THE BANKING CHALLENGE. DEATH OF THE BANKING HALL?

Many years ago, technology started getting into the Kenyan’s blood. Computers were the talk of town. Very few people if any had knowledge of how to use a computer. In those days, being in possession of Microsoft excel skills was like owning road rights. The town was yours for others to access. Bit by bit, organizations started the process of automation and the threat of job loss winked at everyone. Computer packages sold off the shelf like never before. A must have skill. Actually that was 15-20 years ago. Fast forward, did people lose jobs? Did job seekers lose employment opportunities for lack of computer skills? Maybe yes. Did the society feel the change? No. why? Because everyone accepted and reacted to the change and those who resisted had a keyboard forced through their nostrils. Where am I driving to with this? Our banks are under a serious automation and cost-cutting threat and only those that respond will survive.

First is the big elephant. The Banking hall. Why do they need it? For customers to open bank accounts, make loan applications, make deposits, money transfer,… name them. The question is, how many of this services can’t you do from your phone or at the automated machines? So why do we need the banking hall. Cost cutting measures are the key issues that our banking sector shall target. My target is thousands of square feet for customers to queue in order to get services that can be automated.

So do they close banking halls just because we have automated services? I don’t think so. Think of how supermarkets operate. Within the big mall is the supermarket as the anchor tenant. The anchor tenant shall collect rent from the rest of the tenants as they enjoy the space and the customers that the supermarket attracts. Point? You end up getting a full under one roof shopping experience, but what do you say as you go home? I am from XYZ supermarket. Can the bank use the same strategy? Yes. The hall can be maintained by the bank as the anchor tenant but with agents giving different financial services with the Bank as the principle. The bank shall use its brand to attract customers but save on rent as the agents chip in to pay rent and also save on salaries that they could have paid the cashiers and tellers not to forget the account opening department. Note; the customer shall not even notice that the service was actually indirect.

Does that mean that the banks do not need most of their staff? Yes. Direct banking jobs shall get thinner with time. Agency banking shall take over for a while. The only area that the banks could have a hard time replacing is their Back-office and the legal departments. Not a big group but very important. If any bank is to survive the era of lower interest rates and stiff competition, then they have to focus on cost cutting measures and my opinion is that the banking hall is about to experience a major re-organization with automation and replacement being the main focus. Generation Z group are joining the customer base very fast. Theirs is all about the mobile phone. Just like computers reorganized the society 15-20 years ago, the industry now faces a serious automation challenge. How these institutions react to these development shall determine their survival or the lack of it.