Customer Is Still King and Queen of Banking Innovation

In a world where change is constant, digitization has become one of life’s certainties. This advancement is coming to even traditionally staid sectors like financial services and banking, spurring profound transformations. That’s because the story of banking is not just about money, transactions and deposits; it’s about the evolution of an industry that sits at the heart of our daily lives, influencing economic growth, societal dynamics and individual financial wellness. “Banks still play the role they’ve always played, but as we become digital, as we become mobile and as the banks become branchless, the relationship becomes centered in the technology and the capabilities — not always the individuals, the bankers that knew you,” Shaunt Sarkissian, founder and CEO of AI-ID, told PYMNTS for the “What’s Next in Payments Series: What Is a Bank — the Changing Landscape of Banking and Financial Services.” Traditionally, banks have been characterized by their physical presence, with brick-and-mortar branches dotting the landscape. Sarkissian said that while the nature of banking interactions has changed, the fundamental trust that customers place in their banks remains the same. However, the advent of technology has sparked a seismic shift in the banking industry. Internet banking emerged as an early sign of change, allowing customers to manage their finances online, reducing the need for physical branch visits. This digital migration has only accelerated with the proliferation of mobile banking platforms and apps, enabling anywhere, anytime banking — from checking balances to making payments with just a few taps on a screen. “It used to be that mobile was viewed as one of many form factors, and people would primarily access their banking services via the web … but mobile has become the de facto bank interface for the vast majority of consumers and businesses,” Sarkissian said. “How banks are learning to adapt in a mobile world and also lean into the benefits of mobile for security and authentication has changed quite a bit,” he added. When asked about the expectations consumers have for in-person branch interactions, Sarkissian noted that while some activities, like opening new accounts, still often occur in-person, the nature of these interactions has changed. He pointed out the frequent turnover of bank personnel and the shift toward a relationship with the entity, rather than the individual. “It’s not as if branches I think will ever truly go away. They’ll just change the nature of the role of what they do,” Sarkissian said. The banking industry’s evolution reflects broader shifts in technology, society and consumer expectations. “There’s a great saying: Show me the incentive and I’ll show you the result,” Sarkissian said, explaining that with consumers increasingly demanding seamless and intuitive experiences, the importance of rewards and personalization within the context of financial relationships is becoming paramount. He cautioned against overlooking consumer incentives, citing the failures of past online banking and eCommerce initiatives from the early aughts that failed to resonate with customers, and noted, as it relates to modern advances like pay-by-bank, that, “unless financial institutions do pay-by-bank with an interchange model that can fund a reward system, you may not see a tremendous amount of consumer adoption for that option.” As the line between banking and technology continues to blur, the future promises even more innovation and change, and Sarkissian emphasized the need for banks to remain front and center in the minds of consumers. “Try to not get too far upfield to what that customer does. Otherwise, you’ll become irrelevant and look like you’re trying too hard,” he said. Crucially, the ongoing digital transformation of banking has not only enhanced convenience but also democratized access to financial services, reaching underserved or unbanked populations who previously lacked access to traditional banking infrastructure. FinTechs, leveraging technologies such as artificial intelligence (AI) and big data analytics, have introduced products and services that challenge traditional banking models. Regarding the state of FinTech collaborations and the future of open banking, Sarkissian emphasized the need for FinTech companies to prioritize regulatory compliance and urged caution in choosing banking partners. Drawing an analogy to dating, he emphasized the importance of finding stable and compatible partners in the banking ecosystem. As the industry continues to undergo rapid transformation, one thing remains clear: adaptability and innovation will be the keys to success in the digital age of banking — as long as they are centered on customer needs and incentivize customer behaviors.