Banking threatened by electronic retailers

Smartphones will drive a move to self-service banking

Banks must be agile in their uptake of technology or risk losing their market to nimble electronic retailers, according to one industry expert.

Jerome Svigals, director of the Smart Card institute, was presenting a Lafferty webinar on Retail Banking 2020, and argued that it is up to banks to move quickly enough to preserve their market positions.

A key catalyst for change in the next decade was said to be smartphones, with their ease of use, increasing functionality and ubiquity driving a move from branches to devices.

“There will be a dramatic increase in the use of [mobile] self-service in the banking industry. We’re starting to see the demise of face-to-face banking,” Svigals said.

This change will provide economic benefits to banks, in addition to convenience to the customer.

“It’s up to 95 per cent cheaper to deal with a mobile transaction than a transaction in the branch. The growth of ATM use demonstrates the acceptance [of this change].”

On the growth of internet banking, Svigals commented that customers will be given unique URLs to access their accounts, rather than the common point of entry that is standard at the moment.

Access to this URL could come from a barcode, read by a smartphone. A PIN would be required to access records, transactions and other functions, with a move to an additional biometric (such as a fingerprint scan, also performed by the smartphone) layer of security in the future.

“This direct access opens up self-service opportunities,” Svigals continued. “The same concept will be used in almost every industry. If banks operate in this way, they could potentially sell on the service to other industries.”

However, with far less reliance on branches and human resources, the industry appears to be open to whoever first grasps and runs with the new technology. Svigals suggested that there is as much chance of an electronic retailer moving into banking territory as there is of a bank leveraging its own services in other markets.