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CHAPTER 3
The bank of the future and the people who need to build it.
The phrase ‘digital transformation’ has been around in enterprise circles for quite some time. At times, it has served as a beacon of promise for the transition from legacy systems to modernised business architecture. At other times it has served as little more than a buzzword for adding new IT on top or alongside old IT and solutions whose adoption rates have been less than satisfactory.
Then along came COVID-19. And by force or necessity, this changed the concept of enterprise digital transformation forever. COVID-19 has shown that banks can implement massive change rapidly and effectively and regardless of whether the new normal will return to the old normal or we will face a hybrid of living, working and engaging- the inefficiencies and longer end-to-end project lead times, will surely be a thing of the past.  We are on the cusp of an important inflection point which will determine the direction of the banking industry.  From the perspective of the customer, the immediate impact of COVID-19 has shed new light on their requirements for their bank and their expectations of what a bank should be. This is as true for retail banking customers as it is for enterprise and commercial users. From the perspective of the banks, the rapid transformation over this period has shown what is possible - that rapid acceleration and adjustment of previously stonewalled practices are open to change, and customers can be on board, especially when they are led. The time is now, not just to make short-term adjustments, but to make long-term and lasting changes that will shape the future of the banking industry. We believe that the future will be shaped by AI.
Innovation acceleration
These benefits will be felt across the entire banking value chain. In fact, these benefits must be felt across the entire banking ecosystem for them to have meaning and relevance for every player within it.  As barriers to entry into the banking industry diminish and new players appear to tackle ever growing, niche needs, it has never been more relevant for banks to reassert their meaning and, therefore their need, to customers. The equalising nature of AI plus a shifting wider Macro landscape, for example the increasing prevalence of Open Banking, means there are more players in financial services markets than ever before. While incumbent banks may believe that their size, history and position in the connected fabric of our society mean they will always be there, in practice, this is not the case. As the .com growth just 20 years ago showed, if incumbents do not adjust to the changing field, the game will change beneath them. The rapid rise of platformitisation is there to be seen. The way we purchase groceries, consume media and book holidays is not the same as it was 20 years ago. Financial Services is not averse to this trend with FinTech Revolut offering users the chance to buy commodities such as gold and silver directly from its platform for instance. This may or may not have a wider market impact but it does point to the different experience that new and digitally native customers want.  Banks, however are essentially their own platforms and so are in poll position to stave off any new challenge from FinTechs and emergent banks. To do this, banks need a new way of thinking and offering the services that meet the needs of today’s consumer and those needs, like never before, are experiential. It is not enough to double-down on good service or increase the core product range but customers and stakeholders alike are now demanding a new experience of a bank.  It is positive then that banks have stepped up to the plate during the COVID-19 crisis to rapidly digitise their offering while simultaneously managing their multi-segmented customer base and should feel positive about the brand recognition won during this crisis.  The shackles are off in terms of imagining what a bank could be with AI as the driving force behind exploring just what is possible and delivering an experience that matches expectations. 
So what does it mean to be a bank of the future? 


Imagine a bank that...
Delivers a big tech experience
Imagine a bank that...
Augments the workforce to usher in new era of what is possible for workers and how they operate.

Imagine a bank that...
Challenges the very notions of what it means to be a ‘bank’ while still delivering on its core promise of Trust to its customers, to the regulator, and to the world.
The bank of ten years time needs to be built today using the momentum garnered as a result of the recent rapid enterprise transformation.  However, this will not happen unless it happens from within. While FinTechs and Open Banking are disrupting the sector positively, incumbent banks still have massive books and distributed revenue streams across a variety of products which still services a large need for both commercial and retail customers. This will not disappear any time soon. Banks and the people in charge will need to look at their own agendas and decide how AI can best serve it and accelerate this transformational growth.
Sidebar
Transforming a bank means taking data and AI beyond the Chief Data Officer
Experience is the future 
On a positive note, the need to explore greater customer experience is not lost on the banks. As 76% percent of the C-suite can attest (HBR, 2019) customer experience is high on the corporate agenda. Yet knowing and doing are two very different beasts and bank leaders must not allow themselves to fall into an ‘experience at all cost’ mentality. Or gimmickry in other words. It is the dissemination of the meaning of experience that will determine the form that banks take over the coming years.  As we have seen, while COVID-19 has provided a curve ball of sorts in many instances this has actually served to accelerate digital transformation in banks. This has to be taken in context, with many retail banks, for instance, taking the necessary measures to manage the immediate crisis points that COVID brought to light - mortgages, savings, overdrafts - all measures designed to meet immediate customer needs rather than their experience. Paradoxically, the period has highlighted two things. 1) that banks can move collectively and at speed (though this did result from significant resource push from other avenues in the bank) and 2) that customers will forego aspects of experience over other factors such as peace of mind or efficiency depending upon the context of the situation. This, in itself, does amount to customer experience, just not how it was first imagined. Knowing what AI is and what it can do is essential. Banks must concentrate on both innovation and education - not judging AI as a new toy but understanding what is possible. In simple terms - it is not enough to use AI to merely ‘do more stuff’ and right now it feels like customers and banks are on the same side in accepting that there needs to be a shift in the way things are done.  As previously highlighted, the agenda of different players within the banking ecosystem is quite clear. So too is the knowledge of the potential of AI as it stands today. Banks need to be careful though that they do not use AI as a fixer rather than an enabler. Incremental improvements will not usher in great experiences either internally or externally.  There is a lot for banks to do in this current window of opportunity.
Faster Horses
Banks have a once in a generation opportunity to use the momentum garnered from COVID-19 positively and not fall back on old practices. There is a real chance now to refocus and formulate a vision of the future of the bank and question its meaning. However, this needs to be delivered strategically with a 360 view that stretches beyond banking.  As Henry Ford once said “if you’d asked people what they wanted, they’d have simply said ‘faster horses.’’’ This notion is true today and banks need to lead on the vision of the future while there are opportunities to do so.  As we move out of the current crisis and into the rebuilding phase, we will begin to see an increased level of expectation from customers. Banks have won back a lot of credibility from a customer perspective which needs to be continued. That is not to suggest that banks should follow exactly what the FinTechs do, the wider ecosystem is changing and banks need to adapt and reframe what they can offer all of their customers and not simply be an undifferentiated repository where people keep their money. Meaning as much as experience will be a key factor in this new world order.  Banks will need to be firm in leading on what is strategically possible and not simply use the power of AI to make faster horses.