Meet Alex – a typical twentysomething in the modern digital world.
Upon waking, Alex checks the day´s headlines and weather. Then she buys a plane ticket for the weekend. All before getting out of bed, just with her cell phone. At breakfast, she checks on her investments on peer-to-peer Lending Club site and on her startup investment on Microventures. During her lunch break at work, she gets some online shopping done and pays with Amazon pay. In the evening, she meets up with some friends at a restaurant. Alex picks up the final tab and the others send their respective shares to her with a few swipes on their iPhones using PayPal.
These are the kinds of experiences the digital native is used to: quick, easy, and preferably stylish.
The Only Constant is Change
Is it any wonder that the Millennial Disruption Index, a three-year study of industry disruption “at the hands of teens to thirtysomethings” sees banks at the highest risk of disruption? Way ahead even of discount retailing or household goods!
The survey also finds that 71 percent of those surveyed would rather go to the dentist than listen to what banks are saying. About the same percentage says that in five years the way we access our money and how we pay for things will be totally different. A full third even believes they won’t need a bank at all.
The world of banking clearly is changing fast. We’ve discussed this in the past, but it continues to evolve and accelerate. And it goes way beyond redesigning bank branches or offering a discounted cup of coffee to customers talking to their banker via videoconferencing.
It also goes beyond retail banking. Numerous Fintech startups target anything from payment solutions to crowd-investing and wealth management.
And while you may say that many of those Fintechs are small and often fail quickly, what about the likes of Google, Amazon, Apple, Intuit and PayPal getting into the banking game? That is exactly what they are doing in the Financial Innovation Coalition.
The initiative states among its policy priorities to “leverage technology to reduce barriers to financial services,” to “enable faster payments,” or to “streamline the rules for the online lending marketplace.”
While many find comfort in the thought that the margins in retail lending and payment systems are so small that big guys like Google or Amazon couldn’t possibly be in it for the long haul, this view gets it wrong. It is not about fees, it is about data. Performing services traditionally handled by banks will allow e-commerce giants to learn so much about the customer that they are able to tailor their offerings even further, and capture more of the market.
The World of Banking in 2025
This is a far cry from how many banks today operate. The point is that the world of banking in the year 2025 will look a lot different compared to today. And that of course also means that the world of employment and talent in banking will look a lot different.
While today banks are trying to streamline by putting tellers in a remote location serving customers at different branches, what bank leaders need to realize is that in the future they will need more people with completely different skill-sets. For example, more people who can write code in addition to people who can count money.
I believe the changes in the making will be so meaningful, that I want to dig deeper. For the next few topics, I will look at specific jobs and challenges that recruiting in banking will face over the next few years.
And don´t fret: there will be a lot of good news. The digital age is not just threatening, it also brings a lot of opportunity. And anyhow, we can´t change the course of the world. So, better roll with the punches.
Because as Benjamin Franklin aptly puts it: “When you´re finished changing, you’re finished.”