Future of banking has disruptions and opportunities

Many banks will start to examine the opportunities in delivering new and innovative ways of providing banking services. I see this as an excellent time for banks to fundamentally redefine their value proposition to their customers and as a result to grow their non interest related income.

To do this there needs to be an appreciation of the changing market place and in particular an understanding of the new generation of customers.

Every generation is exposed to different things as they come of age, and that exposure has a meaningful impact on the way they see the world. Financial institutions must be ready to understand these differences to effectively engage consumers at every stage of life.

So what do some of these customers look like? Millennials (born 1980s to 90s), want guidance about how they can save more and provide for fledgling careers and families.

Not surprisingly, mobile banking is especially important to millennials, who are more likely to use the channel for daily balance notifications, statement analysis, savings, local deals and mortgage tools.

They are the generation that is used to getting information on-line and instinctively turn to the internet to access information for things they are not clear about.

Accessibility

This generation needs to be engaged by banks in unique ways that reflect their needs and where they turn to for guidance.

Interestingly, FSD Kenya’s excellent Finaccess report of 2016 shows that whilst customers trust banks more than they do mobile money providers, they are won over by the vastly superior access provided by mobile financial services. Accessibility is the key.

Generation Z (born 2000s onwards) is the first generation to be raised in the era of smartphones. They instantly absorb information—but lose interest quickly.

This Gen Z has many decisions ahead about loans, mortgages, accounts etc but they are highly unlikely to be addressed through existing channels.

Financial institutions need to create a personalised and extremely engaging experience for them. It’s no longer about just managing their money well; it’s about helping Gen Z easily make sense of their financial lives to make smarter, more informed decisions.

Gen Z may have a shorter attention span, but that does not mean they are any less complex or demanding when it comes to their financial needs and services.

To create this new world, banks will need to turn to Fintech companies to co-develop appropriate ways of reaching these customers and monetizing the relationship.

So perhaps the silver lining is that banks in Kenya can use this opportunity to ask whether they are preparing well enough for the new generations of customers.

The author is CEO, Interswitch Group.

SOURCE:BUSINESSDAILY