Original text here from Patrice Bernard (LinkedIn)
No observer would boldly claim that the banking sector is extraordinarily innovative, but many would agree that it is dynamic and demonstrates creativity. However, when Lloyds Bank reflects on half a century of progress, it's clear that change has been slow and modest.
This analysis is unbiased, as it is based on a list compiled by the esteemed British financial institution. This list highlights six major advancements made by the industry, decade by decade, from the 1970s to the present. These are touted as milestones in the "history of banking innovations" and are supposed to represent the industry's most significant evolutions. But what's the reality?
Initially, the first breakthroughs were indeed revolutionary. Designed and developed specifically for the financial world, ATMs and payment cards truly transformed the habits of millions of consumers. Their widespread use today illustrates their lasting impact on our societies. Unfortunately, beyond these two major innovations, it becomes challenging to find other original ideas.
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The 1990s saw telephone banking; the 2000s brought account balance inquiries via SMS; the 2010s introduced smartphone apps (and mobile payments); the 2020s saw the rise of conversational interfaces. Each of these developments (except for one) is merely an adaptation of customer service options to new technologies, reflecting more of a technological following rather than leading, reacting to user behavior changes inspired by other sectors.
While these innovations are useful and appreciated, they have not caused any fundamental shifts in core banking activities or how customers perceive them. Additionally, these interaction facilities are often presented as supplements to traditional in-person advisor contact. So much so that when the adoption of digital tools accelerates, banks struggle to adjust their systems, revealing a lack of long-term vision.
In summary, it appears that the banking sector hasn't experienced any noteworthy innovation in the past forty years, more due to prevailing conservatism than a lack of opportunities. Emerging concepts like embedded finance, automated proactive advice, and financial well-being might have to wait longer before being seriously considered. Furthermore, it must be acknowledged that FinTech, mainly focused on digitizing traditional banking functions, also struggles to tackle these issues.
