How banks meet their customers’ needs

Financial development is often misunderstood as a term. To many it means increasing an economy’s sophistication so that it can handle the kind of financial products that are complex and lucrative, but far removed from the life of an average person.

In reality, financial development simply means increasing capacity: of a person to be able to finance his/her life’s ambitions, of a business to thrive and to reach its potential and, ultimately, of an economy to prosper and to grow.

Banks are vital to this process by virtue of the products and services they provide and the way that they sit between borrowers and lending, bridging short-term deposits and long-term borrowing in a “maturity transformation”. But this means that as the world changes and people’s habits change with it, banks have to adapt their products to meet the needs of their customers wherever they are, and however they chose to transact.

Part of the evolving customer demand is driven by technology. For instance, the comparatively recent boom in smartphones has led to customer behaviour in diverse markets to converge, with the tech savvy 20-year-old in Brazil starting to mirror the expectations of a peer group in France or China.

When we look to the future of banking, I believe that it will continue to be driven by the evolving way in which customers choose to interact with banks, and the increasingly international nature of retail customers.

Money is moving ever faster, and the ways we access it keep growing. Whereas just a few years ago, online and phone banking were regarded as innovative, by 2016, more than 500 million people will do the bulk of their banking on their smartphones. While, until recently, it took up to three days to move money from one account to another, the number of same-day payments in the United Kingdom alone has now increased by a quarter in just three months to 145 million.

What’s more, customers are no longer predominantly fixed in one country. This means that they are looking for products that are “borderless” by nature. A credit card that stops working the moment it is taken out of its home country is no use to an international traveller. Likewise, financial products that don’t offer customers exposure to markets outside of their home market run the risk of limiting their investment horizon.

These changes present considerable challenges to banks, not least in terms of technology and security. But it is necessary to overcome them to maintain the ability to cater for customers however they chose to interact with banks by affording them the capacity to grow.

Bank customers are changing, becoming more international, more dynamic and more demanding in the ways they can interact with banks. Financial development and innovation are essential to ensuring that the banking sector can meet customer needs, now and in the future.

Author: Antonio Simoes is the Regional Head of Retail Banking and Wealth Management at HSBC. Antonio joined HSBC in September 2007 as Group Head of Strategy, based in London. He was then appointed as Group Head of Strategy and Planning and Chief of Staff to the Group CEO in October 2009. Antonio holds an MBA with honours from Columbia University and was named as a Young Global Leader by the World Economic Forum in 2009.

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