future of banking

The Bank of America teams up MIT’s MediaLab to set up a Center for Future Banking. The new center will operate with a $3-5m annual budget for a period of five years and

“… explore new ideas in banking by inventing technologies that reveal and leverage insights across a wide range of physical and social scales, from one-on-one customer interactions to global transactions. Researchers will address such questions as: ‘How can every customer be empowered with the knowledge and tools to take better control of their financial futures?’ ‘How will banking interactions evolve as a customer’s physical and virtual worlds become completely intertwined?’ and ‘How will social networks and mobile platforms transform customers’ banking experiences, making it easier, more convenient, and better integrated with their daily lives?’.”

Prof. Deb Roy, Chair of MIT’s academic program in media arts & sciences who will lead the project, says:

“We will create a focus of intellectual energy that brings together researchers with radically different perspectives, including behavioral economists, social scientists, computer scientists, psychologists, designers, and others who share a passion for invention. It’s a recipe for producing unexpected new ideas that will trigger significant innovations in the world of banking.”

The world of banking is changing drastically, not only from within, but in major ways also under influence of external developments, which pose new challenges for existing players in the field as well as opportunities for new ones. For example, on the ‘cheap end of innovation’, discount banks popping up everywhere are forcing many players to change their businesses and offer added value in new innovative ways. Worldwide, local and networked communities are stepping up to fill gaps left by the business players and open new markets, introduce new (or redress old) models also in the banking sector. While still marginal now, initiatives such as Zopa, a p2p online loan bank, or community bank Umpqua (experience-designed by Ziba), but also initiatives such as the Grameen Foundation‘s microfinancing model (see also a previous post), the Children’s Development Bank by Butterflies in India, investing in kidpreneurs show the changing face of banking and the mechanisms behind it. As customers become pickier and more demanding, technology offers new possibilities and banks realize customer-centred reasoning pas off, many future-oriented initiatives of existing banks are focusing on improving the overall customer experience through better, more human-centred design of their spaces and products. See for example Deutsche Bank’s Q110 bank of the future. They also aim to enhance simplicity, flexibility and customer enjoyment.

Feel free also to check out this (slightly dated) IBM podcast on the future of banking (or read the transcript).

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