Why banks will become the new tech titans

Banks will have to blur the line between themselves and technology companies if they are to follow the money into digital spaces.

Speaking exclusively to Business Beat, renowned Australian author Brett King said banks will need to create lines of jobs that lean heavily on technology.

“You have to forget being a bank and become a technology company. This is really key. The shift is from bank products to banking experiences, where the utility of the bank is served through technology,” he said.

Mr King has given keynote addresses on disruptive technology in more than 40 countries, spoken at TED conferences, as well as authored best-selling books on the future of banks.

With the digital shift, King sees banks collapsing their structure from product points, like mortgage, credit card or savings departments, to come up with new models and metrics of tracking performance.

This, he said, will call for a huge capital outlay that may be out of reach for smaller banks, forcing consolidations and takeovers.

“The only way smaller banks are going to survive is by partnering with technology companies. They will not have the huge capital to do innovations. We may, therefore, see some technology companies acquiring banks,” he said.

Many analysts of the local banking sector have argued that with 43 banks serving about 45 million people, the market is overbanked. South Africa, with a population of 52 million, has 19 banks, while Nigeria’s 180 million people are served by just 22 banks.

Cheaper and faster

As automation happens, King said many of the traditional jobs in the banking hall will have to go. According to him, tellers, line officers and credit risk officers will be among victims of automation.

“These skills are not very useful for the banks we need to be. There will be new jobs created, such as data scientists, designers, behavioural psychologists, programmers and digital community builders,” said King. He also tips the customer service desk to become lean, but with increased competencies to match the technical issues presented by technology.

King, who at one point visited the White House to advise the National Economic Council on the future of banking, added that it is going to be cheaper and faster to bring in new skills than retrain old talent.

Digital products in the country have steadily increased in a sector that has faced numerous bumps in recent years, including the Government’s 2016 decision to cap the cost of loans. So far, at least five banks have announced plans to cut their staff numbers.

This is set to continue as technology leans on deploying less staff to increase efficiency, said the author of titles that include Why Banking Is No Longer Somewhere You Go But Something You Do, and Branch Today, Gone Tomorrow.

High cost

King predicts that many banks will continue to roll out digital products and find ways to incentivise customers away from brick-and-mortar banking.

“If you are a customer who likes going to branch, in future you are likely to pay for that behaviour. It is a high cost to provide that sort of banking. Every bank that relies on branches for revenue won’t exist in the next 10 to 15 years,” he said.

King, who is in the country to help Kenya Commercial Bank fine-tune its digital offerings, added that as the utility of technology banking improves, there will be growth in both the volume and amounts transacted.

Already, the Kenyan market is seeing transactions at branches decline, while those from alternative channels, such as mobile and agency banking, gain momentum.

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