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Here comes banking 4.0

Financial services were always due for a shakeup but, as a recent conference revealed, this is happening in the midst of a banking revolution, writes ARTHUR GOLDSTUCK

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Some may remember when banking was done only physically, face-to-face, and in a building made of brick, mortar, steel and glass. What they may not know is that it was an era that lasted from the opening of the first deposit bank in Italy in system in 1407 all the way to 1980.

That was the year computer banking was introduced by a community bank in the United States for the first time, and expanded worldwide through a text-based system called videotex. It came to South Africa in 1986 as Beltel, and was the precursor to full online banking. Along with ATMs, telephone banking, and call centres, it ushered in the era of self-service banking. Web-based banking may have felt like a bigger shift, but it was part of that second revolution.

However, the real modern banking revolution began in 2008 with the arrival of Apple’s App Store, and today most people with a bank account access it via an app.

Think about it: the first era lasted almost 600 years. The second, a mere 18 years. Banking 3.0, as it is known, has now been with us for 12 years. 

In the context of such acceleration, the next revolution seems overdue. In reality, it has already started, says global trends commentator Brett King, author of the book Bank 4.0. The subtitle sums up his argument: “Banking Everywhere, Never at a Bank”.

In other words, the physical bank has started vanishing. Thanks to the COVID-19 crisis and at least 12 to 18 monthsof social distancing ahead of us, it may disappear altogether. King underscored this view during the Huawei Southern Africa FSI Summit 2020 last week, at which he presented to an African audience remotely from New York.

“There are a lot of unknowns in this space, but the accepted wisdom is that the digital changes we’ve seen since the Internet came out in 1995 are accelerating as a result of coronavirus, particularly with the lack of access to physical offices and physical branches.

“In places like China, cash has become an anathema. People don’t want to deal with cash because it represents a transmission vector, potentially, for the virus. This is an issue for many countries that rely heavily on cash transactions. It’s likely to see a resurgence in efforts to create mobile transaction capability and mobile payments capability at the point of sale and online.”

Read more on the next page about how bank branches operate at a low profitability.

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