Digitales Banking

Financial adviser from the App store: How digital will tomorrow’s world of banking be?

Checking your bank account in the app and splitting the check via PayPal after a meal – banking is becoming faster, easier and more digital. And the wave of digitization is constantly rising. ISM graduate Daniel Monteiro is a freelance business analyst and expert for digitization projects in the banking sector – and also hosts workshops at ISM Frankfurt. In the following interview, he explains how digitization is reflected in the financial world and what it all means for careers and end customers.

Portrait Daniel MonteiroDigital solutions are now commonplace when paying checks, transferring money between accounts and choosing policies. Is it making life easier or more complicated for end customers such as myself?

Many things have already become easier without end customers really taking much notice of them. Today, for instance, we can even pay by card in the smallest restaurants and shops thanks to small and affordable card readers from SumUp. We use digital solutions for capital investments, which we can keep an eye on at all times in an app. Insurance policies can also be changed, terminated, compared and re-negotiated quite simply using an app – without a lot of paperwork or costs. Overall, the world of finance is becoming much more customer centric and apps more user friendly, but at the same time less personal. In the future, fewer financial advisers and asset managers will be needed to serve an equal number of clients. On the one hand, as a customer I enjoy simpler and more understandable products, but, on the other hand, the responsibility of selecting a suitable product rests increasingly on my shoulders.

Why is digitization such a big issue in the world of finance?

Especially in this current period of low interest rates and the associated declining margins in the world of finance, companies are increasingly focusing on ways to reduce costs. Digitization promises, among other things, improved and accelerated processes and related lower costs. FinTechs – often founded by former bankers – were the first to question the previously inefficient and unnecessarily costly processes. In many cases this was so successful that a real FinTech hype broke out. The established banks and insurers began to recognize the benefits of digitization and developed their own solutions, purchased FinTechs or collaborated with them. Through the use of apps and similar digital solutions, financial companies are also able to address younger target groups who do not want to have to show up at their local branch or get in touch with a consultant when dealing with their financial affairs.

You’re saying fewer financial advisers and asset managers will be needed for the same number of clients. Assuming I want to pursue this career option – will my job be done by an algorithm in the future?

Not quite. When the FinTech boom began a few years ago and the buzzword ‘disruption’ went through the media, people were still convinced that the new wave of digitization would eliminate many jobs and make banks superfluous. In the meantime, it has become apparent that FinTechs and banks can work well together and that the end customers, above all else, continue to value personal contact with a financial adviser or an asset manager. In the future, we’ll most likely see hybrid solutions in which an algorithm analyzes the client’s data and suggests a suitable product, but a real person still accompanies the process. This will definitely enable financial advisers and asset managers to deliver services to a larger client base.

Perhaps you could look into your crystal ball: What will the world of finance look like in ten years’ time?

In ten years’ time, the new world of finance will have little in common with today’s processes. Banks and insurance companies will increasingly develop into IT service providers that process and transfer large amounts of data through automated means. AI will be the decisive factor of success in this respect. Accordingly, significantly more AI and IT experts will be needed in the future, while the demand for manual data processing and handling will increasingly decline. For me as a customer, dealing with my financial affairs will become easier because, as with all digital products, the focus will be primarily on the user experience and I’ll have a choice of services that are both understandable and easy to use. Digital assistants might let us know if we’ve gone over budget last month or if an increase in our salaries would allow us to invest more money. Spending a whole weekend battling through the paper jungle of insurance products and financial services will definitely be a thing of the past.


Interview: Laura Krause