Discussion: What Is the Future Model of Banking?

A recurring theme of our Future Model of Banking series is whether banks should fear, acquire or partner with startups. Personally, I think traditional financial firms should take a cue from startups and deepen partnerships with retailers.

I say this partly because I've never seen more people pay for things with a mobile phone than while I'm waiting in line at Starbucks, which launched a major partnership with Square back in 2012. (Come to think of it, I've never seen anyone pay for anything with their mobile phone anywhere other than Starbucks.) 

And Dave Martin, who hypothesized on the future model of branch networks in this series, made a great point last year when he argued that in-store branches would survive the brick-and-mortar exodus: "Perishable food item purchases are not likely to go the way of books or shoe sales. People won't download bananas or have bread mailed to them. They'll continue to physically frequent these stores."

Slate blogger Matthew Yglesias was also on to something when he argued that Wal-Mart, not banks, would be able to offer a cheaper payday loan to low-income customers, a demographic that financial firms still largely struggle to serve.  

"The solution to this problem, I think, would be for banking services to be performed by a firm that already has low-income clients and would have an interest in increasing its level of engagement with them even if the payday lending operation wasn't profitable per se," he explained.

American Express has successfully (and smartly) widened its customer-base by partnering with Wal-Mart on Bluebird, a prepaid checking account alternative (read: bank competitor).  And forging a similar partnership in the payday business would certainly beat competing broadly with the retail behemoth, should regulators choose, at some point, to grant Wal-Mart a banking charter.

Whether any of these partnerships results in, say, a Bank of Ameri-Bucks (or maybe JPMorgan-Mart) remains to be seen. We'll also have to wait and see if financial firms heed our contributors' call to use big data as an opportunity to rebuild trust and intimacy between banks and their customers.

While there may ultimately be the emergence of a high-tech version of Charles Dickens' venerable Mr. Lorry, there's also a chance banks could take a less paternal tack. Barclays, for instance, told customers just this June that it might soon start selling their information to advertisers and other marketing companies. Banks are clearly at a crossroads here: is data something to be mined and marketed? Or is privacy the next big banking product? (I vote for the latter.)

Now that I and the rest of our contributors have presented ideas on the future model of banking, we invite you to share yours:

What is the future model of banking? What products and services will tomorrow's banks offer that truly add value and that customers will be willing, even happy, to pay for? How will banks deliver/market these services? Think big and broad – five years out at least.

Let us know in the comments section below and we'll include some of the ideas in a slideshow wrapping up the series next week.

Jeanine Skowronski is the deputy editor of BankThink. You can contact her at Jeanine.skowronski@sourcemedia.com or follow her at Twitter @JeanineSko.