at the moment and that technology (tech) companies are going to continue to cause disruption. “What we are experiencing now is like a rollercoaster ride, regulators are not finished with us and tech companies continue to attack us from all angles.”

Hamers said that he believes the future of banking is in digital and that customers and clients know what they want and if banks can’t deliver then they will go to competitors. He also said that banks should not wait for others to disrupt their business but should dare to become disrupters themselves. “You should not wait for others to disrupt your business model, you should disrupt yourself.”

As a part of the strategy to make ING more agile, Hamers said that the bank have appointed a Chief Innovation Officer, Head of Analytics and a Chief Operating Office from a telecoms background. Hammers also said that he believes the 2008 financial crisis was a blessing in disguise because it taught banks a lesson.

Steven Cooper (CEO, Personal Banking, Barclays) said banks that must disrupt in order to compete with new entrants during his presentation at the summit. “New competitors will have a strong impact in our user base. To compete in this changing landscape we must disrupt and transform.”

According to Cooper the biggest threat comes from Silicon Valley and Silicon Roundabout tech companies but banks should be willing to work with them not against them. Cooper said that there will be fewer branches in the years ahead and that Lloyds' announcement that it will close 200 outlets over the next few years is the beginning.

Cooper said that we are in the middle of a digital revolution and that Barclays have introduced Digital Eagles, staff members who provide tips on how to use the internet as part of their commitment to enable everyone to use digital.

During a panel discussion, Philip Davies, (President, EMEA, Siegal+Gale) raised the question what is the banking system going to be like in the future: will banks be providing the system or will it be the disruptors? According to Anthony Thomson (Founder, Metro Bank and Atom) all of the reasons that customers had for going into a branch are now gone, including the ability to cash a cheque which can now be done by taking a photograph of the cheque on your mobile. Thomson also said that banks can’t seem to attract millennials and questioned whether young people are going to want to pay for a service that they are not using. 

According to Mike Hearn (Bitcoin Software Developer) Bitcoin is already a banking system without banks and he sees the digital future of property such as cars, as smart property, which recognise that you are the owner by embedding a chip in the engine.

Whatever the future of banking may be, it is clear that bank branches may no longer have a place in the banking system and Hamers said that he is optimistic about the future because there are a lot of players trying to make banking a better experience.

By Nicole Miskelly, bobsguide Lead Journalist

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