Full Frontal Banking

The future of consumer banking is all about intimacy. Forget the genial, ask-about-the-kids familiarity. This will be a level of closeness previously reserved for medical probes. It will be a vastly different kind of relationship, and we'll love it, once we get over feeling stark naked.

Banking is naturally an intimate activity. Financial institutions play a part in most major life events: college, marriage, buying a home, raising children, divorce, financing a business, retirement, illness or death. Customers are often full of emotion, feeling anxious or vulnerable as they approach their financial providers.

It's no wonder trust is so important to banking. In fact, research by BAV Consulting shows trust is actually more important to banks than other nonfinancial brands. The same research found that the key driver of consumer trust in the financial sector is not honesty or fairness, but helpfulness. Customers want a bank that is trying to look out for their interests.  

Over the next decade, banking is going to get even more intimate, and helpfulness even more vital to success. This deeper level of intimacy will come from three factors, all born out of technological advancements.

First is location. In ten years, nearly all banking will be done in your home or with a mobile device, in the places comfortable to you, not on display in the picture windows of a sterile retail branch. Banking will occupy your spaces and develop an everyday closeness as it fits seamlessly into your life.

The second factor is data. Soon, your bank will know you better than you know yourself. Vast amounts of information about our spending habits and financial behavior are already being collected. Combined with demographic details, thoughtful analysis will tell a great deal about an individual's patterns, risk tolerances, even upcoming financial goals – then offer the services he or she actually needs or wants. It will feel like a multi-faceted version of Amazon's "you might also like" function.   

And unlike the rigid and blunt FICO score, big data can create a precision instrument for banks that is a far better predictor of credit risk. (Yes, there are discrimination concerns around fair lending, but in my future world, this has been addressed carefully by regulators.)

The last factor is personalized service. As technology makes retail banking cheaper, and big data makes it more insightful, banks will be able to provide mass customization of services. With just the tweak of an algorithm, an offering gets tailored to a customer's specific patterns and profile. I won't have to troll other bank websites to find a credit card with the right constellation of features and terms, because my bank will know how to create a custom card that suits my exact needs.

Future banking will feel more like a medical relationship – integrated into everyday life, understanding and serving you with the intimacy and attention of the family doctor.

This full frontal banking will be better for everyone – consumers get a more useful experience, improving their financial health and opportunities. Banks get a better tool to gauge credit risk, plus the ability to spot troubling patterns and try to help consumers before delinquencies even arise. Banks will also launch more effective, targeted sales pitches with better success rates. Ultimately, they will have deeper and more stable consumer relationships, which are also more profitable.

But this powerful type of relationship only works with a Hippocratic-oath level of trust. (Imagine a bank using this new personal data to find the most effective ways to bilk you?)

Since trust is driven by helpfulness, new technology is really only a conduit – the special sauce here is intent. Are you trying to improve my long-term financial life?

Any bank can talk a big game about customer-centricity, but the business models have to back it up. So far, the new players – e.g., Simple, Moven, GoBank – seem best at embracing this kind of helpful relationship in all aspects of their organizations. (Moven even has its own oath.)

Future consumers will get over the creepy sensation of being this exposed and revel in the ease of banking and their newfound financial health. Future bankers will accept that success in the land of intimacy requires a genuine, long-term commitment to the well-being of every consumer.

The only question is whether today's established players will be the bankers of the future.

Susan Ochs is a former Treasury Department advisor and a senior fellow at the Aspen Institute, where she founded The Better Banking Project.