I attended an interesting webinar this week entitled Digital Banking for Analogue Customers, organised by Professor Michael Mainelli, Chairman of Z/Yen Group, the leading financial think tank in the City of London. The speaker was Duncan Cockburn, founder and CEO of OneBanks which has the slogan – “All banks. One location. All welcome”. He started by asking the audience what we thought was the number of people yet to adopt online banking and had this changed very much post-pandemic. The percentage of the adult population in the UK who were yet to adopt online banking was 30% before the pandemic and was still 30% after the pandemic based on information from the head of a large UK retail bank. The fact is that many people lack the digital skills to go online while others do not trust the Internet. They may not even have access to it, and they prefer to do their business in person. Many still believe that they should be able to call in a branch and get a solution to whatever is their problem.
Duncan believes this is an urgent problem for banks and society in general. It is a problem for banks because they are already challenged to meet their profit targets. Most of the UK’s 6000 bank branches are not economically viable but government and regulators are clamping down on branch closures. In the town where I live, which is prosperous and growing with a largely middle-class population, already four bank branches have closed in recent years including two of the big four. My own bank closed its branch in my local town four years ago and it was only a few months ago that it reopened as a café, as if we needed another café. It is a problem for society because several million people do not have the skills to access digital banking and are in danger of being left behind. They are deprived of essential financial services due to branch closures and both customers and SMEs must travel further to access basic banking services. In other industries solutions are being found where they are moving to subscription and a shared infrastructure economy. They allow customers to conveniently access services in a cost-efficient manner. This leaves companies to focus on their main business, leaving the non-core operations to third parties.
Douglas is proposing a solution with the OneBanks ecosystem that he founded a couple of years ago. He describes this as a bank agnostic solution for all customers in the sense that individuals and SMEs can interact with OneBanks which is then integrated with the retail banks through Open Banking. OneBanks itself is not a bank but a technology platform with multiple channels. It uses mobile applications, self-service, branches and hubs. So, in effect it is a technology platform which seeks to enable financial institutions to maintain or broaden a cost-efficient presence, connecting the digital world with the physical one to ensure no consumer is left behind. The hubs come in three formats and the sites are customised depending on the needs of banks and communities. Solutions range from technology licensing, a self-service device, through to a bank branch equivalent.
The central part of Duncan’s analysis is that access to digital and access to cash issues need to be solved in tandem otherwise one will be solved to the detriment of the other. If for example it is digital that takes priority which seems to be the case in the minds of many, then the minority who cannot or are not willing to use digital will find that their access to cash becomes more and more limited and their ability to operate a normal life becomes severely compromised.
Open banking was introduced to provide customers with more control over who they share data with. Duncan says that this concept of decentralised finance needs to be embraced within the cash space to allow customers to transact however, wherever and whenever they want. In the UK at the cashpoint identity is only established by producing a card. In other countries other forms of identity such as biometrics are used. In such new ways banks can authenticate customers and drive greater customer experience i.e. one that is cardless but not yet cashless. This will support a wide range of transactions in a cost effective and compliant manner. Banks he believes have the unique opportunity to embrace decentralised solutions in order to drive innovation and competition and help their customers access cash but also move in the digital direction.
Douglas updated us on his rollout plans. Firstly, he sought to establish the kiosk proof of concept. These are located in under-banked locations to increase the public brand, test the technology and be involved in the Communities Access to Cash Pilots and this proof of concept is now complete.
Secondly, he is in the process of establishing a paid pilot with banks. Here the aim is to showcase the flexibility and capability of the technology. In one case they have a presence with a major bank in their pop-up branch in a busy city shopping centre and there is another with a building society seeking to provide “last bank in town” services over the counter.
Thirdly, he seeks to expand in the UK by working with partner banks to deploy solutions in the areas where branches are likely to close over the next three years and this is planned over the next 12 months.
Then he seeks to expand horizontally by exploring innovative ways to support their user base and continue to connect the visual world with a digital one to ensure no one gets left behind. Finally, he believes he can roll out the solution internationally as Open Banking gains traction in Europe, having established proof points in the UK market and as branch rationalisation gains traction. He even thinks it’s possible that this solution could be introduced into the United States market where on a per capita basis there are five times as many bank branches than in the UK and it seems inevitable that that must change.
His vision for the future is to unite the physical with the digital. This will enable customers to perform everyday banking, including cash deposits, withdrawals, bill payments and support getting to online banking. There will be free access to cash in local communities with cash and coin recycling services. And he believes they will be able to enable customers to access the banking services without the need for cards or smartphones.
There was a lively Q&A session but in general there was considerable support for Duncan’s approach. I for one welcome this initiative as I have been severely concerned for some time about the disappearance of cash which I think would be of great harm to many sections of the community. it is not just the old who struggle with digital technology nor is it just standard retail consumers and SMEs. Think how much charities depend on cash collection. Yes, it is possible to carry a credit card machine with you while you’re holding out your virtual tin but actually these things are quite expensive to access. Many charities would not think it was worth the investment. Think of churchgoers who pass round the collection plate or whatever in which people can place their notes and coins but that cannot operate electronically. Think of beggars- you may not have any sympathy for them -you may not believe it appropriate to give them your cash, but some people do and clearly the beggar is not going to be able to take money through a credit card transaction. Think of young children and how they are taught what is the value of money. I’ve heard many people say how they see that little children believe that paying by credit card somehow makes it free. Some children have used their parents’ credit card to spend thousand pounds of money on toys and online games.
At least there is one person trying to do something about this serious issue and I hope he is successful and perhaps he will start a new industry.