Banks can be as powerful and valued as the big technology firms. Yes, those trillion-dollar titans. Consider it: forward-thinking banks are already part of the Big Tech movement.
Finance has always been a powerful instrument for societies. Even in the 1500s, when the absolute powers of popes and emperors had no competition, the bank-owning mercantile families were already a dominant class. They held sway over princes and pontiffs who owed them considerable amounts.
For this reason, banking activities have always been evolving as society required it. Individual banks might get stuck in a place and time. Still, the industry innovates to meet the market’s requirements.
Innovation means change, which explains why banking always seems to be in a state of turmoil. In reality, that is the price one pays for being an early adopter. Banks are early adopters out of necessity. When bitcoin arrived, the banks didn’t hide. They held conferences, created development teams and became part of the conversation.
We don’t think about it today, but much of the connected world today exists because of the efforts of banks. Transferring money instantly, conducting safe online sales, and making customers feel safe in the digital world are all innovations spearheaded by the financial sector. Banks are continually investing in new technologies, to the point that today technology sits at their cores.
Yet individual banks get stuck - and it’s never been more evident than now. A new generation of banks and fintechs are turning up the pressure. The services they create are redefining banking experiences, both for customers as well as internal processes.
There are many sectors pursuing excellence through technology. Retailers might have flashy ‘cashless’ stores, brokers speak of policies created by AI, and automakers are pondering a ‘platform on wheels’. But banks are ahead of the curve. They aren’t trying to bring technology into its world. The innovation culture is already present. Banks are upping the game through new technologies.
Banks are already connected, and operate integrated digital environments. They already pursue omnichannel touchpoints for customers. Banks already manage private information and are very trusted by their customers in that regard.
In a way, banks are even further ahead than the technology giants. Those companies are still wrestling with consumer confidence problems that banks don’t have.
So why are banks lagging? Blame the dizzying complexity of a large bank, not only in its technology but also its range of different services. These are forcing banks to spend heavily on technology to simply maintain momentum.
There are three things banks can do to correct this. The first is to encourage a culture of experimentation and change, particularly through creating small business units that can pursue a specific outcome. These should be given the autonomy and protection not to be crushed by the bank’s other priorities.
The second action is to collaborate more, particularly with fintechs. Fintechs are nuances players with specific goals - they are not necessarily a competitor to established banks. Working closer with fintechs and their startup cultures is a potent way to focus on what our modern times require.
Finally, banks should relax some of their procurement mechanisms. These can be very demanding and quickly raise the prices of any experimental technology or proof of concept. An agile culture needs agile procurement.
I believe banks can be as powerful and prominent as the largest technology firms. They have a well-established appetite for technology and experimentation, and they have been instrumental in creating the connected consumer world of today. Banks are also much more diversified than competing sectors.
Individual banks can get stuck, thinking they have done enough. Yet the race never ends. This counts for every company, yet banks are ahead of the curve. With the right focus, they can reach the head of the pack.
Kumar Utpal is Regional Sales Manager for Banking and Insurance, In2IT Technologies. Views expressed are his own.