The business model of financial services, primarily banking, will undergo a significant shift soon. The next big thing would be ‘Contextual Banking’ supported by various technologies such as Blockchain, Open API, Social Mining, Fintech startups, government and finance/risk professionals, marketers, and data scientists.
Technologists, data miners, digital experience experts, and risk professionals will be creating our future models in banking.
Of course, each of these has its particular definition of actions and operations that they do, such as; government and finance/risk professionals may integrate innovating new regulatory models. Each of these categories is ripe for discovery and explanation.
As an example, Compumatrix uses several of these areas such as; Blockchain, Social Mining, Advertising through marketing, and so much more for a more robust and connective environment. We also have experienced 1st hand the need for close looks into risk management and regulations around the world, so some of this is not new to us at Compumatrix.
How many of you have heard of “Contextual Banking”?
I haven’t, and so it was interesting to find out. And then, I found out I did not know a precursor to Contextual Banking, which is Contextual Commerce, so we have two new terms to add to our language.
Contextual commerce merely means thinking beyond a brick and mortar storefront for doing all business online. It is a whole new way of life where a consumer can buy anything, anytime, anywhere with the simple point and click of a button
Like contextual commerce, contextual banking is getting rid of the brick and mortar building in favor of all banking services online. There will be many companies creating their own branded debit accounts to become “contextual.”
Contextual banking will completely change the way banking is done now. It’s an evolving model, where financial products and services come to you at the place and time of need. Banking will become life enablers where services are delivered in a contextual and embedded fashion across various channels consistently and quickly. Banks create digital customer experiences based on your context with the help of data and technology. At the same time, risk experts will ensure that these transactions are smooth while guaranteeing your experience to be regulated and secure.
Another possible parallel would be that every retailer will become a banker. Considering the fast and the furious Fintech scene now, you do not need a ‘Bank’ to do essential banking services. Every retail outlet will act as a bank, selling banking services. Fintech companies are already doing great work at debt funding platforms, equity trading mechanisms, and payment processing hubs. We can see fast adoption and acceptance of this new way of banking services. A whole new model is emerging, driven by a change in technology, customer expectations, and a competitive landscape of the entire world scene.
Since Compumatrix was created and uses a black chain as its financial connection primarily, we can see things such as; Blockchains are emerging as a robust and secure digital record-keeping method. Nasdaq started using Blockchain technology in its private stock market to secure record-keeping, one of the world’s largest systems that have facilitated the trading of financial assets for decades. How can blockchain technology change existing banking processes? Blockchain’s power comes from the fact that it can process transactions in a secured fashion and create a perfect and reliable digital record.
Blockchains will revolutionize the payment industry, trading, and security management.
So with blogging, social media, and advertising switching screens as it was because the marketeers and data scientists gathering information gives importance to particular products and desires, we will say, “Goodbye Salespeople.” Welcome Social Selling, which will be the most significant disruption due to contextual banking. The replacement of direct sales force and relationship managers from banks. Those hefty incentives and commissions will turn to fee income for banks.
Selling banking products will be delivered at any channel or place the customer is available; this will be achieved by converging social, cloud, and data. Understanding and Leveraging Social Data will be a new Social phenomenon. Along with other trends, it will shift the balance of power to consumers, accelerating the need for greater engagement, which will give great interest, recognition, and boost to our company well.
Due to this new financial construct, all commercial and wholesale banking will go digital. Many financial institutions will maintain their visual and concrete visages, but they will all be gone due to maintenance costs one day.
Corporate business models will embed banking, where purchase and accounting happen over the cloud. Major wholesale banking players like HSBC, CITI, and Morgan Stanley have already started to deliver digital solutions to giant corporations.
Financial space is changing a lot in all areas such as regulation, technology, compliance, demographics, changing customer expectations, the rise of Millenials, and competition from fintech. Customers become increasingly disappointed and confused with their banking experience. At the same time, they’ve become increasingly comfortable with going through their favorite social network or retail provider to buy financial services.
We have already started experiencing new ways of payments, micro-financing, investment advice, money management, trading, etc. even small Blockchain companies such as Coinbase are growing exponentially and buying up the competition. Older online payment systems such as PayPal, are in turn, starting to offer newer services trying to compete.
This movement of banking and financial services to the online digital realm is the next logical Big Step!