The revolution of the banking distribution
For some time now there have been predictions that the banking sector will suffer a shock comparable to the one experienced by the iron and steel industry in the early 2000s. Nothing of the sort has happened: more than ever, banks are indispensable in the operation of the economy and in the recycling of savings and their channelling towards the financing of public authorities. These same banks are also facing up to a number of challenges to the management of their profitability in a context of low interest rates and flatlining economies.
The real revolution of the banks, however, is taking place at the level of how they distribute and collect savings. The abundance of savings no longer justifies extensive networks of branches open to the public, now that modes of distribution by Internet are becoming more flexible and popular.
Traditional banks that are moving towards on-line banking and focusing their strategy on the portability of the banking relationship through different channels (branches, tablets, etc.) will clearly be key players in the banking landscape of the future. Already they all try to bolster their range of services with a second brand and digital accounts (or channels).
There is a need to look beyond, however. Now that the debate centres on the (legitimate) need to maintain a physical base through a network of branches, some banking institutions operate in an exclusively digital form, although with a more limited range of services: these are credit card operators. Indeed, these cards are manufactured and distributed by classical establishments, which does not prevent Visa, MasterCard and American Express from having banking relationships based on the geographic mobility of their account holders.
Who will these operators be targeting from now on? Probably, companies that combine continuous follow-up of customers’ profiles with the use of geolocation systems… Facebook, Google, Amazon, etc. These companies will link the logical and physical proximity of their customers/members by offering the capacity to model their profiles. They are, therefore, ideal candidates for linking up with banks, helped by telephone companies. Some unlikely link-ups could occur, for example, a telephone company that creates an alliance with a content provider (Amazon, Google, Ebay, etc.) to offer a financial service.
I suspect that the banking world stands at the dawn of a revolution on a similar scale to the integration of IT systems in the 1970s. We may see worldwide platforms appear that will bring about enormous economies of scale.
The flagships of the financial world could well be companies that are not banks at the moment.
One thing is certain: the Internet revolution has not started yet.
