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The internet connects more than half the human race. What began as a tool for an ‘informed public’ has become an everyday support and is often the best way to keep in touch, shop or take care of administrative matters. Families are overwhelmingly going digital and making the internet a household standard. The customer relationship is being revolutionised and organisations are having to reinvent their services and language.

“There is no terror in the bang, only in the anticipation of it” Alfred Hitchcock

A look ahead to the major trends of the upcoming years and their impact on the financial and economic sector. Produced by Lonsdale’s strategic planning division, with the participation of Olivier Nosetti, Head of IT at Banque de Luxembourg.

In the space of thirty years, digital tools have dramatically changed the face of the world. The digital transformation has spread to throughout society and is changing our relationships not just with technology but also with friends and family. Since it emerged in 1969,1 the internet has joined the list of great inventions that have democratised access to information. In addition to global reach, the internet’s power lies in the speed at which it has grown and, more importantly, been adopted. Two years after its birth, when it was still intended for scientific research, the internet had already linked up 23 US universities. In 1977 more than one hundred were connected. In 1991 the technology fell into the public domain and was open to all. In 1994 servers were saturated. With so many new users, the networks were jammed and scientists complained they could no longer work. The internet’s success in such a short period of time surprised its creators, who then lost control of it. Henceforth, the internet belonged to its users, who ‘spread the word’,2 created new protocols for exchanging data and dictated how the internet could be used.

Demand drove supply. The pace of innovation and speed of information had to match the ever-increasing demands of the general public. Accelerated by COVID-19 and the ‘major lockdown’, the digital conquest has spread to every family member as well as to the people they typically interact with. As a result, online (and social media) standards are seeping into general consumption, and all services, including banking, are having to provide offers that are hyper-personalised and hyper-convenient. How will widespread digitisation impact families’ relationships with banks? Are fintech and an all-digital approach really the future of banking? And as virtual services and data processing become ever more common, will tomorrow’s bankers be robots?

The end of the divide

The start of the 21st century was an age of technological mirage. As technological tools were being developed, so a new boundary began to form between social classes, generations and geographical regions. A bipolar world seemed to be giving rise to a ‘homo numericus’ while simultaneously marginalising a portion of the population. Today, though, the digital divide is gone, and we are entering what economist Jeremy Rifkin calls ‘the age of access’.3 Anyone can get a service or a piece of information immediately, simply by requesting it. The democratisation of technologies and the growth of broadband across regions and communities have connected most of the world’s population. In 2020 more than 58% of people over 70 accessed the internet every day, compared to only 30% in 2015. Says Olivier Nosetti, Head of IT at Banque de Luxembourg: “There are fewer and fewer generational differences, and the use of online tools is now a natural reflex among people who until recently were a bit reticent about using them.”

Since lockdown, global internet traffic has increased by 70% and, for the first time in history, the global population and the connected population are indistinguishable. In particular, digital technology has lost its cold, technical image and instead become a vector of sociability. In 2020, the messaging platform WhatsApp tripled its daily chat volume, with more than half its users forming private groups allowing family members, young and old, to keep in touch. The society of physical distance is also one of virtual closeness.

The use of online tools is now a natural reflex among people who until recently were a bit reticent about using them.Olivier Nosetti


Empathetic machines

The pandemic has accelerated the digital transition. By steering digital habits towards the family circle and contributing to the boom in e-commerce, the public health crisis has highlighted the “growing influence of digital technology on our lives”.4 The virtual world is gaining an advantage over the real world, with the virtual seeming more real. Rather than representing a dehumanised relationship with a machine, social media tools are promoting real relationships and replicating family life. In particular, people are increasingly gravitating towards private platforms (instant messaging or Facebook groups), which are micro-channels for genuine, useful conversations. Digital technology allows organisations to get closer to consumers and create personal chat bubbles with individuals.

In the United States, Nike keeps in touch with its customers by creating a WhatsApp group that also allows them to purchase or order an item by text message. Social media and messaging platforms individualise and personalise relationships with customers. With so much data, digital tools are becoming empathetic machines that can anticipate human needs and develop an emotional relationship with every family member. For instance, Alexa, Amazon’s voice assistant, is developing technology that will analyse feelings so it can identify emotions and recognise the user’s mood. And voice technology is already being used by US insurance companies to determine how a customer is feeling (based on their positive or negative intonation) so it can respond in the appropriate tone.

The temptation of the all-digital approach

According to German sociologist Hartmut Rosa, what modern humanity is experiencing is acceleration.5 Speed has become the yardstick against which all facets of the economy are measured. The ongoing mass digitisation of society is an illustration of this acceleration. As Olivier Nosetti explains, “Cycles of disruption and innovation are getting shorter and shorter, as are the regulations that go with them”. Today, 80% of customers use digital channels for most of their transactions,6 and virtual currencies (or cryptocurrencies) are available to the general public.7 This is of concern to the traditional players, who are barely or ill-prepared for the transformation and are dealing with ageing assets. However, it would be risky to suddenly digitise the entire customer journey just to catch up with technology. According to Olivier Nosetti, it’s a losing battle: “Banks must avoid being carried away by belief in technology at all costs. There is so much new technology flooding in that it’s impossible to keep up with it. Rather, they have to introduce digital tools little by little.” Digital technology is being added to the physical world but it is not replacing it.

Thanks to their digital and mobile services, some banks are able to react in real time, facilitate loans remotely and provide personalised advice. The large volume of data generated on a daily basis is not just task automation, but rather a way of ensuring people remain the central priority. Data provides more knowledge and understanding of a customer and gives a holistic view of their journey through life so they can be supported at every stage of it. The digitisation of banks would favour tasks that are complex and intelligent and reduce those that have the least value. Says Olivier Nosetti: “Some banking tasks are going to be replaced for the better, but we’re still quite far from artificial intelligence that can go as far as doing the banker’s more ‘intellectual’ tasks.” The challenge for the finance industry is therefore to recognise which tasks are complementary and to delegate the most operational tasks to software and algorithms so that the banker can focus more on their role as adviser. It’s a major ‘division of tasks’ that addresses users’ need for personal contact: the more digital tools are developed and become part of daily life, the greater the need for real relationships.

In an all-digital world, human contact is special and becomes a refuge. It also guarantees data protection – another sensitive issue when it comes to digitisation. Aware of the value of their data, 8 some users do not trust the internet and even find its use risky.9 As Olivier Nosetti points out: “You can’t place your trust in artificial intelligence. Digital technology is there to support bankers in their tasks and help them stay close to clients but it is not there to replace them.”

Digital technology is there to support bankers in their tasks and help them stay close to clients but it is not there to replace them.” Olivier Nosetti

Based on these core, salient points, we can devise two scenarios just to see how digitisation might continue to transform the banking sector. As in any exercise involving a fictitious scenario, these two proposals combine verified facts and subjective opinions and pit outlook against prediction.

Scenario 1: ‘Tele-society’

In many sectors, the risks associated with the global pandemic were the ‘trigger’ for a totally digitised society. What we glimpsed during lockdown is now becoming widespread and permanent. In this scenario, the internet is organised into micro-communities so that people can communicate with friends and close contacts, based on the group to which they belong. Physical schools empty out but virtual ones fill up on dedicated platforms where teachers control classes via instant messaging on smartphones. From telecommuting to telemedicine, mobile society turns static, with all tasks performed remotely. Homes are ‘digital households’ that offer permanent contact with the outside world so occupants never have to leave.

To manage their accounts and savings, clients can arrange all their transactions by voice using their smart speakers. For more complex transactions and better advice, they can turn to bankers who are available in real time via video in WhatsApp groups or via live videos on Instagram. Now it is just as easy to send a message to a banker as to a family member, and this often forges a relationship of friendship. But trust is key. A permanent bond is created with bankers who facilitate clients’ relationships both within their family and with the outside world.

Scenario 2: Data, money and robots

The digital transformation has transformed mankind. The role of banking adviser has changed considerably and they are now a family member in their own right. Advisers are no longer intermediaries who pop up from time to time to settle financial situations. Thanks to automated services and new communication channels, advisers become stakeholders in their customers’ daily lives. They can help find an apartment, choose the best school for the youngest member of the family or plan a house move. All operational tasks are done by robots and artificial intelligence which work for bankers and support them in their advisory role. For instance, to determine the best possible choice for a mortgage, the bank can generate a real-time report of the best locations to live in as well as changes in urban neighbourhoods.

Robots provide the information and humans decipher it and guide the customer. Robots are frequently the servants who deliver messages from the bank to the home. They gather information on a daily basis, assist customers in a number of day-to-day tasks and transfer all data to the bank, which can process it in real time and adjust financial transactions accordingly. But a fear starts to creep into people’s minds: by entrusting our memory to algorithms, do we not risk losing everything? Financial institutions therefore introduce new professions such as digital archivists and documentalists, who store clients’ data manually, safeguarding it from any online manipulation and keeping it out of sight of the robots.

In both scenarios, digital technology supports the human role of adviser and seeks a balance between the relationship conducted remotely and the relationship of trust. Far from the utopia of autonomous artificial intelligence, this outlook draws a balance between digital tools and human intelligence. It seems that money, an everlasting concern, cannot be trusted entirely to digital technology but requires advice, listening and education to be understood. These are emotional qualities that machines still lack, at least for now.

Key points

The digital divide between generations, geographical regions and social classes is shrinking. Digital practices differ less and less as tools become democratised and broadband gains ground. Digital technology is no longer optional for any sector of the economy.

As they seek closer relationships, users are migrating to micro-platforms where they can chat with brands and make their purchases by text message or voice memo.

Digital technology is being added to the physical world but is not replacing it. On the contrary, the all-digital approach is bringing bankers’ advisory role to the fore. While clients are wary about how their data is used, the main challenge for tomorrow’s banks is building trust through healthy, virtuous and profitable use of digital technology.

A dedicated website has been specially created to mark the Bank’s centenary. The website uncovers 100 years of economic and social history, going back in time and analysing the implications for the future.

1 In 1969, two computers exchanged data for the first time, giving birth to ARPANET, the forerunner of what we know today as the internet.

2 Excerpt from the French radio programme Les Temps Qui Changent on France Culture, 1994.

3 Jeremy Rifkin, The Age of Access: The New Culture of Hypercapitalism, TarcherPerigee, 2001.

4 Alain Finkielkraut, L’esprit Public, France Culture, 2020.

5 Hartmut Rosa, Social Acceleration: A New Theory of Modernity, Columbia University Press, 2013.

6 French Banking Federation, Banque et Innovation, 2019.

7 In 2020, to cope with the recession, a travel company offered customers the option of paying for their purchases with the virtual currency of their choice.

8 Especially since the scandal of the Facebook data breach in which user data was leaked. In 2020, the theft of data from the website of French telehealth provider Doctolib increased suspicion about data security.

9 Baromètre Acsel de la Confiance dans le Numérique, (Acsel Barometer of French Digital Confidence), Harris Interactive, 2020.