The bank of the future will be invisible - KPMG

The bank of the future will be invisible - KPMG

By 2030, technology will have made banks and banking invisible to customers, hidden by Siri-like personal assistants that cull data from our connected lives to fulfil daily personal and financial obligations, claims KPMG.

This revolution will see large parts of traditional banks - customer service call centres, branches and sales teams - disappear, predicts the professional services giant in a report.

This will leave the future of today's banks uncertain, and in a worst case scenario they could become relegated to the position of white labelled product providers. The winners will be those that are able to make best use of their data, drive down costs, build effective partnerships with third parties, and build strong cybersecurity.

To illustrate its vision for banking in 2030, KPMG has imagined a Siri descendant called EVA (Enlightened Virtual Assistant) that uses advanced data analytics, voice authentication, AI, connected devices, APIs, and cloud technology to serve customers.

In an example of a day with EVA, the assistant approaches the customer having accessed its payment data and noticed an increase in spending on junk food. Coupling this with health data gathered from the customer's wearable device, EVA suggests a yoga class and then books and pays for it.

Asked by the customer about their finances, the assistant then explains that it has "shifted some savings around to get you a better interest rate and there was an unexpected charge from the USA which I have arranged a refund for".

In this vision, there is no "banking app" - access to money is interwoven with health, time management, leisure and other parts of daily life. This means that the "platform layer" - the customer interface - is likely to be provided by global technology players such as Google, Apple and Facebook.

Banks can own the product layer - product, balance sheets, security and custody of assets - but a new wave of utilities - outsourcers, fintechs and existing giants such as Visa - will emerge to win the process layer, facilitating things like payments, client onboarding and KYC.

Warren Mead, fintech lead, KPMG, says: "Banks are making efforts to improve customer service through use of exciting technologies like robotics, artificial intelligence and blockchain, but the pace of change is slow and in reality, I’d say banks are only 10% of their way through their digital transformations.

“Getting most banks to our vision of 2030 will be painful. Currently, technology firms invest 10-20% of revenues into research and development, for banks it’s just 1-2%. With banks’ return on equity under 5% it’s hard to see that changing significantly in the short to medium term, but if firms want to remain relevant, it has to."

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Comments: (6)

Bernd Richter
Bernd Richter - FIS - Frankfurt 18 October, 2016, 12:33Be the first to give this comment the thumbs up 0 likes

Nice to see that more and more do embrace the "what's next?" where we must be moving UI & UX to a new level - away from pure mobile/web menu driven point and click interaction towards our best known interface - natural language.

Maybe worth visiting my earlier blog "Of messengers, chatbots & financial buddies. A future banking UX?" here at where I write about the concept of a Financial Buddy

A Finextra member
A Finextra member 18 October, 2016, 14:042 likes 2 likes

It's nice to focus on UI and UX, but in all honesty banks have been white-labelling their services for years very successfully and making a big pile of money doing so. Whether that be providing indirect access to payment services, BIN sponsorship, credit line provision, white label mortgages for brokers, identity services, the list goes on... Yes, perhaps for some retail services 'the banks' will be 'relegated to the position of white labelled service providers' but this doesn't mean that the entire banking infrastructure and business model will collapse if they aren't in control of the front end. After all, gmail still works if I use the native app on my iPhone - and I still call it gmail.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 October, 2016, 19:16Be the first to give this comment the thumbs up 0 likes

Even if banks were to become invisible, I agree with @FinextraMember that they will not disappear. However, going by trends in other aggregator-driven industries, I tend to believe that banks will NOT become invisible. In fact, they might even become MORE visible.

Take cab aggregators for example. I really don't need to know the name of the cabbie and all the other info that I get when I make a booking on Uber. But, still, Uber provides all that visibility. Why? Because Uber does not want to take responsibility for what happens after it connects me with a cab.

Take Amazon for another example. As long as it's Fulfilled by Amazon, I really don't need to name the name and address of the Seller but Amazon gives me all that info. Why? Again, for the same reason as Uber - to limit its own liability.

Same way, a Siri or a Cortana won't take responsibility if my EFT payment falls into the cyberabyss and the only way it can wash its hands off is by providing me with full visibility about the bank that it has chosen to execute my EFT.

The desire to provide visibility raises manifold in a regulated industry like banking - a Siri or Cortana won't want to be subject to the regs that apply to banks.

A Finextra member
A Finextra member 19 October, 2016, 10:541 like 1 like

Welcome Big Brother, disguised as a lovely Eva ("Enlightened Virtualised Assistant") and taking care of the wellbeing of those childish citicens - and good bye to freedom, democracy and own responsibility. What comes next - Eva informing me that she donated the better part of my available funds to support a robust military mission for "restoring peace in Absurdistan" ?

Very scary, fortunately there are still hammers left to smash one's smartphone.

A Finextra member
A Finextra member 19 October, 2016, 18:38Be the first to give this comment the thumbs up 0 likes

Almost anything is possible, but not all things are probable.  And, I have read that we tend to under estimate change in the short term and over esitmate it for the longer term. I think that is happening here.

There are some assumptions being made that I don't think cut across the board. One, that banks will be willing to be just a wholesaler of services and not own the customer relationship (Some banks will be willing to do this, but not all). Second, That customers will be willing to give up financial control of their lives to an AI "robot." (Again, some will be willing, but not all).

A Finextra member
A Finextra member 20 October, 2016, 07:10Be the first to give this comment the thumbs up 0 likes

Probabilities work best when the issues at hand are rather simple and lead to rational decisions. Unfortunately, that's not always the case - when complexity grows beyond a certain level, people tend to look for simple solutions and to take irrational decisions. Two years ago, the Brexit decision and the selection of one of the current candidates for the US presidential election would have considered as pretty unlikely events.

Unlikelyness per se does not prevent unfavourable developments, so it makes sense to look into the potential consequences early.