As the digital revolution continues apace and branch banking declines, banks will need to harness a very different skill set. How can they attract the right sort of talent to help them stay afloat in the years ahead? Brett King, CEO of Moven, explains how banks’ employment patterns will need to adapt as technological disruptions break their organisational mould.
Brett King - the speaker, author, radio host and innovator - does not hold out much hope for the future of the bank branch.
"The way I look at it is, bank tellers today are like the telegraph operators of the late 19th century," he says. "We'll try to figure out what to do with them as telegraph wires get discontinued and people shift to telephones. Why would you go to a branch in five or ten years time, when you'll be able to perform almost every conceivable part of your day-to-day banking experience without needing to?"
These are strong words, rare in an industry that King believes is still intent upon hedging its bets. Despite a clear downward trajectory in transition volumes, branch banking is proving stubbornly enduring. More specifically, while consumer visits to their branches have dipped 80-90% since 2006, banks still spend more than 80% of their channels budget on branch real estate, staffing and support.
For King, this state of affairs doesn't make much sense. His latest book, Branch Today, Gone Tomorrow, makes a strong business case for deprioritising branch banking in the channel mix.
"I think [there is] only one reason you'd go into a branch in the future, which is if your technology is broken and there's no other way you can fix it," he explains. "This is similar to how you'd use a 'genius' in the Apple Store today. There is a role for that but it's a very different skill set from what bank tellers have currently."
As the founder and CEO of Moven, the mobile-banking service pegged as 'reinventing the everyday banking experience', King is renowned for taking an unusually high-level view on the global banking landscape. His perspective is informed by economics, new retail distribution models and customer behavioural shifts.
He is talking to Future Banking about how the changes afoot in banking will affect their staffing practices. As we move into an increasingly digitised age, what will that mean for banks seeking to lure tomorrow's talent?
"When you look at the destruction of various industries, starting with the steam machine disrupting the textiles industry in the UK in the late 1700s, the reality is it changes employment patterns," says King. "I don't think there's any way of avoiding a shift in the way we employ people from transactional tellers in a branch to something that's very different based on digital."
While this is undoubtedly bad news for branch staff - many of whom, King concedes, will stand to lose their jobs - it bodes well for the growing numbers of people with financial technology (fintech) skills. As the decline of the branch becomes harder to ignore, we are starting to see a huge investment in fintech and a corresponding surge in job creation. Over the past couple of years, fintech has generated 50,000 new jobs in London alone.
"The skill sets in fintech are very different from in traditional banks," King points out. "But there are five jobs I like to talk about as being skills for banking. Number one, you'll need data-science people; number two, you'll need experienced designers and storytellers; number three, you'll need behavioural psychologists; number four, you'll need risk programmers, because risk moves to being a function of code and process; and number five, you'll need community builders. You won't need more bankers."
The branch and the wrecking ball
The danger is not so much that banks will fail to seek out these people, but more that the people in question will stay away from banks. While the fintech industry itself is growing fast, banks are digitising their current operations at a far slower rate. There is still an ingrained perception that banks have few outlets for their talents.
"Let's say you're a data scientist and you're just out of university - how would you go about choosing the kind of organisation you'd like to work for?" asks King. "Number one would probably be something like Google or Facebook or Apple, and number two would be fintech companies, which are starting to look like start-ups. You'd want to attach your name to whoever's going to be the Facebook or Uber of banking. And third, you'd go to the most progressive digital-enabled banks. You wouldn't go to a traditional bank that hasn't got its digital act in gear."
For a so-called 'traditional' bank, this is a sobering thought. The implication seems to be that, as fintech companies become more prominent, banks will struggle to compete - not just in terms of marketplace positioning, but also in terms of their ability to hire the right talent. Unless they rebrand themselves as digital first, they may risk being left behind the curve.
"The CEO needs to create a culture in the bank that says, we are a digital technology company from this point forward," says King. "There are a handful of banks globally that have really come to the market and said they want to be a technology company with digital at the fore. I think everyone who's still waiting is not going to attract the real talent required to successfully make this transition in the future."
This transition may be surprisingly close at hand. At some stage within the next ten years, King believes we'll reach a point at which the mobile bank account becomes the baseline, superseding the physical bank account.
This is already beginning to happen in certain parts of sub-Saharan Africa, where a widely discussed 'mobile digital revolution' is underway. Here, landline infrastructure is generally poor and vast swathes of the population use mobile phones for their online activities. Factor in the costs of travelling to a bank branch, and it is clear to see why more people have accounts on their phones than own a plastic card or chequebook.
We have not yet reached this tipping point in developed economies, but as mobile technology develops, convenience is coming to hold sway. Once the shift occurs more broadly, it is unlikely that the major account-keepers will be the banks that dominate the market today.
Hail to the king
King feels that, as this trend gets under way, banks would do well to take their cues from Silicon Valley - taking bold steps into the unknown rather than clinging to what is currently normative.
"What banks generally are trying to do right now is follow customers' existing behaviour, and go with that," he says. "But if you think about Google or Facebook or Uber, the biggest and fastest-growing companies in the world, these are organisations that have challenged the status quo. They have done something different; they have started changing consumer behaviour and engineering their services around that."
King thinks that we are currently seeing a spate of serious disruptions to the traditional banking model, particularly as it applies to retail banking.
"Right now, we have a distribution team and they run the branch network, and then you have product teams that support things like credit cards and mortgages. And then you add on these additional channels that cover mobile, social media and internet banking," he says.
"This model is going to break apart because as branches decline to the point that they become a secondary source of revenue and support for customers - and primary revenue and relationship channels are handled digitally - the bias towards distribution networks disappears. And as problems become solved contextually, based on mobile geolocation and things like that, what's much more important than the product itself is the experience that wraps around it."
King feels that this will have ramifications not just for banks' organisational structures, but also for the ways in which they gauge success. Whereas in the past, they wanted to know how much revenue was generated per product per channel, today they are more likely to pay attention to customer engagement. So if customers are engaging particularly strongly through social media, say - leading to revenue or relationship creation in the long term - then that becomes an important metric.
While these kinds of changes are already underway, the next few decades may well see almost unfathomable disruptions. As a futurist, King does not shy away from the bigger picture.
"We talk about the machine age, the space age, and then the digital or information age that we're currently in," he says. "I call the next age the age of augmented intelligence. Over the next 30 years, there are going to be two key disruptors - artificial intelligence,and experience design. Experience design is more akin to what we would call customer experience or channel interaction, but AI is going to disrupt advice."
Banking and possible artificial intelligence
He feels that as the associated technology advances, AI will reach a point at which it is better at giving financial advice than humans. Lacking our cognitive biases and distortions, as well as our propensity for mistakes, AI systems may eventually displace a whole other set of jobs. "This is going to be a dramatic shift in terms of what we valued in financial services previously, which has been location and advice," he says. "We still need a banking ecosystem, we still need money, we still need credit systems and we still need the ability to move money around the planet. Having said that, the entire layer on top of that - those traditional pipes and wires - is going to be defined by a very different level of service."
To bank or not to bank: that is the question
Within this new, highly automated, reality, King believes banking will become a fully integrated experience; a seamless part of everyday life. To the customers of 2040, going to the bank (noun) won't mean much. They'll be more concerned with banking (verb) as something they do.
Of course, this is to veer into the realm of the speculative. For the time being, banks are being kept busy with more pressing concerns.
"One of the interesting discussions is whether there's a place for fintech companies and banks to play together, and I think there is," says King. "We'll start to see a lot more cooperation emerge, because banks will realise they can't compete with fintech on the customer experience side, but they do have some assets in terms of platforms that fintech companies can leverage off. I think that's the best of both worlds, and the banks that embrace that will ultimately be best off."
While this may seem like a high-risk strategy, it is clear that in today's fast-changing banking climate, sticking with convention is the biggest risk of all. For banks to harness the talent they need, they will need to carve their niche as serious participants in the digital revolution.