Banks Editor's Choice Europe Fintech

The Financial Industry: Evolving Towards A Cash-Free Future

For too long the financial sector has remained loyal to traditions and old habits. While other industries, like retail and medicine, have embraced technology since the early days, the financial sector has been cautious with its adoption of new systems. Ali Niknam, the founder and CEO of Dutch neobank Bunq thinks that recently, this has begun to change.

Ali Niknam, bunq

In his early twenties, Ali founded TransIP, the biggest domain name and web hosting provider of the Netherlands. In 2012 he set out to change the banking industry radically and founded bunq. Now with the emergence of challenger banks, he believes that digital banking experiences are at the core of a new cash-free future. 

The changes taking place have been recently magnified by coronavirus; the outbreak has put the spotlight on digitalisation with social distancing measures across the world discouraging the majority of physical services. For banking, this means cash payments, branch visits and even non-contactless card payments have been disrupted.

While the pandemic may have put a digital evolution on an unexpected fast forward, this has the potential to have a hugely positive impact on the banking industry as well as consumers’ daily lives. If managed correctly, the transformation of the financial industry and cashless communities will allow for more personalised banking, putting users’ needs at the centre of business offerings. 

The acceleration of digitalisation

The world is always changing, as are people’s wants and needs. Running a financial organisation, or any business for that matter requires businesses to be constantly in tune with what people want and need to make their lives better. Coronavirus has emphasised the urgency of having a bank that is driven by the needs of its users – one that is capable of adapting to an ever-changing world. As an entrepreneur, I have always strived to build businesses that have their thumbs on the pulse of our users and give people freedom when it comes to how and where they use the service.

The eruption of technology and AI is a welcome ‘refresh’ button for the financial industry. Many things, like the real-time connection with accountancy software to provide users with an overview of everything that happens in their account, are still missing from traditional services. Challenger banks, on the other hand, have embraced technology as fundamental to success and run away with it, far ahead on the race track. 

Users need to come first in banking  

Everything – and I mean everything – should start with the wants and needs of the user. Digitalisation is a direct bridge between bank and user, creating an opportunity for shared ideas and combined purpose. For a long time, banks haven’t had this opportunity – and may not have wanted it –  but now we must work together to listen to what people want and need. 

For example, in the last ten years, alongside the growth in climate change campaigning there has been a rising demand from consumers for businesses to provide sustainable options. In fact, research from Neilson found that 81% of global respondents felt strongly that companies should help improve the environment. Industries under the most security such as energy and food took a stance to come up with more sustainable and long term solutions a long time ago. However, the financial sector has been much slower off the blocks, despite the part that financial institutions play in climate change. 

Sustainability is just one example; but by taking the time to listen, leaders in the financial industry can now quickly learn what makes their users happy and take on the role of an advocate and leader of what people want. Something to remember when putting users at the heart of banking is that payments are not uniform. How people choose to bank is closely bound with habits and custom and that said, there is no one size fits all, especially when considering banking on a global scale across age groups and various demographics. 

There are many ways the finance industry should be looking to tailor their offering for the people they serve. For example, a unique way a bank can customise its service is by launching in a two-phase process; i.e. speaking with users trialling the service and evaluating their feedback to help shape the product. Only once the service is steadfast should phase two – using promotional tools – be invited to the party.

The future of banking 

With all pointers directed at personalisation and digitalisation – the obvious result is our progression towards a cashless society in the future. Rather than cash payments, I believe people will have multiple bank accounts and over many years, the world will converge to fewer currencies. Recently businesses have been under pressure to opt for cashless transactions – either online payments or contactless payments – to help combat the risks associated with excess exposure. While the basis of this is for safety purposes, there is a huge benefit for business owners going cashless in the long term – as a result, they will be able to keep track of finances in a simple, transparent way.

For consumers, many people have had to adapt – especially the elderly – as a necessity. With digital payments becoming more familiar across all generations, we’ll quickly start to see sections of society, particularly big cities such as London and Amsterdam, become completely cashless.

The fact there are so many Neo banks emerging in the UK is an indication that people are open and up for change. However, if we want to see the financial sector continue to blossom long term, the future lies in really understanding what makes people tick and establishing what makes them happy. Ultimately, banks and users must work together to facilitate the best way forward for moulding the future of the sector. By listening closely, banks can personalise the experience for their users and avoid offering suboptimal services, while both business owners and users will benefit from eventually adopting a fully cashless future. 


  • Gina is a fintech journalist (BA, MA) who works across broadcast and print. She has written for most national newspapers and started her career in BBC local radio.

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