TDS Desk:

Traditional banks that cling to branches, paperwork and plastic cards face existential threat in the next decade. Within the next 10 years, digital transformation will no longer be optional, it will be about survival, warns Brett King, a global futurist and author of Bank 4.0.

“The two things that are really necessary for survival are technology agility and cultural agility. If you can’t change your mindset to be technology-focused, you’re going to be in trouble.”

THE FIVE ERAS OF BANKING

He breaks down the evolution of banking into four eras so far, each with a distinct trait.

The first (Banking 1.0) relied on branches and signatures; the second introduced ATMs; the third, internet banking; and the fourth, mobile-driven and embedded finance.

The next one, Banking 5.0, will be powered by artificial intelligence, where traditional products such as credit cards, and even the presence of branches will fade. Banks will have to focus on their core utilities, such as storing, moving and accessing money, and deliver those instantly, digitally, and contextually.

“None of the products we know from past banking will remain beyond the next 10 or 15 years in the traditional sense,” said King. “Technology will reshape them into banking experiences.”

THE BIG LEAP FOR BANGLADESH

Bangladesh, with only around 40 percent financial inclusion and low credit card penetration, faces unique challenges. But King sees opportunity.

“Bangladesh doesn’t need to follow the traditional credit card path. It can go straight to contextual digital credit,” he explained.

For instance, a shopper could receive an instant loan offer on their phone while at a grocery store, bypassing the need to visit a branch. “You won’t need to go to a bank to get access to credit; that emergency cash will be available instantly.”

This shift, King emphasised, is already happening across Asia. Mobile financial services like bKash are paving the way.

“Countries like Bangladesh, India, China, and most of the developing world are shifting to wallets instead of traditional financial inclusion through plastic cards. Mobile is much more important as a tool for financial services access than a bank branch.”

Instead of trying to fix what’s broken with the country’s traditional banking methods, King suggests giving Bangladeshis broader access to financial services through mobile and technology.

Globally, the physical branch is already in decline, King notes. His forthcoming book documents how by 2015 the world had reached “peak branch,” with closures accelerating every year since then.

“The Internet didn’t reshape banking too much,” King said. “But mobile created the fintech revolution, leading to non-bank companies providing banking utility. Paytm in India and bKash here in Bangladesh are good examples.”

“The statistics are striking. If you look at the top 20 fintechs globally, they service about 4 billion customers, while the top 20 retail banks service 2.7 billion,” King said.

Today, he pointed out that banking is delivered through the mobile phone much more than it is delivered through the bank branch.

If a customer still needs to see a human to resolve a banking issue, “that’s largely a design problem. Humans are not necessary in banking delivery on Sunday.”

“Your personal AI will help you understand how to spend and save money properly. If you need access to credit, it will find you the cheapest option. If you’re looking at investment strategies, it will optimise them,” said the futurist.

He identified Nubank, the largest fintech bank in Latin America based in Brazil, and WeBank, a private digital-only bank based in China, as the most “operationally efficient banks in today’s world.”

“Their cost of delivery is fractional compared with, say, US banks.”

PRESENT, FUTURE CHALLENGES

In Bangladesh, where millions remain outside the banking system, lower delivery costs are not just attractive. They are essential for financial inclusion.

While supporting this vision, Biswas Dhakal, CEO of a UAE-based fintech firm Filps, who was also present at the interview, pointed out the grassroots challenges that countries like Bangladesh face.

“If we really want to grow the economy, the micro-SMEs need to be well-equipped with access to capital,” he said.

“But today, if I am running a small tea shop or grocery shop, I need to pay a premium interest rate compared to big enterprises. There is no justification for this.”

Dhakal notes that AI-driven partnerships between banks and platforms that are already embedded in people’s daily lives, like Pathao, Daraz, or Pikaboo, could transform access.

For instance, he said, “When I take my bike early in the morning as a Pathao driver, I don’t have Tk 2,000 to fuel my tank. How can AI in the bank and financial services help my life? That’s the real question.”

The answer, he said, lies in building an AI-enabled marketplace where multiple banks compete to serve micro-customers at the best possible rates.

“If I have a monopoly, I’ll just give you a loan at 18 percent, and the bank benefits. But if we democratise, with intelligence, these are the practical uses of grassroots-level AI.”

King agreed, further noting that use of AI will reduce human involvement to zero. “That means the cost of serving one individual customer will be zero. Lower costs mean banks can finally make profits even when serving the unbanked and underbanked.”

Apart from technology, existential challenges like climate change will also bring forth many changes, King predicted.

Rising floods, soil salinity, and other environmental risks threaten agriculture, housing, and small businesses. Banks must prioritise affordable loans for climate-resilient infrastructure to protect livelihoods.

Warning that by 2050, Bangladesh will see a 15 percent loss in food production due to salinity in the soil and perennial flooding, he said, “Banks must have a core focus on providing very affordable loans for this sort of next-generation climate-resilient infrastructure.”

THE ROAD TO FOLLOW

King argues that adaptation of technology will decide the next generation of leaders in banking in the next 10 years.

The tools to revolutionise banking already exist, and Bangladesh, with its mobile-first culture, can leapfrog directly into the AI era, if the mindset is right.

“If you’re asking which bank to copy, don’t look at HSBC or Deutsche Bank,” King said. “Look at Alipay, WeBank, bKash, or Paytm. Because these are technology companies that deliver banking, and that is the framework for success in the future. Banks will have to become technology companies to survive.”

He also went on to note that the top 50 fastest-growing banks in the world are all technology companies or wallet ecosystems without a single traditional bank on the list.

“The lesson is very clear: by 2035, all the biggest banks in the world will be technology companies.”