April 17, 2015/POSTED BY Kai Gehrmann/

At eight o’clock in the morning the world is still in order. The branch manager opens the doors, staff stand at the ready behind counters and in consultation rooms. The good old banking world is (still) in order.

But what happens during lunch, between twelve and one o’clock. And after the branch closes at five o’clock? Or what about Saturdays when banks don’t open at all?

Up until recently banks have retained customers by offering additional services, particularly online banking and brokering. A few transfers made via tablet, a few shares and funds here and there – these are activities with which most bank staff are pleased to see being carried out by the customers themselves. The really important business, however, still takes place in the bank itself. This is because, as it were, adequate advice for complex financial products (and it is these which really generate profits) can only be given by advisors in face-to-face meetings. Only they know the details, only they know the contracts inside out. But they also know the fine details which make the difference between good investments and rip-offs.

Fintechs, or Start-Ups in the area of finance, are well on their way to taking advantage of the loss of trust in personalised advice.

And when the customer has known the local bank branch and its staff for years – what could be more natural than taking the advice of bank staff rather than trawling through the daunting expanse of the internet for suitable products on their own. Minimising risk, the “feel-good” factor, insider knowledge, confidence: it was quite clear even before the Lehman crisis that this idealised and romanticised image of banks had been outdated for a long time. Current financial products are so complex that even bank advisors don’t understand them.

Fintechs, or Start-Ups in the area of finance, are well on their way to taking advantage of the loss of trust in personalised advice. Take for example an app which (1) provides direct contact to customers on mobile devices at all times and on demand; (2) processes inter-bank transactions; and (3) last but not least is an adaptive algorithm that can make recommendations and suggestions for financial products on the basis of account details and user behaviour. And these recommendations are objective. Independent. Any time.

Call funds automatically transferred as soon as a better rate of interest is available. An automatic distribution of accounts, knowledge of all fixed costs, calculation and display of the financial framework on a daily basis. Portfolio analysis, investment recommendations, automated, simplified forward transactions. The potential is immense. We can look forward to what the near future holds for us as regards new digital solutions and if the traditonal banking system will awaken from its slumber (or maybe not).

It remains to be seen whether end consumers are prepared to entrust sensitive personal bank and commercial date to an app, a portal or the cloud. We have known for quite some time that there are no limits to the mass surveillance of data. Up until the now, the direct consequences of this were very abstract and hardly tangible. That could change however with a hacked and cleared out account along with the theft of one’s identity.


photo credits: Yunioshi /