All bets are off in the financial world

Thanks largely to the Internet and the changes it has recently helped to produce, banks no longer have to be made of bricks or stone, and currency isn’t always made of paper and coins.

The world’s first commercial bank opened in Italy in 1472, and for more than five centuries, not much had changed – that is, until recently, said Chris Skinner.

The vice-president of strategies and marketing for Unisys Corp. and evangelist for the Global Futures Forum, Skinner spoke earlier this fall at an international conference entitled “Leaders, Lemmings and Laggards?” held in St. Paul de Vence, France The event, hosted by Unisys, focused on future trends within the global financial and technical sectors.

Although changes have been taking place behind the scenes of financial institutions for many years, from a customer viewpoint, virtually nothing had changed for 500 years, Skinner said. However, over the last decade, banks have been trying to distance themselves from their customers by using technology such as ATM machines and the Internet.

Try to remember a time before we had computers, he challenged. “You may think that was a long time ago, but that was 1986. So much has changed in 15 years,” he said. “Technology has gone from the back room, onto the desks and laps of little children. So, the world is a different place.”

The consumer today is actually pretty cynical, Skinner said. “Citizens have access to everything immediately. (And) they are much more competent as a result of the change.”

Financial institutions are finding it challenging in this new world where everything is transparent, consumers are cynical and intimate with the technology, and will look for the best deal, he said. Differentiating yourself from your competitors is key to survival, he said. “But how do you differentiate when everything is so different?”

Skinner cited two alternative online banks that could not have survived in the old-style traditional banking world, but which exemplify the way customers preferences have changed the landscape of service: Bowie Banc (the Web bank named for pop icon David Bowie) and G&L (Gay and Lesbian) Internet Bank.

Personalization is of vital importance in this new customer-driven business model, he said. In fact, one of the main reasons so many banks are now aggregating is so that they can better capture all of their combined customers’ requirements, he said. The question banks may have to ask themselves in order to gain competitive advantage in the “very near present” may well be: “How niche are you?” he added.

Communication is what will change services, he continued. “That’s why the Internet has become a semi-revolution – it’s that language change; it’s that behavioural change; it’s that cultural change that we have to look for. Those are the things that will change services.”

Our concept of money is also changing, said Bernard Lietaer, Belgium-based author of The Future of Money and chairman of the Terra Global Foundation.

According to Lietaer, there have only been two radical technological changes in the 5,000-year history of money – the move to paper money from precious metals and jewels, enabling the shift of money creation from sovereigns to banking systems; and the dawn of electronic money, which may eventually signal the end of the control the banks hold on debt money. He sees a near future where the monopoly of national currencies will likely cease as other types of payment become more prevalent, such as countertrade (international barter) and what’s known as corporate scrip (programs such as Air Miles). Many of these are already being used internationally on a corporate level to purchase items in lieu of cash, he said.

With all the sweeping changes taking place in the current economy, effective management of change is no longer an option – it’s an imperative, said Peter de Jager, Brampton, Ont.-based consultant and associate director of the Global Futures Forum.

“No longer is the local branch office of a bank the only place to transact business. Suddenly, the world is at their doorstep…actually, it’s moved even closer with the advent of wireless; the whole world waits impatiently, like the genie in the lamp, in their pocket,” he said.

“To survive…we must develop new and appropriate skills, otherwise we either fall further and further behind or, like the cute little lemmings, fall off cliffs of our own construction.”