At the DWS Digital Convention last year, Australian banking futurist, best-selling author and co-founder of mobile banking startup Moven, Brett King spoke about how technology is killing traditional banking and requiring the industry to entirely redefine how the financial services business should work.

As the world is digitizing, seeking low friction and immediacy, banking and financial services are too on the verge of a major shift, a shift that will not just require about inserting technology into banking but rather completely rethink how we approach banking and finance.

Today, most of the financial industry’s major innovations are being led by Chinese tech giants and new fintech startups, King said. Taking the example of Tencent’s WeChat, he said:

“WeChat didn’t try to create a credit card or debit card that you signed up for at a branch and you use a traditional point-of-sale network. They just use a simple QR code. [That’s] first principles thinking around payments. It wasn’t a payment product; it was enabling the utility of a payment experience.”

In China, 98% of mobile payments go through two technology platforms: Ant Financial’s Alipay and Tencent’s WeChat. Last year, that amounted to US$12 trillion worth of mobile transactions. This year, China’s mobile payments transaction traffic is set to surpass all of the card traffic in the world, he said.

One of the major shifts happening in the sector right now is the way consumers think of a basic bank account or value store.

“Already, since the creation of the smartphone, 1.4 billion people have come into the financial services ecosystem without ever visiting a bank branch. […] So the bank account itself in the next decade will be considered an artifact that’s in the cloud or on your phone, not a physical artifact you got from a bank,” King said.

“By 2025, […] more people will use digital access to financial services on a daily basis than will visit all the branches and all the human advisors in the world on an annual basis. So if you want to grow your business in the future, it has to be based on digital onboarding, digital relationships and digital engagement. You cannot scale your business of the future based on humans.”

King predicts that the biggest financial services organization in the world by 2030 will be Ant Financial as a result of being entirely digital and being able to scale rapidly.

“[Ant Financial is] going to be worth twice what ICBC is worth by the end of the next decade, they’re going to have about three billion customers, and they’re going to be doing lending, investment, and all of these things powered by the fact that they have three billion people connected on a super wallet architecture over 100 countries,” King said.

“And they’re well on their way to this already. […] Jack Ma has a very simple principle behind the future of banking. He says that ‘you should be able to send money from one person to another person anywhere in the world immediately, regardless of what bank account you’re with or what artifact you use. It should just happen instantly.’ […] He’s trying to create that architecture and so far, we’ve seen he’s been extremely successful at it.”

To survive this digital transition, King said it is imperative for banks to “start from scratch,” rethink their business, and become cloud-based in order to take advantage of frameworks like digital identity, cryptography and security.

“The only way you’ll survive this transition intact is if you’re prepared to start all over again, rethinking the role of your business in your customers’ lives based on the fact that you’ll always be there embedded in the world around them. That’s first principles thinking of financial services and what I like to call Bank 4.0.”

King explained the need to evolve from iterative thinking, where we take technology and gradually improve on it, to first principles design thinking, where a new piece of technology that comes along is so different from the way it was done before that it requires everyone to reset their thinking and change the way they behave.

With Hong Kong recently granting Ant Financial virtual banking license, Brett King prediction might just come true sooner than we’d think

Featured image: Brett King at the DWS Digital Convention 2018, Berlin, Germany, April 2018.