Should U.S. banks be turned into daily-service apps?
How banking will be changed in the coming years
We will not argue about whose banking system is the best in the world. Each market has different factors to consider, so it isn't easy to establish a ranking. (In addition, it would be a tedious task.)
But consider the following question. Given the present rate of emergence of new technology and changing models of interaction, how do you think banking will be affected in the coming years?
If you look at banks and financial services in emerging markets, you cannot help but notice the vast number of services provided by banks to their clients that U.S. banks fail to deliver. As a customer of several banks in Eastern Europe and an active participant in the fintech community, I can say that many banks in these countries use technology to provide innovative services to their customers.
While this may not be news to those in the banking world in the U.S., I believe it would surprise many bank customers. But consider the difficulties of interacting with the bank beyond straightforward transactions.
I want to discuss what services banks in Europe or emerging markets offer that U.S. banks might offer and the technologies needed to do so. (One central area is the use of APIs, and another is a rapid deployment of solutions, but given how much there is to discuss in both these areas, we will reserve them for another discussion.)
I will describe the services I have used firsthand as a customer and found valuable. I was working on my fintech products, realizing what I miss here. However, I also firmly believe that one's bank is the best place to receive these services because that is where our money is and where we move our money to and from.
Speaking of money movement – this is much faster elsewhere, twice as fast, or more. There are many reasons for this that those in the banking and fintech world know, so I won't go into details. But there are other factors, other ways the U.S. banking system is not serving customers to the best of its abilities. The following are my firsthand experiences from banking outside the U.S.:
I didn't need to call the bank if I was going on vacation. Informing the bank in advance of travel meant my card would always work. Nowadays, with mobile phones, your bank should be able to verify where you are and see if the transaction requested matches that location.
I can get money from an ATM, even if I don't have a bank card. It's enough to bring a mobile phone. Unfortunately, some ATMs do not have a display; their access is carried out through a smartphone. This is coming to the U.S. but is not yet widely available.
I can find service providers in a directory hosted by an online banking client or mobile app. This is convenient because it allows me to avoid the middleman — I choose the provider and make the payment.
It may sound exotic, but I can call a taxi using a mobile banking app. Therefore, the bank becomes a personal assistant regarding my money and the need to make any payment.
I can conveniently file a tax return from my banking application.
I can register a corporation.
I can get the key to my electronic signature and use it in public institutions and businesses.
The banks provide notary services online.
Sellers can lend to their customers and provide bank guarantees on payment of goods directly via the point-of-sale terminal. (Not to be confused with credit cards.)
If you do not have internet access, you can make business payments via SMS if you urgently need to transfer money.
Companies can record staff time through POS terminals and credit cards. The bank processes all data and considers this when calculating salaries.
There is electronic document management.
I even found a ticket service for events offers from a bank.
Closing and opening new accounts are done more quickly.
Banks are becoming service companies and providers of various services, and they have the opportunity to make dealing with finances on any level, in many contexts, convenient and efficient. Banks can serve as entry points to many other industries and should integrate with other service providers to facilitate safe and smooth transactions.
My bank app should not only help me buy stock or send money to a friend but call a taxi or make a dinner reservation. Yet many more fundamental or intrinsic services are still not part of banking as we know it in the U.S.
For example, when I am looking at my bank statements, I don't know why I cannot find, in a single click, all my recurring monthly costs. This is not a technological issue – it is just understanding the role you play – or can play – in customers' lives. Helping customers manage the many services dealt with daily in our busy modern is adding value in a way that is simply saving or completing payments – however crucial those are – is not.
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