Capitolo 1
Banking's Digital Revolution: How Customer Behavior is Reshaping Finance
Imagine walking into a bank branch in 2030 only to find yourself in a museum-like relic of the past. This isn't science fiction-it's the trajectory Brett King maps out in his groundbreaking book "BANK 2.0." While traditional bankers cling to their marble columns and mahogany desks, King reveals a startling reality: 90% of daily banking transactions now happen electronically, not in branches. This disconnect between how banks operate and how customers actually bank represents what Bill Gates once called banking's "dinosaur moment." Published in 2010 and quickly becoming required reading for financial executives worldwide, King's work earned praise from industry leaders like HSBC's former Head of Marketing Michael Armstrong, who called it "the most comprehensive insight into the challenges facing banks in the digital age." Beyond banking circles, the book's influence has spread to Silicon Valley, where fintech entrepreneurs cite it as inspiration for ventures that have collectively raised billions in funding. As we navigate an increasingly cashless society, King's vision becomes more prophetic by the day.
Capitolo 2
The Customer Behavior Revolution: How Technology Transformed Banking Expectations
The internet and mobile devices have fundamentally altered customer psychology and expectations about banking. Today's customers demand instant gratification and 24/7 access to financial services-a dramatic shift from the deferential banking relationships of previous generations. This transformation follows Maslow's Hierarchy of Needs, where once customers satisfied their basic financial security needs through traditional banking, they now seek self-actualization through complete control over their finances.
This behavioral revolution has unfolded in three distinct phases. The first occurred with the internet's arrival, shifting 90% of transactions from branches to electronic channels within a decade. The second phase emerged with smart devices enabling mobile banking-33% of mobile banking users now monitor accounts daily, and 80% check weekly. The third phase, projected around 2015, involves mobile payments and the convergence of phones with payment cards.
What's remarkable is how rapidly these technologies achieve mass adoption compared to historical innovations. While electricity and telephones required 50 years to reach critical mass, computers and cell phones needed only 12-14 years, and the internet just 7 years. Today's innovations like smartphones and social platforms achieve widespread adoption in mere months. This accelerating rate of technology diffusion creates a critical challenge for banks: if they don't introduce innovations at the same pace customers adopt new technologies, they risk losing business to more agile competitors.
The consequences of this shift are profound. Banks that once controlled the customer relationship now find power has transferred to consumers who demand service on their terms. As Evans and Wurster discussed in "Blown to Bits," intermediaries face business deconstruction if they can't redefine their value proposition through technology. The contrast between Charles Schwab's embrace of online trading and Merrill Lynch's resistance illustrates two organizational responses to technological disruption. While Merrill's vice-chairman dismissed Internet trading as "a serious threat to Americans' financial lives" in 1998, electronic trading now dominates global markets.
This empowerment extends beyond trading to basic banking services, with dramatic improvements in product approval times: credit cards now offer instant approval versus 14 days in 1980, personal loans take 24 hours instead of 7-14 days, and mortgages are approved in 48 hours rather than 30+ days. The fundamental shift is clear: "I'm not here to work for you; you are here to work for me." Customers now demand that banks understand their needs, recognize their financial sophistication, and deliver solutions that meet their specific criteria without unnecessary paperwork or branch visits.
Capitolo 3
Breaking Down Banking's Organizational Barriers
Banks face three critical organizational problems preventing holistic customer experiences. First, channels operate in silos that don't share customer insights. While technical barriers to channel integration have largely been overcome through middleware technologies, the organizational problem persists: channel owners rarely communicate with each other and often compete for budgets and customer mind-share.
Second, organizational structures fundamentally misunderstand customer behavior. Despite 90-95% of daily transactions occurring electronically, most banks still prioritize branches in their hierarchy. The Head of Branch networks typically reports directly to the CEO, while internet channel managers sit three or four levels down under IT or marketing departments. This creates a disconnect where channels handling 90% of transactions have minimal organizational influence.
Banks often justify this by claiming branches "generate all the revenue," but this is misleading accounting. For credit card applications, branches often get credit for sales actually generated through other channels, simply because compliance requires final paperwork to be processed at branches. Senior executives treat branches as "serious banking" while considering other channels merely "alternatives," completely misaligning with how customers actually use banking services.
Third, and most critically, solutions are developed without customer involvement. Banking terminology creates unnecessary barriers for customers. A revealing example shows customers struggling with online international transfers because they couldn't distinguish between "third-party transfers" (domestic) and "telegraphic transfers" (international)-banking jargon that makes perfect sense to insiders but confuses customers.
The solution isn't training customers in banking terminology but using customer-friendly language like "Transfers within Qatar" and "Transfers Overseas." Banks should involve customers early in channel design through human interaction design or usability engineering. Though institutions resist the upfront cost of proper design testing, fixing problems after implementation costs 10-100 times more than addressing them during design.
To build better customer experience, banks must: appoint a customer champion to manage ALL channels, implement analytics to identify failures across touchpoints, involve customers in design processes, create an innovation team with real authority, and understand customers' total relationship with the bank across every channel. While revenue metrics show past achievements, behavioral analytics reveal why customers act as they do and where improvements can be made.
Capitolo 4
Reimagining the Branch for a Digital World
Branch banking must fundamentally evolve to survive in the digital era. The traditional branch model is becoming unsustainable as customer behavior shifts away from in-person transactions. Forward-thinking banks now view internet, branch, ATM, and phone channels collectively as "the bank" rather than treating branches as superior.
Several innovative branch models are thriving in the Bank 2.0 world. Cashless, teller-less branches like those from Rabobank and ING Direct operate as coffee shops where over 90% of transactions happen through internet, phone banking, and ATMs. Banks are creating hybrid branches with automation for transactions while preserving low-counter capability for sales. HSBC's Premier customer initiative uses RFID technology to recognize valuable customers upon entry, allowing staff to prepare before interaction. ABN Amro's Teleportal Multi-Access Bank-shops use videoconference tellers who can simultaneously manage multiple locations while automated devices handle cash transactions.
The successful branch of the future will follow the Starbucks concept: a packaged, self-sustaining business model generating revenue with excellent service metrics, but without the burden of cash transactions. This means letting less costly channels handle routine transactions while branches concentrate on building deep, profitable customer relationships. The branch will be a place customers visit for expert banking advice, not for transactions that can be handled more conveniently through other channels.
Banks can implement several short-term branch improvements that benefit both the organization and customers. Key opportunities include installing cash/cheque deposit machines to reduce counter transactions, deploying meeters/greeters to direct customers to self-service options, implementing customer information systems for behavioral analytics, developing sales intelligence with automated offer capability, creating branch customer dashboards showing relationship footprints and sales opportunities, improving staff training with better KPIs, re-engineering business processes to reduce departmental layering, implementing Straight-Thru Processing for immediate application fulfillment, and launching customer-friendly language initiatives.
As Michael Armstrong reflects from his experience at Citibank Australia: "What matters isn't the physical branch itself but the business proposition, sales approach, and service model. In today's environment, products can be sold and serviced remotely, most transactions occur through non-branch channels, and relationship management can happen anywhere."
Capitolo 5
Transforming Contact Centers into Service Powerhouses
Call centers face fundamental problems in the banking industry despite their 20-year existence. Customer frustrations include having to repeatedly explain problems to different representatives, disconnects between departments, and poor service experiences. Originally designed to reduce customer service costs, call centers evolved to include sales functions. However, aggressive outbound sales tactics led to customer backlash and regulatory restrictions like do-not-call lists.
For effective sales performance, contact centers must focus on better targeting and improved sales conversations. This requires intelligence-driven systems that match the right product to the right customer at the right time, shifting from pure selling to "service-selling." Analytics should identify opportunities in six key categories: previously purchased products, products indicated by transaction history, aspirational upgrades, better alternatives to current solutions, complementary bundled offerings, and time-sensitive future offerings.
Call center staff face intense pressure handling frustrated customers while working in hectic environments focused on quantity and speed. This contributes to high turnover rates-Gartner reports 15% monthly attrition globally, while Sibson & Co. found 31% annual turnover in US centers, reducing earnings by 43% and costing the industry $5.4 billion. Creating a positive service culture requires leadership that demonstrates vision beyond empty phrases like "we are customer-focused."
Most retail banks lack a department-wide customer communication strategy ensuring consistent service across multiple touchpoints. With customers interacting through numerous channels while receiving statements, offers, transaction advice, and alerts, organizations struggle to regulate communications while remaining sensitive to individual customer needs. Email presents particular dangers, as even junior staff with company accounts can create major customer service problems.
Call center effectiveness is hampered by fragmented systems and departmental silos. CSRs face numerous challenges including broken workflows, excessive screen navigation (6-8 different screens per customer issue), limited empowerment, and poor first-call resolution rates. While customers can access consolidated information through internet banking, CSRs struggle with disparate systems. The solution is a single-screen customer dashboard that integrates key components: customer data, contact history across all channels, frequent functions, product applications, account relationships, and sales opportunities.
IVR systems have become obstacles rather than service enhancers, designed primarily for cost efficiency rather than customer satisfaction. Most bank IVR menus reflect organizational structure rather than customer needs, greeting callers with department-based options that confuse rather than help. Despite the complexity of proper IVR design, analytics show 70-80% of bank calls concern just 5-6 key requests: account balances (60%), credit card balances, recent transactions, bill payments, and lost cards.
For near-term contact center improvements, banks should implement staff retention programs including homesourcing options, incorporate email, VoIP and instant messaging directly into contact centers, redesign IVR menus based on traffic analytics, deploy a single-screen customer dashboard, instill pride in contact center roles rather than treating them as "dungeon" positions, and use customer analytics to understand call reasons and anticipate needs.
Capitolo 6
Fixing the Broken Web Banking Experience
Despite becoming essential for banking in developed economies, the Internet channel remains limited because many institutions view it primarily as a cost-saving mechanism rather than a serious sales channel. This perspective persists despite evidence contradicting this assumption.
The three critical drivers for online banking success are convenience, control, and simplicity. Online banking processes must be easier than traditional methods to avoid customer frustration. The most successful online products require minimal staff interaction during execution, offering no advantage to visiting branches for form-filling.
Many banks fail at usability by simply transferring physical processes online without adaptation. For example, one UAE bank's online credit card application asked customers to "attach" physical documents to the form. Similarly, requiring customers to print forms and visit branches defeats the time-saving purpose of online banking.
The first step to improving usability is observing actual customer behavior with existing systems. This approach, pioneered by Xerox in the 1980s as Human-Computer Interaction, helps identify where problems exist in current processes. Usability tests can be informal observations where users interact with interfaces while observers take notes without intervening. When HSBC tested their internet banking portal in 2002, they discovered only 10% of customers could change their email address because the menu item was labeled "Services" instead of the more intuitive "My Details"-a simple change that improved success rates to 100%.
Most bank websites suffer from internal politics about content placement, particularly on the homepage. While management might prioritize financial reports, PR news, and corporate information, over 90% of site visitors are retail customers seeking products and services.
The "value exchange" concept is simple: customers won't use your site unless it provides fundamental value to them. They want solutions that improve their lives, respect their time, and save them money-not content that primarily serves the bank's interests.
Here's a simple but powerful revenue-generating insight: over 90% of visitors to bank websites click on the Internet Banking login button. Yet most banks allocate 95% of their web marketing budget to public websites and third-party campaigns, while treating the secure portal as merely a functional platform managed by IT.
This represents a massive missed opportunity. Banks should redirect at least 90% of their web marketing budget toward building targeted offers for existing customers through the secure Internet banking portal. These customers are easier to convert since their information is already available, eliminating complex acquisition processes.
HSBC Hong Kong's experiment with online insurance sales demonstrates how proper website optimization can create substantial new revenue streams. By analyzing site usage and customer behavior, HSBC discovered visitors trusted the bank implicitly (82% wouldn't compare prices elsewhere) and came specifically to apply, not to read marketing materials.
For just US$10,000 in development costs, HSBC created a simplified five-page structure with instant-approval capabilities and one-page application forms. The results were remarkable: website traffic increased 250% within two months, online applications grew from zero to 78% of all travel insurance applications, while branch applications remained stable at 800 per month-proving this was entirely new revenue. Processing costs dropped from HK$320-364 per application in branches to under HK$85 online, generating monthly cost savings of HK$800,000-2.3 million and new revenue of HK$7 million in peak months.
Capitolo 7
Mobile Banking: The New Frontier of Financial Services
Mobile banking has always promised revolutionary potential, yet despite early hype around WAP (Wireless Access Protocol) in 1999-2000, the technology disappointed due to slow connections, limited handset capabilities, and poor application support.
Since then, mobile technology has undergone remarkable evolution, from basic texting to sophisticated multimedia devices. Today's smartphones integrate digital cameras, music players, video capabilities, email synchronization, and internet connectivity into pocket-sized devices-a convergence that would have required numerous bulky gadgets just 20 years ago.
Mobile banking solutions fall into two categories: content as a service and access to financial platform functionality. These manifest in three key areas: mobile bank (the bank-in-a-pocket concept), mobile payments, and banking for the unbanked.
For the mobile bank concept, account balance inquiries-the most common customer request across all channels-can be easily delivered through mobile apps with 128-bit SSL encryption, the same security used in internet banking. Banks like Chase, BBVA and Westpac already offer this functionality, while third parties like MoBank in the UK have stepped in to aggregate account information from multiple banks and offer retail payment services.
Mobile payments have evolved rapidly since Finland's Sonera pioneered them in 1997, starting with vending machine purchases and expanding to parking meters, WAP payments, and more. The market is growing explosively, with mobile person-to-person payments projected to reach $60 billion globally by 2013, while payments for goods and services could exceed $300 billion.
In South Korea, four million people purchase digital content monthly via mobile billing, generating $1.4 billion in 2008 alone. T-Money, electronic cash stored in SIM cards, enables payments for transportation, convenience stores, and even parent-to-child transfers. Japan has embraced "wallet phones" since 2003, with Edy and Mobile Suica systems processing billions in transactions.
Mobile payments are particularly transformative in developing economies, providing financial services to the unbanked. With 175 million migrant workers sending over $328 billion in remittances annually, mobile-based transfer services like M-PESA in Kenya and G-Cash in Philippines have revolutionized financial access, challenging traditional banking models.
Mobile banking is exceptionally cost-effective, averaging just 8 cents per transaction versus $4 for branch transactions and $3.75 for call centers. This "sticky" service increases customer loyalty and profitability while reducing costs through channel migration.
Global adoption is accelerating rapidly: Japan has over 40 million payment-capable handsets, South Koreans use mobile for real-time banking, South Africa's Absa Group signed up a million mobile users (25% of their customer base) in three years, and Bank of America grew to 3.5 million mobile customers with 300% growth between 2007-2008.
Revenue opportunities include transactional revenue (mobile payments, remittances, virtual cards), acquisition revenue (new products, lead generation), subscription revenue (daily feeds, loyalty offers), and cost savings through reduced branch, ATM and call center usage.
Capitolo 8
The Future of Payments: Beyond Cash and Cards
The future of payments is evolving rapidly beyond traditional banking systems, with emerging technologies creating new paradigms for transactions and cash. Conrad Chase revolutionized VIP identification at his Baja Beach Club by implanting patrons with VeriChip's RFID microchips that function as virtual credit cards. For 2,500 total (1,000 for implantation plus 1,500 credit), members received an 8mm long, 1mm wide glass-encased chip implanted painlessly in minutes.
Biometric technologies are rapidly replacing traditional security measures. Fingerprint-enabled passports and ID cards are already common in the EU, Hong Kong and Dubai, while fingerprint access for laptops and phones is becoming standard. Soon, ATMs will use fingerprint or iris scans instead of PINs, call centers will employ voice recognition or phone-based fingerprint verification, and automated branches might combine RFID with facial recognition.
Virtual currencies are challenging traditional monetary systems, with China's QQ coins nearly threatening the yuan's dominance. Created by Tencent for QQ Messenger's 900 million subscribers, QQ coins became so widely used for online purchases that China's central bank expressed concern about its impact on the yuan. Despite government attempts at capital controls, the coins' value increased 70% due to scarcity.
Mobile peer-to-peer payments are experiencing explosive growth, particularly in remittances. With 191 million migrants sending over $270 billion annually worldwide, telecom operators like Smart and Globe in the Philippines have created SMS-powered micropayment systems (GCASH and Padala) allowing overseas workers to send money directly to family. This $1 trillion industry opportunity was largely missed by traditional banks who deemed migrant workers too low-margin.
In Kenya, while four major banks serve 3.5 million customers combined, M-PESA mobile payments reached 11 million users in just three years. Recently, traditional banks have begun entering this space, with Mercantile Bank of Michigan launching PayPal-integrated mobile payments, and services like CashEdge's POPMoney enabling bank-to-bank transfers using email addresses or phone numbers.
Mobile payment adoption will likely outpace even Internet banking's rapid growth. We're witnessing a fundamental deleveraging of retail payment experiences from traditional banking infrastructure-banks and credit card companies are becoming increasingly unnecessary at point-of-sale. As cloud computing and IP-enabled POS devices allow retailers to accept payments directly from smartphones without Visa, MasterCard or SWIFT networks, control shifts to consumers and retailers.
Capitolo 9
The BANK 2.0 Roadmap: Preparing for Banking's Future
The BANK 2.0 roadmap outlines changes needed in three key areas: Technology and Innovation, Organisational Impact, and Projects Roadmap. These changes will transform platform, channel distribution, customer intelligence, marketing and metrics to prepare banks for the future.
The technology transformation will focus on three core platform changes: implementing Straight-Thru Processing (STP), developing channel-agnostic content capabilities, and creating IP-based service-oriented architecture. STP will automate risk assessment for various financial products, enabling instant approval and streamlined fulfillment. As banking channels move to IP-based platforms, the service-oriented architecture becomes the bank's DNA, with application server technology reducing dependence on legacy systems.
Channel management represents the most significant operational and technical change needed. Banks currently maintain multiple technology silos around customer channels, which is unsustainable in networked economies. New channels like app phones, Skype, and instant messaging present opportunities that banks aren't utilizing. The current complex architecture with multiple independent channel systems must evolve toward an integrated platform where content and services can be delivered consistently across all touchpoints.
Banks must re-engineer their organizational structure around the customer rather than maintaining departmental silos that compete for resources. This means creating consistent service across all channels since customers now evaluate banks on their performance across every touchpoint-"a great branch experience will not save you if your Internet thingy sucks."
Traditional marketing departments remain heavily geared toward "interruption" marketing while digital media continues to grow. Marketing teams lack the skills to leverage social networking and digital technologies effectively, instead retrofitting traditional campaigns onto new media with poor results. In BANK 2.0, television commercials will become obsolete as technology eliminates their effectiveness, and banks will need to target customers with pinpoint accuracy, moving from 0.4% response rates to 20-25% through neural networks and precognitive selling.
In BANK 2.0, branches will simultaneously become both more and less important. Time-poor high net worth individuals and professionals will prefer remotely managed relationships, rarely visiting branches. Customers seeking major transactions like mortgages, new banking relationships, or portfolio optimization will seek specialist advisors, while routine products and transactions will shift entirely to more efficient channels.
The BANK 2.0 transformation requires a carefully structured timeline of initiatives managed by a central innovation programs office to prevent departmental turf wars. Year 1 focuses on building foundational capabilities: Customer Analytics, integrated Contact and Content Management, Real-time Dashboards, Mobile App support, and comprehensive Social Media presence. Year 2 brings Marketing Reform through individualized offers, Straight-Thru Processing for instant approvals, and strategic budget reallocation to prioritize digital channels. Year 3 introduces advanced Payments Technology for mobile and e-wallets, Partner Strategy with distributed applications, and further Marketing Reform. Year 4 delivers Branch Automation to transform physical locations from transaction centers to sales and service hubs. By Year 5, the transformation culminates in Distributed Banking with megastores and mini-branches, Non-Financial Metrics focused on customer profitability, and Predictive Marketing leveraging cloud computing for real-time, location-based offers.
BANK 2.0 confronts inevitable, accelerating, and disruptive change in banking. While some may disagree with predictions about the decline of cheques, credit cards and cash, the evidence shows customers are rapidly changing how they engage with banks. Banks must listen to customers about their channel preferences rather than defending traditional branch networks. The message is clear: customers won't return to old banking methods-they're moving forward at warp speed. BANK 2.0 is now, so "Get moving, or get out of the way!"
