The finance and banking sector has always evolved in step with economic changes, market transformations and customer expectations. Until now, this adaptation has been consistent and steady. However, the rise of artificial intelligence, combined with changing customer demands, is set to profoundly disrupt the banking industry.
Let’s face it: most banks today offer very similar services and products at similar prices. This homogeneity is certainly due to customer expectations, but above all to an increasingly strict regulatory framework and governance requirements.
The real difference lies — and will continue to lie — in the quality of advice and customer relations. But how can you stand out in a context where all banks have to redouble their efforts? Marketing and advertising have their limits: when overused, customers quickly become saturated. Offering exclusive ‘customer experiences’ may be appealing for a while, but here too, you quickly reach a ceiling, sometimes at the risk of skirting the boundaries of ethics.
Let’s be honest: ‘small customers’ do not always make operations profitable. It is generally the largest assets that ensure the economic balance of banks, particularly for so-called ‘commercial’ institutions.
For private banks or the Ultra High Net Worth segments, the difficulty is of a different order: these customers, by definition, have everything they could possibly want. How can you retain them? You can organise exclusive events, offer themed trips to the four corners of Europe, seduce young heirs with experiences worthy of the best TikTok influencers… but sooner or later, the banker reaches their limits. So what remains?
Finding a lasting solution for a clientele that is often jaded, accustomed to everything and has seen it all, is almost a feat. All that remains is advice and a personalised relationship between the client and their banker. But is this relationship, which can sometimes be close to friendship, really enough to build loyalty? And above all, at what cost?
The fear of losing a client leads some institutions to pamper not only their clients, but also their bankers, sometimes at the risk of going too far. This can encourage disconnected, even contemptuous behaviour towards support teams, who suffer the consequences.
Furthermore, formerly loyal customers are becoming more volatile. They are diversifying their assets, opening private family offices, comparing services and no longer hesitating to change institutions when their expectations are not met.
Is this race forward really sustainable, and above all financially viable, even for the most solid banks? Differentiation remains essential in the strategy of institutions, but when everything hinges on increasingly costly details, the situation eventually becomes untenable. This dynamic is likely to accelerate consolidation in the sector, with the absorption or gradual disappearance of the most fragile players. Didn’t Bill Gates already say, at the end of the 1990s: ‘Banking is essential, banks are not’?
I sincerely sympathise with my colleagues in the sector, while wishing them well in finding the resources to reinvent themselves and continue to stand out successfully.
Enjoy reading and see you soon.