We will not argue about whose banking system is the best in the world. There are different factors to consider for each market so it is difficult to establish a ranking. (In addition, it would be a boring 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 years to come?
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 provide. 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 are using technology in order 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 would like to discuss what services banks in Europe or emerging markets offer that U.S. banks might offer as well, and the technologies needed to do so. (One major 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.)
The services I am going to describe are all ones I have used firsthand, as a customer, and found valuable. Now I am in the U.S. and working on my own fintech products, I am realizing what I miss here. I also firmly believe that one’s bank is the best place from which 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’m going on vacation. Informing the bank in advance of travel meant my card would always work. These days, 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 with me. It’s enough to bring a mobile phone. By the way, some ATMs do not have a display, and access to them is also 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 just choose the provider and make the payment.
It may sound very exotic, but I can call a taxi with a mobile banking app. Therefore, the bank turns into a personal assistant when it comes to 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 personal 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 keep a record of 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 by a bank.
- Closing and opening new accounts are done more quickly.
We can stop right here.
My goal is not to list all the services that I have used in non-U.S. banks, but to illustrate the direction of development of the banking cultural code.
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 simply saving or completing payments – however crucial those are – is not.
For Bank Innovation February 22, 2017