By 2030, technology will drive an even deeper fundamental shift in banking – moving it from being hidden to completely invisible. However, it will be more intertwined in the lives of consumers than ever before. It's time to meet EVA, Enlightened Virtual Assistant, our vision of the future of invisible banking and see the possibilities.
In the near future, banking will be made of three distinct components: The Platform Layer, the Product Layer and the Process Layer. Together, they will make the new Invisible Bank, introducing opportunities and challenges for the industry.
Standing for Enlightened Virtual Assistant, EVA is the platform through which consumers will connect with the Bank. EVA is made possible by technologies that are all available today – advanced data analytics, voice authentication, artificial intelligence, connected devices, application programming interface (API) and cloud technology.
EVA is all about connectivity. Rather than simply making an automatic payment, perhaps she will coordinate information from a customer’s calendar, their social media, wearable devices and music apps to determine that they have been stressed lately, and ask if she should book and pay for a yoga class. She will be constantly available and can be personalised to each customer’s needs.
Customers are on the path to accepting this type of platform. They are already increasingly using channels to fulfil functions previously dominated by banks. PayPal offers loans and credit; Amazon offers inventory finance. Can banks keep up?
Teaming up with technology organisations may be the way. Technology hardware is a global business, whereas banks are becoming increasing national. Technology firms also invest far more of their revenue into research and development. Some banks, who have the capacity and willingness, will try to develop their own Platform Layers. Most will need to partner.
Banks currently fulfil three vital economic functions: they ‘create’ money through making loans, they give people a safe place to store cash and they facilitate maturity transformation.
These functions are possible because of a strong regulatory and risk management environment, access to government support and an understanding of credit risk. Banks are well placed to build on these core strengths and develop bespoke products that suit the lives of customers in the new landscape of 2030.
In KPMG’s vision of banking in 2030, large parts of the traditional bank have disappeared. Customer service call centres, branches, sales forces, IT, swathes of the back office – gone. To own and optimise the Product Layer, banks must be willing to undergo the necessary evolution and put customer needs first.
The biggest banks might well retain an element of transactional infrastructure – the Process Layer – but that will be opened up to competitors as a distinct utility business.
Competition in this market will be intense – led by a range of industry-wide solutions in payments, settlements, core platforms and client onboarding. A rich ecosystem of new fintechs, major outsourcers and existing industry players will serve the banks.
In the world of the Invisible Bank, cyber risk becomes even more acute, and regulation will have to quickly change to meet it. With a Platform Layer like EVA, there is massive systemic risk. If EVA books and pays for a yoga appointment that a customer didn’t want, is that grounds for complaint? And who is responsible for the error? The platform? The payment agent? The hardware provider?
Banking regulation will need to become real time and potentially even present at the point of sale. If it can be proven that platforms like EVA make the customer outcomes better, lower cost and more accessible, then regulators will need to keep step with the industry to ensure that these risks are managed.
Banking is only 10 percent through its journey of change. The Invisible Bank is of course only one possible future, but there are many other alternative scenarios.
For more about the future of the Invisible Bank, read our report below 'Meet EVA: Your Enlightened Virtual Assistant and the future face of the Invisible Bank'.
KPMG's analysis of the major Australian banks' full year financial results.
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