A future with fewer banks: the rise of boutique banking. Are you ready?

Banking is transforming so fast to something like where it all started: few people in the banking hall. However, in the early 1980s few

Banking is transforming so fast to something like where it all started: few people in the banking hall. However, in the early 1980s few people in the banking hall were driven by the lack of access and affordability of financial services.

Owning a bank account was a preserve of the very few privileged technocrats. Folks who had the means to pay bank charges and save. Banking was done manually with big ledger books. Transaction turnaround time lasted over three hours. Despite the inefficiency, there were always few people in the banking hall.

Today, banking is being driven by convenience and banking value addition.

The Coronavirus pandemic that officially became a global health crisis in March 2020 disrupted banking in ways no one ever thought possible. Digital transformation became fast-tracked. Today, all banks are prioritizing a digital agenda – few branches, more internet and mobile banking.

It makes sense.

Why spend over the US $150,000 to set up a brick and motor bank branch, which is not scalable and has a limited number of catchment clients it can serve when mobile banking could deliver the results cheaply and conveniently. Branches are being transformed into boutique banking outlets offering customized banking solutions that improve the client’s business. The future is boutique banking, with specialised banking solutions and more customer convenient solutions that help add value. A visit to the banking hall will be a transformational experience of a one-stop centre banking solutions including advisory, wealth management, governance insights and customized client empowerment in ways not currently being offered.

At the future branch, you will find fewer customers with specialised needs, just like you would find at the air travel agent. The way a travel itinerary is customized for the client based on their interests, likes and preferences.

We will see few and fewer banks, as the small ones merge or get acquired to leverage to on digital capabilities and clientele base. In Uganda, banks like Stanbic, are going it all alone – transforming into an ecosystem bank – to create a centre of innovation to compete with telecoms and fin-techs head-on. Telecoms are investing in payment systems and dominating the segment. To compete fairly, banks must enter such a space. And that that is where the fin-tech battle is heading.

To be differentiated, though, will require innovative thinking – creating strategic partnerships that enable cost savings and more value to the customers with each partner in the ecosystem or partnership enjoying. With country-wide Internet infrastructure setup being fast-tracked by the government; that an extensive electricity network, the digital battlefield is nay.

The question is: are you ready for it?

Copyright Mustapha B Mugisa, Mr Strategy, 2021. All rights reserved.

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