Follow-Up: What Will Tomorrow Bring: Financial Utilities

The FT had more to say this week on the future of banking. Opinionators Patrick Jenkins and Megan Murphy argue in "Banking: Again on the edge" that:

"cuts this time are set to differ from those of previous cyclical downturns. Bankers and regulators agree they may mark a profound change in employment patterns across the world’s banking industry.

The reason is simple enough. At the same time as western economies are teetering on the edge of double-dip recessions, the banking industry itself is caught in the middle of a period of deep structural change – much of it ushered in by the regulatory response to the first wave of the financial crisis three years ago."

Every consultant worth his salt is busy trying to write something prescient on the future business model for banks. GLG Research recently published a report called out the following key parameters, with a focus on retail banking:

1. Peer-to-Peer (P2P) Lending: An advanced technology that eliminates middlemen and directly connects borrowers and lenders.

2. Prepaid General Purpose Reloadable (GPR) cards: In return for modest commissions, a global agency network of convenience stores and retailers are now enabling cards to be “loaded” with cash. When equipped with remote deposit check capture, direct deposit, bill payment and ancillary credit, savings and investment accounts, these cards make traditional bank branching redundant. eWallets such as those touted by ISIS, Google, Visa, Amex, Paypal and FaceCash are the offspring of GPR built on the same infrastructure; similar economics but a different, arguably more convenient, access device.

3. Social Media: Social media like Facebook and LinkedIn can offer insight into customer behavior that can be applied to enhance customer acquisition, retention, and even underwriting (http://www.freepatentsonline.com/20110112957.pdf).