As I mentioned in my last blog post, the last few years have seen unprecedented levels of scrutiny applied to the banking sector, and banks have found themselves criticised not only for their technical practices but also their ethical conduct.
In response, banking, it is becoming clear, is moving towards becoming a utility – where constant, high-quality function is necessary for the health of individuals and society. Like clean water, banking can have a huge positive impact on the lives of those people.
This is quite a change, in objectives but also in philosophy. And, as with any major change, the first step in any journey is understanding. Not just understanding of a bank’s own internal practices, nor of the clients it has or wants, but increasingly, the ability to understand, read and model patterns in the financial weather. By understanding and processing the bigger financial picture, banks can better predict approaching dangers, and work with governments, institutions and each other to minimise the danger for all stakeholders.
With this more holistic understanding, scarce capital can be more appropriately assigned, while keeping systemic risk to a minimum. There is an increasingly prevalent view that excess capital is being kept out of the money supply unnecessarily – representing a missed opportunity to grow global prosperity.
If a more holistic understanding is the first step that banking can take to change the world for the better, the second step is accessibility.
Today, huge numbers of people still have poor or no access to banking facilities – the so-called unbanked or under-banked.
For these groups, banking is about more than a place to store money safely – although that is important. It affects people’s ability to find work, to pay for services, to save for the future, to transact amongst themselves, and indeed to have an official existence. The audit trails provided by banking also help governments to support wealth distribution, fight tax evasion and other corruption and support their citizens.
With the right technology and approach, banks can drive the cost and complexity barriers that keep people unbanked so close to zero that the cost of adding millions of accounts is negligible, and far outweighed by the prosperity and security generated.
Standard Bank has identified 10 million people in its South African market who have no banking access – they see that as an opportunity. In the old language of banking, these are not high-value potential customers.
But their empowerment through access to banking networks has the power to increase security and prosperity – and make a better society for a bank to operate in. Standard Bank’s example should inspire us, and will inform future projects to bring the benefits of banking to people and societies who need them the most.
What inspires you when you think about the future of banking? How would you like to change the world? Share your thoughts in the comments below.