While it has never been easy to predict the future, I can’t help but recall a 1971 Fleetwood Mac song lyric that says “You invent the future that you want to face”. It is as simple as it is comprehensive; a truth that applies in all fields, ideologies, arts, businesses, sciences, and so on.
The future, by all means, has always been changing depending on people’s wants and needs. Generations after generations are born, the times change, fashion changes, policies and dreams metamorphose; the mechanism, nonetheless, stays the same: the future molds on the ever-changing needs of the people. Hence, one of the most recurrent necessities of the past century has been that of speed and overcoming limits. From taking mankind into space and the invention of the World Wide Web, to eBooks, smartphones, mp3s (remember when music was solely recorded on vinyl?) – all have been a consequence of people’s need for speed, efficiency, quantity and quality delivered in the same state-of-the-art package.
The banking industry has not been an exception to this global phenomena and has been rapidly developing from one decade to the other. Take the founding of the first ATMs, for example, in the late 1950s; at the time, they revolutionized the concept of fast usage of personal finance. Nowadays, virtual and digital currencies have created an alternate reality where the economy and the basic concepts of business take on new dimensions. Cashless transactions are increasing one year after the other. Currently, card operations account for about 15% of global consumer transactions. The percentage nonetheless has increased by 45% in just 5 years, from 2009 to 2014, and the next 10-20 years will most likely see a continuous rise.
And even though Southeastern Europe is not as prone to becoming cashless as the Baltic countries are, the number of cards in the Romanian market increased by 6.6% in the first semester of this year, as compared to the same period last year, while the number of POSs rose by 9.7%. Garanti Bank is the 10th institution in the Romanian system and our card issuance increased by 11% between January and June this year, as compared to the first six months of 2015.
In our experience, the number of cards and the volumes of card transactions have been growing steadily. Since 2012, the number of cards issued by Garanti Bank has grown. If in 2012 we had a portfolio consisting in 224,572 debit and credit cards, the number grew to 226,392 in 2013, 236,883 in 2014, and 258,725 in 2015. Moreover, the volume of card transactions has had an exponential growth – RON 1.64 billion (2012), RON 1.9 billion (2013), RON 2.17 billion (2014), RON 2.5 billion (2015). As such, it is an ongoing process and the only way from here is upwards.
Altogether, I have frequently been asked if this rise in technology, corroborated with clients’ need for speed, will ultimately lead not just to a cashless society, but a branchless banking system as well. Surely, financial institutions will put more focus on developing digital products – Garanti, for example, has been working on its mobile app, which already is available for iOS, and we are currently developing the Android version. The latest technology will keep on being incorporated in the banking industry. Clients will become more independent when it comes to managing their basic financial needs and banking accounts.
All of the above will not be the end of branches, nonetheless. Change will bring a makeover in the system and will allow banks to take on a more complex role, which will ultimately benefit all clients. I believe physical branches will continue to exist, but will have a deeper role as far as consultancy is concerned, personal financial advice and analysis, which clients will receive based on their own record and credit history.
The next couple of decades will be interesting to watch unfold, as Generation Z, the generational cohort following the Millennials, will graduate school, enter the workforce, begin to access loans and reshape once more the idea of speed. For us, as a financial institution, it already is a challenge to be a financial educator for these young people, as they were born in a digital era and generally have little patience. They will build the future that they want to face and we are ready to be by their side as counselors and partners.
 Capgemini 2015
Ufuk Tandogan, CEO Garanti Bank Romania