The digital era brought myriad new opportunities for businesses and banks, but also a whole slew of new challenges and uncertainties. A few years ago, when we started taking our first steps with Openbank, our 100% digital bank, we felt like we were walking down a dark, foggy road at night, where the fog was made up of our competition and the regulations – which is to say that we were moving forwards, but not entirely sure what our next steps would have been.
After studying the market and plotting its trajectory, we realised that – since technology is the main driving force for change nowadays – we needed to be on top of the game, and as digitally-savvy as can be. We also needed to be aware of the many changes that can sweep across the banking world and change the playing field practically overnight. We’re all witnessing a great, ongoing technological revolution, and we have seen the enormous effect that the cloud, the use of big data and digital banking have had on our way of working and communicating with our customers.
Therefore, fast-forward to the present, and with Openbank as Europe’s largest digital bank, we are keeping track of significant trends and movements in the world of banking which are key to bear in mind to be successful.
First of all, anyone can own a bank. Banking has opened up and become more ‘democratic’. Gone are the days when opening a bank might have required enormous capital, private vaults and amazing feats of real-world logistics – in theory, anyone can start their own bank online, and agile, tech-savvy start-ups can run rings around those big, lumbering organisations who are too slow to change. In this respect, the world has returned to ancient times, when entrepreneurial merchants could set up their own ‘banking operations’ loaning grain to farmers and traders ferrying goods from city to city. The competition is therefore no longer just the ‘big names’ in banking – it is potentially anyone. Our way of doing business needs to be flexible, modern and efficient enough to reflect that. This is especially true because today’s banking demands much greater transparency, since decision-making happens online and in a matter of seconds. Things move fast. We can no longer afford to communicate up and down a lengthy chain of command where nobody questions decisions made from above – modern banking and all modern business now demands the instantaneous exchange of ideas in a network – including and linking everybody – as enabled by the latest technology. In other words, we need to communicate sharper and more efficient than ever before.
It’s not just banks that are global nowadays – their products are too. Until fairly recently, banks were local affairs. This all changed with the internet, and these days a bank can be practically everywhere at once. Credit cards and accounts, payments and other services are all just a click away. Our customer-base is now the entire world, and our every move needs to be aimed at making the banking experience as smooth and pleasant as possible for the customer of today. Naturally, this requires a combination of technological literacy and making sure we know what our customers think and want. Companies like Amazon, Facebook and Apple have their fingers in many pies, and now they are also turning their attention to banking.
In this era of ‘too much information’, knowing how to handle and leverage all of the available data effectively is arguably what is going to make the greatest difference. It is what distinguishes an organisation that is truly comfortable in the modern world and equipped to harness the power of the latest technology. Technology and legislation nowadays allow customers to change banks more easily. It is therefore imperative that we keep our customers happy and onside, tailoring our action plans to their feedback and desires and updating them whenever necessary. This leads to a final, more general, consideration – uncertainty is here to stay, and we must learn not only to live with it, but also to thrive off it.
So what conclusions can we draw from all this? There are three main lessons: firstly, we must focus on what we know is going to happen and work to insure ourselves against things we predict could happen, given how rapidly things can be turned upside down; secondly, we must learn to do banking without the need for a huge network of branches; and thirdly, we must become a very low-cost operator. Only by doing these things will we be able to stay on top of our game and keep competing with huge conglomerates and rapid start-ups. In short, the future of banking is going to be very different to what we know. Santander is evolving, achieving great things along with Openbank.