Paulo Ferreira

14/6/2019 11:50

The most powerful force of all

With our deep capacity for adaptation we don't even realise how our routines and behaviours evolve. But a simple memory exercise is enough to confirm how, in two decades, so much has changed.

It is already commonplace to say that technology is changing our lives.
With our deep capacity for adaptation we don't even realise how our routines and behaviour evolve. But a simple memory exercise is enough to confirm how, in two decades, so much has changed. Today, when we choose and book a hotel or a plane trip, when we look for the most banal information or news about what is happening in the world, when we relate and communicate with family or friends or when we listen to music or watch a series or a film we are doing it differently than a few years ago.
The technological innovation that enables these changes has already profoundly changed many businesses and transferred centres of power.
In just 10 years, the biggest companies in the world went from being oil and industrial companies to being technology-based companies.

A revolution of this magnitude in such a short space of time only happened because citizens massively joined it. Because the new technological tools give them enormous convenience, comfort and usefulness. But also because they have given them a power they did not have before. More than ever, the consumer today has possibilities of choice, comparison, decision and public evaluation of products and services that he naturally uses in his favour.

We already know the business model changes brought about in the media, urban mobility, the music and entertainment industry, communications and the way we relate to each other, to name but a few.

But there is another sector, one of the most powerful and structuring in any economy, which is now beginning to feel the impact of technological change: the financial industry, especially retail banking.

I have already quoted this data from an American study on other occasions but I recall it because it is impressive: 70% of American millennials would rather go to the dentist than to a bank; 33% believe they do not need a bank for anything; and half say that banks all offer the same thing.
The data is unequivocal. Much is already changing in the financial sector and in the relationship it has with customers, but one guesses that we are still at the beginning of the revolution. Every day new players arrive competing for important slices of the market - from electronic transfers to payment cards - and, above all, contributing to increase the consumer's power of choice, who always prefer the most convenient and convenient, even if it is also cheaper and faster.

This path is irreversible. Open Banking is there, duly sealed and regulated by PSD2, the so-called second Payment Services Directive of the European Union.
The interaction of technological platforms, duly authorised by customers, with their banking data will contribute to bring more transparency, competition and customer mobility between banks and banking products.
The possibility of direct comparison between banking and financial products, so often complex, is starting to become effective. Negotiation with banks will be increasingly demanding. So will competition between banks, both nationally and in the European banking market.

The amount of information available to customers for decision making is increasing and technological tools help to make it practical and quick.
On the other hand, this brings new demands on individual or corporate customers, who have to have levels of knowledge and financial literacy that allow them to level the playing field when interacting and negotiating with banks.

These are new challenges posed to everyone with the certainty that this will not stop. There are no laws or barriers to entry to stop the digitalisation of banking and our relationship with money. For a very simple reason: the main force for change comes from consumers and what they demand because it is more convenient for them. And that is the most powerful force of all.