Technology has changed retail banking for ever. So much so that some computer software professionals in California's Silicon Valley have started describing banking as merely a database of stored customer values over time.

In their view, banks are software companies and their customers are account numbers which can be serviced after studying the customers' past transaction histories that apparently reveal their financial tastes and needs.

It is true that the introduction of computers, the neighbourhood ATMs, the proliferation of mobile phone banking in the developing world and the growth of internet banking among the urban middle class have thrown up reams of transaction data, making the study of earning and spending patterns of some sections of consumers easier.

These technologies have also helped expand the reach of banks, reduced their operational costs and enhanced the overall speed and efficiency of financial transactions.

But are the customers satisfied? A somewhat surprising revelation for the banking industry came from a survey conducted in the United Kingdom in 2000. The Cruickshank Review came up with an indubitable verdict - bank customers are not happy with the services they get.

The British are not alone in their views about their banks. Surveys conducted worldwide have reached similar conclusions. The soul-searching that followed among the banks has led to an inexorable conclusion - banks must bring back the needs and demands of customers back into their business of consumer banking.

That is especially so if a bank wants to differentiate itself from its competitors who all offer the same technical gadgetry to make transactions faster, simpler, reliable and more convenient. Therein lies the key challenge in bringing about further innovations into retail consumer banking.

Back to the Drawing Board

Banks are now going back to their drawing boards and trying to put the customer at the centre stage of their business models.

In the old setup, customers were pushed to the periphery as banks supplanted personal interaction by technological solutions to cut costs. Technological tools were seen as alternative channels to service the customer. The ATM was an alternative to the banking hall, reduced queues and reduced turnaround times.

In the new era, banks see technology as complementary, instead of as an alternative, to face-to-face interaction. They realise that there is a direct trade-off between personal engagement and transaction convenience. As a result human contact has once again become paramount and relationship-building the cornerstone of retail banking.

It is true that maintaining personal contacts is an expensive proposition for banks, especially in retail markets in developing countries where individual asset sizes and the returns per customer are low.

Banks should turn this apparent disadvantage into an opportunity. They could use technology to facilitate human connection, rather than replace it. Under the new arrangement, a customer would be able to press a button on a mobile phone and a personal banker on the other side of the line would know all the details about the customer's profile and be in a position to service her requirements. The customer interface is expected to be both technologically efficient and personally engaging.

Social and cultural traits of each market are going to play a critical role as banks try to understand the needs of their diverse customers. Many in Africa, Asia and other developing markets, for instance, still want to visit their branch to conduct banking transactions with a teller, rather than withdraw or deposit money from a "hole in the wall" or conduct business through the internet.

They also have a preference for holding deposits, instead of investment products such as stocks, bonds and insurance products. Many value empathy and human connection even as they seek greater convenience in managing their financial affairs through the use of mobile phones, the internet, credit and debit cards.

Moreover, banks will have to fine-tune their financial offerings to suit our changing lifestyles and expectations. A larger proportion of women are getting educated and joining the workforce. Extended families are giving way to nuclear families and in many cases single-parent households. This means people's demands for financial products and services are changing faster than ever before.

Kenya's Mobile Model

For sure, internet-based models are not an option in several developing countries where the reach of the broadband network is limited. Moreover, many customers who have access to the internet are reluctant to conduct financial transactions either because of security concerns or because they find the user interface daunting.

Banks in Kenya have got around the problem of the limited reach of the internet by offering SMS banking through mobile phones to customers. The model has become so successful that it is now being rolled out across South Asia and other parts of Africa including Gambia where banks face similar challenges about reaching the hitherto inaccessible customers in small towns and villages. The growth in mobile phone coverage and ownership will facilitate the roll out in Gambia.

This is a trend that we will see carrying through in the coming years. Banks will take the best of breed in terms of customer experience in one market and implement it in others.

The quality of mobile phone handsets and the non-standardisation of software and communications protocol are some of the issues which are holding back a more rapid implementation of this technology in banking. Many see the launch of Android, the open software for mobile phones developed by Google Inc., as a breakthrough in standardising mobile phone banking technology.

The Future

The future, especially in the developing world, lies in leveraging the mobile phone and enablers of point-of-sale transactions. More so for the "Right Here, Right Now" generation who want to conduct transactions while commuting on a bus or standing in a queue, confident that their transactions will be secure.

Standard Chartered, for instance, is developing prototypes of new service models and, following regulatory approvals, quickly releasing them in the markets, instead of waiting for years to come up with a fool-proof model before rolling it out to customers.

Following the release of a new model, the Bank aims to constantly upgrade the product based on client feedback which is likely to be instant in the new era.

The challenge will lie in crunching the entire prototype-to-markets cycle to a few months, rather than years, so that customers can use the latest in banking technology and the pioneering bank can make the most of its investments in developing that technology. The duration of the cycle will, of course, depend on the speed of regulatory approvals granted in each market.

Clearly, a lot can be done to push the frontiers in retail banking technology. But the future will lie in providing customers with a fast, easily accessible, reliable, and yet, personalised user experience every time they want to manage their financial affairs.

Although banking technology has advanced, there is an increasing need for financial advisers to help customers shift through innumerable complex choices to make financial decisions. The ultimate goal of a retail banker would be to anticipate the needs of every client by putting himself in his customers' shoes.

It is a tall order but one that will determine the winner in 21st century consumer banking.

Musa Jallow
Head of Consumer Banking
Standard Chartered Bank Gambia Limited