Banking technology vs banking experience history
The history of banking is inextricably linked to the evolution of technology. And that has proved to be a fast-paced evolution, following Moore’s law to a tee. Back in 1957, 1TB of storage capacity would have cost $9.2 billion, while 1TB of memory would have cost $411 trillion. Today, the same storage and memory capacity costs just $14 and $2,100, respectively.
Banking has evolved in lockstep. We have gone from lofty hollowed branches to banking on mobiles in 70 years. Managing day-to-day banking has moved from cheques and queuing in branches to face ID on mobiles in a historical blink of an eye. However, narrative focus and money have always revolved around the technology story.
I spent two days at the excellent FinovateEurope conference in London this week. As an ‘experience’ person, I always feel like a slight outsider at these events because so much is about technology. In fairness, the conference is aimed at a fintech and banking technology audience, so what do I expect? And in double fairness, some brilliant speakers discussed the importance of experience, I am talking about you Ken Hughes and Rik Coecklebergs!
But the cutting-edge of banking technology was very much on show. Everything from products that can verify whether someone’s voice is real or fake (a common problem for modern IVRs) to banking platforms that can build product campaigns in no time.
This technology frontier is awe-inspiring. We really are at the zenith of incredible changes in banking ushered in by astonishing technology. The pace of change is dizzying, and in my only mention of GenAI in this article, according to Nina Schick (another fantastic speaker), with AI, the speed of change is so rapid we need AI to keep track of the changes in AI!
The technology of today is unrecognisable from the technology of yesteryear. Can you imagine being a developer on the earliest punch card computers, looking now at a fully functional ID&V system that can verify based on an uploaded picture of your passport, a selfie and a smile?
At the same time, I reflect on my own banking experience. How has that changed? What major leaps has that taken? What is its equivalent to the price of memory or the introduction of IBM’s mainframes?
Going back 70 years, banking was manual. Cheques, cash bank managers and branch visits formed the totality of the experience. The late 60s saw the ATM arrive, which meant automated balances and cash withdrawals. First Direct ushered in telephone banking in the 1980s and internet banking at the end of the 1990s. Mobile banking, as we all know, has since had a profound impact.
However, the most significant change has been the movement of banking functions from the bank to the customer. We have all gotten closer to our money, and banking has scaled beyond the limitations of having just a branch network. This has resulted in much more significant financial inclusion as participation barriers have dropped and more competition exists.
At the same time, everything has pretty much stayed the same regarding what banking is and does. Basically, banking has remained the business of securely moving integers between spreadsheets (or ledgers).
Technology has yet to solve the problem of enabling a better relationship with money. Most people have a negative relationship with their wallet. The conversations we have with ourselves about money are rarely good ones. Why is this?