Future of Banking Sector: “Human-Banking” -Beyond online and mobile banking-

As we may all accept that, the banking sector is getting through a transformation period in the world in the last decade, the future of retail banking shifting its roots from branches to online and mobile banking era.

Let’s go back and have a look at the previous world financial crisis and how the banks reacted:


“You are fired baby”

Banking sector always uses financial crisis as a way of changing itself to survive. But it is interesting to note that, BODs generally used crisis to change the human resource dramatically; they either fired substantial amount of bankers or retired them as a kind of first reaction to the financial disasters.

Think about the 2001 crisis’s effects to Turkish banking sector: The cost of the crisis to the banks was %19.3 of total GDP in that year. The second precaution was call the loans back or not give/limit the loans.

Unfortunately, these quick reactions from banks to massage the financial ratios and “to survive” are not enough to neither develop their company nor the sector.

Before 2008, pre-crisis period the ROE of the banks were around %25. During the crisis period, the ROE significantly reduced to %13-15 level, even for some banks as negative as %3. Do you think that ROE came back to %20 immediately? Unfortunately, the average was around %12-13 in 2012 and it is not more than %15 in 2014.

The bank finds the victim: Employees.


“Need to make money”

Basically, the banks have three different source of income: (1) Interest incomes (2) Non-interest incomes (3) Other income. It is accepted that the interest income line is coming smaller in every year. So, the derivative products are increasing their percentage in the total income statements. The financial institutions are finally taking real actions such as BASEL III. We have an increased capital adequacy ratio in our lives today. Better risk analysis methods and increased enterprise risk management (ERM) models.

So the bank finds the other victim: Customers.


“Vacant position: Disruptive technologies”

It is time to create a new market and value chain to disrupt existing banking model and to displace the earlier technologies.

Accenture 2013 US Retail Banking Survey shows that customers believe that their primary bank providers should invest to online banking (%43), branch (%38) and mobile banking (%20). It is interesting to note that Mobile banking has increased nearly 50% since 2012. Please note that, the the mobile marketing sector is not big enough, so that we will see these kind of boosts in the coming years. But today, the banking system is not strong enough to serve customers?

So the bank finds another victim: System.


Human Banking

Let’s ask the question again: Would the online and mobile banking segment enough to create a better or %25 ROE winner bank in the future? Whether or not, the banks could adapt their institutions to current and new type of multi-platform user clients, could offer them new products in different platforms, it is not enough to be a “human-bank”[i].

It has to be an everyday-bank not only to serve clients, but also take part in their daily life. Human-bank concept is about developing a human-brand. Not acting like a human, not offering something to negotiate, not only talking about financials, not forgetting today and selling retirement plans…

I personally believe that there are great rooms for development of the core banking services, credit services and payment services. The transformation would start from the business model, and then followed by the organization and operational models.

A structural, up-to-date technology and innovation driven strategic models would be the most important factors for the future of banking sector.

The real asset of the financial institutions is not the cash and receivable account. It is the human that is working at the head quarter. It is the human that is visiting your web site or branch. It is the human that is called business model.

If you do not know how to be a human-bank, why don’t you listen to your customers? According to a report of Ernst& Young, your customers pay attention to service quality (%89), product quality (%82) and stability (%76) at most.


  • Be strategic and process oriented while not being so boring
  • Be creative and innovative for everyone in your business circle
  • Find niche ways to touch your customers
  • Work with other companies to enrich your offerings
  • Be an investor to change the future of banking


“Insanity: Doing the same thing over and over again and expecting different results.” – Albert Einstein





Suggested Readings:

. Banking 2020, Accenture

. Top three reasons to think of Accenture in Core Banking, Accenture

. Mobility: Fueling the Digital Surge, Accenture Mobility Insights Report 2014, Accenture

. Case Studies of Effective Use of Technology in Banking, Celent Model Bank 2013

. Successful corporate banking

. Focus on fundamentals, Ernst& Young

. Basel II ve Türk Eximbank Semineri 2013, Risk Yöneticileri Derneği

. Turkey: Making the Productivity and Growth Breakthrough, McKinsey Global Institude

. The Future of Banking, booz&co.

. Let’s make a difference: Managing compliance and operational risk in the new environment



[i] Developed by Cem Sari

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