The future of money and banking

The way we bank has changed dramatically over the past decade. It was not too long ago that you had to wait in line in a bank to deposit money. Today, things are totally different. You can do your banking without ever walking into a bank. In addition, the whole concept of money has changed. In the recent past, money usually meant bills and coins. But today, the concept of money has expanded to include digital currency and NFTs. What other innovations should we expect to see in banking in the short and medium term?

To address this, Authority Magazine talked to leaders in the banking, finance, and fintech worlds, to discuss the future of banking and money over the next few years. As a part of this series, Jason Lin interviewed Jason Osborne, our global head of consumer and commercial banking and auto finance.

Jason Osborne: What most excites me about banking is the very real opportunity that banks have to make people's lives easier and generate economic progress, both through the experiences they can create and the products and services they provide. To do this, banks must learn how to better use the vast amounts of customer data they possess to drive real innovation. Banks today aren't just compared to other financial services firms but to technology companies. Banks have yet to fully figure out how to use data as a force for good. For example, when I lived in London, I would often take the Heathrow Express from the airport into the city. Based on my transaction data, my bank could have easily predicted when I was going to be traveling, where I was going to be traveling, and when I would be taking my next rail trip into the city. How amazing would it have been for the bank to offer me new and relevant products, such as a travel savings account, or even pick up the tab on my next Heathrow Express ticket? Once banks figure out how to use their data optimally and use it responsibly, we will see a new world of banking emerge. That new world won't be based on fees or a few basis points on a savings account but rather on the unique products and experiences a bank can create.

Beyond products and services, the use of blockchain data is another exciting area in banking. Banks can effectively rewire the entire rails of an industry by adopting blockchain technologies more holistically. In many ways, banks will be forced to adopt blockchain solutions more broadly. Otherwise, they won't be able to compete with decentralized finance, which uses blockchain to create solutions like crypto assets and currencies that are already providing real-time payments and cross-border transfers, which take place in a matter of seconds instead of days or even weeks.

Jason Osborne: My biggest concern for the banking industry is its ability to keep up with the pace of change. Banks are facing unprecedented competition from outside the traditional banking walls; regulatory scrutiny is higher than ever; customer expectations are rapidly changing; outdated technologies are complicated to unwind and costly to transform; and information security risks and data breaches are at peak levels. The banks that are quickest to adapt will be the ones that win in the long run. So, I think it's important to stay on top – and ideally ahead – of the trends that are changing banking. For example, we worked with the Future Laboratory to identify three macro trends that are having a major impact on the world and banking, and we developed a transformation guide, Banking in the Age of Instinct, that lays out the significant shifts banks must make to succeed in this changing world.

Jason Osborne: The concept of money is relatively simple and hasn't really changed over time. It is a medium of exchange and unit of account. The properties of money will always be its durability, portability, divisibility, and acceptability. In this regard, the concept of money hasn't changed for thousands of years.

What has changed is how technology has helped money evolve to become more effective in the use of its properties. For example, the world has transitioned from coins to paper to plastic to digital. Today, there is little need for physical cash when you can simply tap your phone on a screen to make a payment. Modern technology hasn't changed the properties of money, but it has made it more convenient in just about every possible way.

Jason Osborne: Great question. To paraphrase Bill Gates, "We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10." In the short to medium term, I think we're going to see more collaboration between traditional banks and fintechs. Traditional banks need fintechs for their agility and modern tech stacks. Conversely, fintechs need banks for their scale and customer base. As a result, I think we're going to see more new products, services, and experiences emerge. For example, we are starting to see more banking-as-a-service solutions. This is where banks leverage their balance sheets to support new lending solutions. We are also starting to see banks start to partner with crypto companies to add more asset classes and diversification to their investment portfolios. And we are seeing more technology companies partner with traditional banks to provide installment lending with a much more integrated client experience. Advanced digital technologies, such as data analytics and artificial intelligence, provide the 'glue' for these collaborations.

Jason Osborne: The pandemic has forced us all to stay home. As a result, banks have been forced to go all-in on all things digital. With this change, banks were forced to create better ways for consumers to perform their financial transactions online or on their phones versus physically visiting a branch or even applying for products via paper-based applications. Financial institutions are finally realizing the importance of digital technologies to advance their capabilities not just for simple transactions but also for more complex transactions such as loan applications and financial planning. For example, 24 months ago, most wealth managers wouldn't have dreamed of conducting 100% of their client interactions virtually. Today, they can't imagine conducting 100% of their client interactions physically. As customer demands changed, banks adapted quickly to that demand, which will serve them well in the long run.

Jason Osborne: It's no surprise that the pandemic has led to significant engagement in digital interactions with clients. Last year was a record year for banking and capital markets at Genpact, and 99% of client interactions occurred virtually with zero physical interaction. This is going to be a permanent change.

Jason Osborne: The user experience has become increasingly important. Since the pandemic, Rightpoint, a Genpact company and global experience leader, has seen a significant increase in the demand to redesign customer and employee experiences for an almost entirely digital world. This requires building an entire ecosystem around ensuring the customer needs are met when, where, and how they want to interact. This includes interactions across chatbots, live messaging, phone, and video. The key to success is having the right omnichannel solution where you can track data and leverage it from one interaction to the next, ensuring there is consistency across channels to meet and exceed client expectations. There's nothing worse than interacting with multiple digital solutions and/or human agents with no record or connectivity between them.

Jason Osborne: I would love to see a frictionless 'Contact Us' feature that automatically directs the customer to their ultimate choice of experience. For example, it might be difficult for a digital native in San Francisco who is a freelancer working out of a coffee shop to speak on the phone. Instead, they should be able to easily click a button and chat with an AI-powered agent with the ability to seamlessly transition to a live agent. Conversely, it may be difficult for an elderly person to find a phone number, call the contact center, navigate an interactive voice response system, and hope to find an agent who can help. So immediate and direct access to a live agent may be key in that case. Leveraging that same 'Contact Us' button for each use case should ultimately lead to a seamless, frictionless experience regardless of who, when, or why a customer is contacting their financial institution.

Jason Osborne: The great thing about modern finance is that there are so many career options in banking there are many paths to success. Based on my personal experience, I would say:

1. Be adaptable: Adaptability is crucial. I've had the opportunity to work in operations, technology, and business roles across multiple markets. It has forced me to think differently and learn to adapt to different situations, solutions, products, technologies, cultures, and so on. The best way to learn to be adaptable is to take risks and be adventurous – it makes it a fun journey along the way!
2. Build relationships: The banking world is a smaller community than you might think. Since joining Genpact, I've been amazed at how many former colleagues and friends that now work at other financial services firms across the globe. Build relationships, never burn bridges, respect everyone you work with, and find a mentor who will help advise and sponsor your career ambitions. Over time, you'll be surprised at how many connections you've made across the industry.
3. First become a specialist, then a generalist: It's important to become a subject matter expert in a chosen area before branching out. You always want to have one thing you can go toe to toe on with anyone in the room. For me, it was operations. I initially chose operations because it taught me the nuts and bolts of how banking works. Due to its scale, operations also provided me with tremendous leadership opportunities and enabled me to be responsible for large groups of people. So, I learned two key skills early on in my career. From there, I moved into other functions but always held onto my deep understanding of banking operations, which helped with decision-making in other parts of the business.
4. Become a technologist (even if you're not one at work): Have a desire to understand how technology impacts banking. From the general ledger to the client experience, at the end of the day, banks are technology companies. Over the past five to ten years, fintechs have truly revolutionized the banking industry through technology. Globally, we are using antiquated methods of payments, such as paper checks, less and less frequently. Now payments can be decentralized and on blockchain. Consumers are demanding that financial transactions be conducted faster and more securely through digitization. Cryptocurrencies are the latest example of how finance is changing through technology. A basic understanding of technology is a must.
5. Stay humble but hustle hard 😊

Jason Osborne: I am a regular contributor to various financial services and technology publications. For example, Fast Company recently interviewed me on how banks are doing more as a force for good. I wrote an article for BAI Banking Strategies on how banks can drive higher recoveries from fewer customer contacts using new technologies to align to the Consumer Financial Protection Bureau's new debt collection rule. And I provided advice on how original equipment manufacturers and lenders could work together to jump-start the stalled auto market, which appeared in Auto Finance Journal.

I also post topics related to consumer and commercial banking to Genpact's blog.

Readers can also follow my comments on LinkedIn or on Twitter @jason_w_osborne.

Jason Osborne: Thank you, David. I've enjoyed our conversation.

A version of this article first appeared in Authority Magazine.