Is banking about to have its Social Media moment?

In my previous blogs, I have written about the importance of the Millennial generation and how this group is changing the face of wealth management.

It is this very same generation that are driving technological change in the Fintech space.

Not only does this generation not see a traditional bank branch in their future, they also expect banks to provide them with the state of the art products and services they demand, not what the traditional banks think they can sell to millennials!

This new generation believe that consumer services must travel at internet speed. 21st century software groups are targeting the preserve of the traditional banks and winning Millennial custom. The reason this is happening is because Millennials expect their smart phone devices to do everything from their financial affairs to their social media activities, and agile software start-ups recognising this trend are satisfying their demand. Not all customers are Millennials, and older customers are adding momentum to the demand for greater levels of service and product ranges.

Traditional banks are challenged on all fronts.

Governments are keen to see greater competition in this marketplace.  In the UK, we see traditional banks being encouraged to introduce their own proprietary API's (Application Programme Interface) to help compete with the new arrivals from the Fintech space.

These new arrivals offer modern technology enabled platforms and applications matched with compelling propositions around speed, ease and value for money which hammer traditional banking models.

Banks have to respond to their new competition from the consumer side. Even greater challenges are getting underway in the regulation space both from the EU (PSD2) and from the UK regulator (potentially greater access for Fintechs to the Faster Payments scheme).

A new digital era has begun in financial services, and banks in response are cost cutting back to core profitable business.

Traditional banks will continue to be dominant parts of the economic ecosystem for the future. Banks have fabulous brand equity and loyal customers, and in order to keep it that way, they must offer innovative products now and accelerate to internet speed.