When we sat down to create this special edition of the San Diego Business Journal focusing on banking, we began to talk about the changes the banking business has experienced in the past decade. Of course, our discussion quickly touched upon the very real challenges the banking industry has faced in the past few years, but in truth every industry, every company has experienced similar challenges.
As our discussion continued we began to catalog the technological changes the banking industry has experienced in the past decade, from ATMs to banks-in-a-box inside grocery stores and shopping malls. When we added it all up, we realized the changes in banking enabled by technology have been truly transformative.
You may be saying to yourself that the same could be said about many other industries that have experienced significant change in the past decade due to the introduction of new technologies.
The difference with banking is (drum roll) — money — your money. That factor makes banks unique. Banks touch almost all of us in some way on a frequent, if not daily, basis. Few businesses play a more integral role in our lives than do banks.
Given the close link banks have to our everyday lives, it is no wonder many of us so appreciate the ability to visit our money from what we used to call a telephone, but now call a smartphone. Not only do we visit our money, we spend it, save it, manage it and invest it right from that now ubiquitous device.
The Unimaginable Has Happened
The transition from friendly bank teller to ever-present smartphone as the primary point of contact for a growing number of customers represents a transformation in banking business models that is mind-boggling. Could we have imagined in 2001 that we would be depositing checks by taking a picture of the check with our telephone and sending the image to the bank?
Gartner Inc., a technology research and consulting firm, has projected that worldwide mobile payment users will surpass 141 million this year, up more than 38 percent from the 102 million seen in 2010. Global mobile payment volume is forecast to surpass $86 billion, more than 75 percent higher than a year ago.
Many bankers argue persuasively that it is not about technology, but about people and relationships that makes their banks successful. That may be the case, but ask yourself how many banks today are abandoning technology and staffing up with more tellers?
Tomorrow promises to bring even greater changes to banking, with the advent of mobile payments in which the smartphone will replace the debit and credit card and spending money, already devilishly easy with the simple swipe of a card. It will be even easier as we simply wave our phone over a mobile transaction terminal.
But that is nothing compared to what the future may hold. Imagine, because you have a relationship with a certain bank, your bank arranges for discounts at vendors who are also customers of the bank. Imagine that at about 11 a.m. on any given day your bank sends a coupon to your smartphone for lunch at a nearby restaurant to which the bank recently lent a considerable sum. How does the bank know you are near its new favorite restaurant? Because you have given it permission to know your location — your smartphone can tell the bank — in exchange for receiving just such delicious restaurant discount offers.
And, strangely, even as banks begin to play a bigger role in our lives, with remote check deposit and mobile payments, in the future fewer of us will visit banks or get to know our friendly banker. Not that we won’t value their services, especially when your bank sends you a text reminding you to buy a birthday gift for your spouse. As you glance at your smartphone, you are appreciative of the reminder and make a mental note to buy that special gift as you drop your bank into your pocket or purse.
Reo Carr is editor-in-chief of the San Diego Business Journal.
