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The name Digital Banking is a euphemism, Bankerless Banking is truer

With all due respect, the label "digital banking" does not accurately describe the stronger impact technology is having on banking right now.  Digital, as it relates to Information Technology, is a generic 55-year-old word that described the transition from punched card processing to digital computers.  It was a giant leap forward at the time.  But to use the word digital now is selling short the real impact of the current banking transformation.  Thus the need for a more powerful name - "Bankerless Banking."  My point is, if you want to create a dramatic name to represent a significant evolution in banking, use one that is new, meaningful, industry-changing and attention grabbing.  If bankers are insulted by this, then it must be right.

Jamie, Brian, Michael, and John, the top four bank CEOs in the U.S., are already embracing Bankerless Banking because they can't afford to ignore it.  They are closing branches and firing employees.  But they won't like my new name because they themselves don't have the skills to run what banks will become.  The old normal ended.  Duh! 

This idea is not entirely mine.  For example, back in the sixties, when Dale Reistad introduced the idea of a checkless society and a cashless society, not many of us believed it.  But we went along because we saw the merits of better, faster, increased productivity and cost savings.  Now I believe even the toughest cynics will admit that the use of paper checks has declined significantly, and cash has been sidestepped in part with swipes.  Dale was right; the industry just took too long to transition from the sixties to the two-thousands.

The same slow rate of transition is happening right now.  It takes too long for banks to move towards dramatically different methods of doing business.  But just a few years ago, bankers were building branches like Starbucks was creating coffee shops.  Adding more of the same is a lot easier for a banker than doing something entirely different.  And following others off a cliff to gain quick profits also seemed like the thing to do when the front line, wallstreeters, had a track record for making money by labeling packages of investments that no one understood.  Remember subprime mortgages?  Why didn't they call them Deadbeat Mortgagors? 

This is what I think Bankerless Banking really is.

Bankerless Banking is the extent to which a bank or credit union uses electronic banking services that their customers can use to perform their routine banking tasks.  It is self service.  It does not rely on in-your-face bank employees.  It does not depend on physical structures, aka monuments of glory.  It does not have to be 100%.  It should be real-time so as to achieve a one-touch-transaction performance.  Bankerless Banking can be as much or as little as a bank needs.  And here's the surprise.  Bankerless Banking has been going on for decades, but it was piecemeal, one component at a time.

There are now 24 components, some old, some new, and some I don't even know about yet.  Bankerless Banking will always be a work in progress, a philosophy that the great minds of technology companies have embraced as a chipped-in-stone strategy.  In banking, they are:

Telephone Banking
Internet Banking
Electronic Payments
Remote Deposit
Debit Card
Credit Card
Mobile Banking
Wire Transfer
Automated Clearing House
Platform Automation where customer defines platform
Tablet-based solutions
Smartphone-based solutions
PC-based solutions
Laptop-based solutions
Kiosk-based solutions
Interactive Video Banking
Social Media-based solutions
NonBank-based processor solutions
Cloud Computing
Any time, any place, any legal customer
Data Retrieval by customers and bankers but no hackers
Decisioning by customers and bankers
Transaction Monitoring

Show me a bank that can demonstrate the above performance, and I'll show you a bank that has been to market, carefully acquired existing vendor solutions, implemented their capabilities, trained its infrastructure employees, explained the new relationship to its customers, and has achieved the distinction of a Bankerless Bank.  Also I'll show you a bank that does not employ hand-holders and schmoozers.  Going forward, the job of bank employees will be to build the technology infrastructure so that bank customers can get whatever they need on their own.  Impossible you say?  Ask Apple, Google, Microsoft, Amazon, and LinkedIn.  They're not only staying in business, they don't have a capital problem.  The Bankerless Banking model is a profitable model.

Where will your bank be down the road?  Applying for a bailout?  Merging with another bank?  Responding to regulatory threats?  Closing?  Or converting from the old model to the Bankerless Banking model?  And please remember, just like checkless and cashless didn't disappear entirely, don't expect bankers to disappear entirely.  They will just be upgrading their value to customers by doing more mindful tasks rather than grunt work.


Comments: (2)

A Finextra member
A Finextra member 14 May, 2015, 06:52Be the first to give this comment the thumbs up 0 likes

Totally get what you are saying, but let's never forget the key role of real people, especially the honest, hard-working ones.

There is a tremendous infrastructure (rails) painstakingly built over the years, on top of which all the new channels and clever payments must run - ACH, Visanet, Banknet, Clearing Houses, FX and more. Systems fail, systems break.

The real danger is if we do not felicitate and protect the talented, dedicated people who make all this work so we can sleep at night. And when I have a problem I want to speak to a real person.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 14 May, 2015, 15:49Be the first to give this comment the thumbs up 0 likes

In all the 24 components, I couldn't find one related to sales. Unless banks sell  these products / services, everything else is moot. And better ability to sell is the real reason why Bankerless or Branchless Banking will not happen in the forseeable future.

Secret Of Survival Of Bank Branches

Forget delays in the disappearance of cash, I actually see it entering hitherto cashless usage scenarios e.g. ecommerce and even airline eticketing.

The Death Of Cash Is At Least 190 Years Away

Even the cashless-native Uber just announced plans to accept cash a couple of days ago.

Uber tests cash payments in India

I'm not questioning change per se but I don't believe that it's always unidirectional. Role of cash, branch and banker could sometimes swing both ways like a pendulum. The direction of change will be largely driven by the status quo. Too much branch density, like in USA? Shut down branches. Too little branch density, like in India? Open new branches. And so on.

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