Banks face fork in the road – and must get off the beaten track

There are two roads banks can go down, according to Peter Weill, MIT professor and futurist, as the financial services sector faces a rapidly evolving technological landscape and shifting customer expectations. 

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Speaking to bluenotes on podcast, Weill, senior research scientist and chair of the Center for Information Systems Research (CISR) at the MIT Sloan School of Management, said banks will be forced to choose whether to move toward or away from the customer - although ultimately some will do both. 

"I think it's one of the most exciting times for banks going forward as you get to reinvent a model that's been very successful for a long period of time.” - Weill

“My sense is that banks face a fork in the road,” he said. “Either they will go towards the customer and therefore meet broader needs of the customer beyond product - like buying a house or starting a business or opening a new store - and partner with others to deliver those.

“Or they'll move away from the customer and become the most-efficient processor of transactions that are regulated and reliable, [like] payments, FX and those sorts of things.” 

Weill said some banks would inevitably do both: become “more efficient at doing those transactions and… [then] move towards the customer”.

“I think it's one of the most exciting times for banks going forward as you get to reinvent a model that's been very successful for a long period of time,” he said.

Huge transformation

In early 2014, Weill told bluenotes banking as a sector had a future - but accurately predicted the rise of competitors in banking services that are not banks.

He still thinks so - “of course banks still have a future” - but says the sector still faces a “huge transformation” it must reckon with.

“The way you achieve that is changing the culture of organisations from the way that we used to operate… to be much more agile, partner oriented and faster,” Weill said.  

“We need different skills, we need different behaviours. The result will be better jobs because we will automate a lot of the jobs that weren't so interesting and that will leave us with a lot more creativity.”

One thing he can guarantee is banks won't keep doing what they’ve done before.

“It will be a different kind of behaviour and I think that's very exciting,” Weill said.

Carina Parisella is innovation editor at bluenotes 

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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