Last week I had the pleasure of attending the Consumer Bankers Association’s annual CBA Live conference. More than 1300 senior-level bankers gathered in Gaylord, Texas to network with colleagues and find ways to address a multitude of challenges facing their companies. At the general session, attendees were asked what they thought would be the top issues facing the banking industry over the next three years. In a major change from previous years, “regulation” slipped from 1st to 5th in terms of priority. Instead, issues that pertain to better customer and employee engagement rose to the top of the priority list.
I say it’s about time.
In the nearly 10 years since the Great Recession, banks have been dealing with an increasing array of new and in many cases, complex regulations. While acknowledging that some of these rules were a necessary response to the excesses that led to the financial crisis in 2008, the consensus at the conference was that the regulatory pendulum had swung too far. Banks have been spending too much on compliance, in some cases stifling innovation at a time when consumers and employees are increasingly demanding a more engaging and frictionless experience when it comes to financial services.
Now, as Washington is pledging to reduce regulatory burden on American businesses across the industry spectrum, bankers appear poised to address this innovation challenge. Many ideas were shared about how to do this at the conference, and they all had one thing in common – the future of banking will be digital.
Based on what I saw at CBA Live, here’s what the not-too-distant future will look like in the banking industry:
- Checkbooks and lengthy branch visits are giving way to mobile apps and virtual assistants powered by natural language understanding. Customers increasingly use these tools to handle almost all their transactions through self-service. The bank employee of the future will be skilled at mapping these customer journeys through a variety of digital channels, looking for ways to remove friction and improve the experience.
- New products are emerging from the combination of big data and artificial intelligence (AI). One speaker at the conference called AI “the electricity of our era”, as revolutionary in its impact in this century as the light bulb was in the last. AI will fuel everything from personalized recommendations to proactive transactional alerts. One-size-fits-all products will morph into unique solutions for every need.
- Concerns about privacy and data security will be eased as passwords and PINs are replaced by biometric authentication. Soon, something you are supposed to know but have probably forgotten will be replaced by something you are and can never forget. Already voice biometrics are being used by banks around the world to simplify customer access to their accounts and to weed out fraudsters. Facial recognition and behavioral biometrics are adding to the flexibility of these solutions.
The conference ended with an inspiring talk by Richard Davis, retiring Chairman and CEO of U.S. Bank. Mr. Davis reminded the audience that only bankers can turn one dollar of deposits into seven dollars-worth of realized customer dreams. With two standing ovations, the crowd at CBA Live showed they enthusiastically agreed and then set off to make it happen. I am glad to be with them on the journey.