Bank 4.0

Winner of best book by a foreign author (2019) at the Business Book of the Year Award organised by PwC Russia The future of banking is already here — are you ready? Bank 4.0 explores the radical transformation already taking place in banking, and follows it to its logical conclusion. What will banking look like in 30 years? 50 years? The world’s best banks have been forced to adapt to changing consumer behaviors; regulators are rethinking friction, licensing and regulation; Fintech start-ups and tech giants are redefining how banking fits in the daily life of consumers. To survive, banks are having to develop new capabilities, new jobs and new skills. The future of banking is not just about new thinking around value stores, payment and credit utility — it's embedded in voice-based smart assistants like Alexa and Siri and soon smart glasses which will guide you on daily spending and money decisions. The coming Bank 4.0 era is one where either your bank is embedded in your world via tech, or it no longer exists. In this final volume in Brett King's BANK series, we explore the future of banks amidst the evolution of technology and discover a revolution already at work. From re-engineered banking systems, to selfie-pay and self-driving cars, Bank 4.0 proves that we're not on Wall Street anymore. Bank 4.0 will help you: Understand the historical precedents that flag a fundamental rethinking in banking Discover low-friction, technology experiences that undermine the products we sell today Think through the evolution of identity, value and assets as cash and cards become obsolete Learn how Fintech and tech "disruptors" are using behaviour, psychology and technology to reshape the economics of banking Examine the ways in which blockchain, A.I., augmented reality and other leading-edge tech are the real building blocks of the future of banking systems If you look at individual technologies or startups disrupting the space, you might miss the biggest signposts to the future and you might also miss that most of we've learned about banking the last 700 years just isn't useful. When the biggest bank in the world isn't any of the names you'd expect, when branch networks are a burden not an asset, and when advice is the domain of Artificial Intelligence, we may very well have to start from scratch. Bank 4.0 takes you to a world where banking will be instant, smart and ubiquitous, and where you'll have to adapt faster than ever before just to survive. Welcome to the future.

Preface 13 Acknowledgements 16 PART ONE: Bank 2050 Chapter 1: Getting Back to First Principles 20 First principles design thinking 23 Applying first principles to banking 27 A bank that is always with you 32 Is it too late for the banks? 39 Feature: Ant Financial—The First Financial Firm for the Digital Age by Chris Skinner 44 The Alibaba stories 46 Ant Financial: Building a better China 58 Chapter 2: The Regulator’s Dilemma by Brett King and Jo Ann Barefoot 64 The risk of regulation that inhibits innovation 66 A flawed approach to fi nancial crime and KYC 72 The future form and function of regulation 82 Elements of reform 86 Feature: How Technology Reframes Identity by David Birch 93 PART TWO: Banking reimagined for a real-time world Chapter 3: Embedded Banking 102 Friction isn’t valuable in the new world 104 New experiences don’t start in the branch 106 Advice, when and where you need it 109 Mixed reality and its impact on banking 114 Feature: Contextual Engagement and Money Moments by Duena Blomstrom 118 Are banking chatbots the future? 118 Chapter 4: From Products and Channels to Experiences 124 The new “network” and “distribution” paradigms 124 Bye-bye products, hello experiences 131 The Bank 4.0 organisation chart looks very different 140 Onboarding and relationship selling in the new world 151 Feature: Future Vision: Your Personal Voice-Based AI Banker by Brian Roemmele 156 Chapter 5: DLT, Blockchain, Alt-Currencies and Distributed Ecosystems 160 Emerging digital currencies 161 Bitcoin and cryptocurrencies on a surge 166 The structural implications of DLT 176 PART THREE: Why FinTech companies are proving banks aren’t necessary Chapter 6: FinTech and TechFin: Friend or Foe? 185 “For me? Two servers” 189 Where the new players are dominating 191 Partner, acquire or mimic? 199 Killing FinTech partnerships—the barriers to cooperation 204 If you can’t beat them, join them 209 Feature: Why Banks Should Care About FinTech by Spiros Margaris 212 Feature: The Speed Advantage by Michael Jordan 214 Chapter 7: The Role of AI in Banking 219 Deep learning: How computers mimic the human brain 225 Robo-advisors, robo-everything 230 A bank account that is smarter than your bank 233 Where automation will strike first 242 Redefining the role of humans in banking 245 Chapter 8: The Universal Experience 252 The expectations of the post-millennial consumer 253 The new brokers and intermediaries 261 Ubiquitous banking 267 Feature: Going Beyond Digital Banking by Jim Marous 269 Going beyond digital banking basics 270 Amazon model provides a guide for banking 271 Feature: Digitise to Lead: Transforming Emirates NBD by Suvo Sarkar 278 PART FOUR: Which banks survive, which don’t Chapter 9: Adapt or Die 286 Key survival techniques 295 Survival starts at the top 306 Chapter 10: Conclusion: The Roadmap to Bank 4.0 311 Technology first, banking second 315 Experience not products 323 The Bank 4.0 roadmap 333 Conclusion 333 Glossary 337 About Brett King 344