Millennials and Banks: Surmounting the digital divide
There is a rumor going on about a Fourth Industrial Revolution. There is this talk about Millennials and their predestination to impact this revolution. Some people are saying it has already begun, others are still clinging to deterrent strategies like it’s their last resort.
The thing is, we have all felt it: in the rise of automated production, in the ascent of digital economies, the shift to fast-paced cloud environments, the velocity with which data is made accessible to just about any person who owns a computer.
Yet, there are these signs of disruption, which seem to gradually annihilate all possible recommendations for advice. Insufficient introspection and understanding of the disruptive changes caused by the Fourth Industrial Revolution may well lead to a gloomy future. Industries that are both time-worn and have been resilient for so long might just never make it through.
In setting out to identify the industries most likely to be transformed by the aforementioned Millennials, banking seems to be at the highest risk of disruption. It may be hard to indulge, but the generation which is most likely to lead the upcoming revolution would rather go to the dentist than engage in a conversation with a banking representative.
Seemingly unbearable to take in is the fact that most Millennials are more excited about the prospect of turning to Google, Amazon, or PayPal for financial solutions than having to scoop up a reason for switching from one bank to another. And this becomes even harder to do when Millennials claim that they cannot even tell the difference anymore between the services of one bank and another.
As dispiriting as this forecast may appear, we cannot but agree with a foretelling of the shattering changes in the banking industry. The moment the banking industry embraced its commercial role at the fullest, it stepped into the pandemonium that is “retail” and “customer acquisition”. And given that for every action, there is a reaction, the august heritage of merchant banks in Assyria and Babylonia, of Bardi, Peruzzi, and the Medici families, has swiftly diluted into today’s financial market economy.
The more banks fight to gain individuality and title of their own, the more they blend into this generic citation of dissatisfaction and distrust. It may be too late to shift the general perception on banking today, but we can work in favor of the predictions for a Fourth Industrial Revolution and consider the following:
- Stepping into the Age of Big Data: The digitalization of global information systems has spawned large volumes of data that have gradually become more difficult to manage. Having understood the characteristics of big data, the corporate world has been seen trying to contain it and build on the opportunities of its inductive abilities. Banks will have to acknowledge the need for a transition to technological frameworks that work in favor of statistical inference. The enhancement of data collection and analysis processes will assist the banking sector with sampling up big data in order to forecast and predict customer preferences.
- Lashing at cyber-physical systems: Unlike previous structures, cyber-physical systems are built on connection, correlation, sharing, collaboration, personalization, and value. Banks will eventually have to abandon their patronizing ways and step into the world of disconcerted socializing.
- Re-modeling current portfolios: In a world of new and improved financial services, banks will have to reconsider their product portfolios. They will need to use data to spice up their current deposit and lending portfolios. As much as they need to be versatile, new age financial products will also have to be elective and basic, so they can be embedded with the bank’s software component and interface programming (API).
- Deflecting measurement: Given that competition is slowly fading to collaboration, modern banks will have to consider target abandonment. Banks will eventually have to learn how to measure on the outside, instead of the inside. They will need to make use of their sophisticated tools to perform real-time, pulse-snatching monitoring, measurement, and assessment on the outside world, rather than on the ones working for them. Targets are for KPIs only. Practicing them on people is no longer acceptable.
- Looking up to Fintech for solutions: Digital wallets, bitcoins, and mobile banking are the new in. Banks need to look up to financial technology pioneers and path leaders for collaboration instead of competition. Working in spite of financial innovation will slowly drive such banks to isolation and disconcert.
The Fourth Industrial Revolution will bring a seismic change, and banks will stand at its forefront. In a world where Millennials are the future, preferring to go to the dentist rather than talking to a banker, perpetuating practices such as targets for front-line advisers is nothing but madness.
People speak of the downfall of corporate ladders, they speak of the fragmentation of skill, they speak of the connectivity and specialization that dominates the world. In this millennium, there will be no room for self-absorption and egomania. Under their current disposition and given current circumstances, banks will fall as fast as they have risen.