Topaz explained that banking is facing heavy regulatory constraints and the traditional banking system needs to undergo rapid, major changes in order to offer value to customers. The world is changing at a record pace, innovation has become a leading value in itself and is no longer considered an ‘added feature.’ “Anyone who is not innovative and proactive will find himself irrelevant in the very near future,” he said.
Traditional banking, Topaz explained, is divided into two approaches – the Asian banking model, where the consumer is the center of the business, with the understanding that the customer’s need is the purchase of a product or service and the financial component is the infrastructure for making the purchase. The client may be exposed to an app like Ali Baba which provides his needs and services in one place without switching between different websites and platforms, so that the transfer of money does not require further action on the part of the customer.
The second approach – the Western approach – is that the bank is a body with stability in the public consciousness and will remain so in the coming years, with changes in the way it operates. Topaz notes that all banks are heading towards collaborations with third parties. “We see collaborations with different Fintech organizations or platforms that bring value to the customer and, of course to the partners,” Topaz said.
Topaz provided a number of examples of third-party bank collaborations with an outside party that provide an innovative technology experience and significant value to the customer. One example is BBVA Valora, which provides tools to a customer who wants to buy an apartment. The service allows the customer to look for apartments that match predefined data, examines the data about the community, education in the area, and even examines the client’s financial ability to purchase the property.
As for Israel, Topaz declares, “Any area in which we see successful and profitable collaboration is due to the efforts of the regulator. In Israel, the situation is different and the traditional banking system has not yet made changes that will allow its customers to enjoy services that are offered elsewhere in the world.”
What needs to be done so that we Israelis can enjoy the technological advancements in banking services? Topaz says that the banking system needs to be more innovative and flexible. In the past, the main banking competition came from the five largest banking groups in Israel. Today, the picture is completely different. Banks today face Big Tech giants like Google, which is already a significant threat to traditional banking.
Summarizing the future of banking, Topaz says it will become technological and custom-made: “The world is taking huge steps towards a contextual value proposition, such that it depends on the time when it best suits the client and where he needs to receive the offer from the bank.”
Topaz cited the example of a person who goes to purchase a car. Upon entering the dealership, he is identified by face recognition software which incorporates his information with various databases to identify his loan eligibility. While he is speaking with the salesman about the car he wants to purchase, his loan application will already be approved without the need to speak to the bank’s representative. At the conclusion of the purchase, the customer will leave with an approved loan with a minimum amount of effort, and with maximum value.
Added Topaz, “I believe that in the near future we will see Israeli banks collaborate with large entities and together they will offer the customer services as is customary today in the world. In order for this to happen, legislators and bank regulators will need to create a suitable legal environment.”