Trust has evolved over centuries. For a long time, until the mid-1800s, trust was built around tight-knit relationships. So say you lived in a village with 5 people, and you all knew one another, and say someone wanted to borrow money. One of the 5 people might lend the money to that someone, and if they didn’t pay back, you’d all know that person was dodgy. That person would get a bad reputation, and you would refuse to do business with them in the future. Trust was mostly local and accountability-based.

In the mid-19th century, society went through a tremendous amount of change. People moved to fast-growing cities such as London and San Francisco, and a local banker here was replaced by large corporations that didn’t know us as individuals. We started to place our trust into black box systems of authority, things like legal contracts and regulation and insurance, and less trust directly in other people. Trust became institutional and commission-based.

It’s widely talked about how trust in institutions and corporate brands has been steadily declining and continues to do so. With major breaches of trust: the News Corp phone hacking, the Volkswagen emissions scandal, the widespread abuse in the Catholic Church, the fact that only one measly banker went to jail after the great financial crisis, or more recently the Panama Papers that revealed how the rich can exploit offshore tax regimes.

It would be easy to conclude that institutional trust isn’t working because we are fed up with the sheer audacity of dishonest elites, but what’s happening now runs deeper than the rampant questioning of the size and structure of institutions. We’re starting to realize that institutional trust wasn’t designed for the digital age. Conventions of how trust is built, managed, lost and repaired - in brands, leaders and entire systems - is being turned upside down.

Now, this is exciting, but it’s frightening because it forces many of us to have to rethink how trust is built and destroyed with our customers, with our employees, even our loved ones.

You would be very careful sipping your coffee in an Uber or hanging your towel and keeping your bathroom clean when staying at an Airbnb venue. It is because guests know they will be rated by their hosts and that those ratings are likely to impact their ability to transact in the future. It’s a simple illustration of how online trust will change our behaviours in the real world and make us more accountable in ways we cannot yet even imagine.

Trust is no longer top-down. It’s being unbundled and inverted. It’s no longer opaque and linear. A new recipe for trust is emerging that once again is distributed amongst people and is accountability-based.

And this shift is only going to accelerate with the emergence of the blockchain, the innovative ledger technology underpinning Bitcoin. The real implication of the blockchain is that it removes the need for any kind of third party, such as a lawyer, or a trusted intermediary, or maybe not a government intermediary to facilitate the exchange. We still have to trust the idea, the platform, but we don’t have to trust the other person in the traditional sense.

Today, many of us are comfortable getting into cars driven by strangers. We meet up with someone we swiped right to be matched with. We share our homes with people we do not know.

This is just the beginning, because the real disruption happening isn’t technological. It’s the trust shift it creates, it’s the consumer behaviour which has changed, and for my part, I believe, the future of banking revolves around helping people understand this new era of trust so that banks can get it right and we can embrace the opportunities to redesign systems that are more transparent, inclusive and accountable.

Digital Vs. Bricks and Mortar

The ongoing battle in the industry, which is better? Clicks or bricks?

Why not look at the scenario from a different perspective? What if the digital world and bricks and mortar were not in competition at all, or enemies, or opposing subjects? What if they weren’t competing ideas, but rather individually, enablers and facilitators of an enriched banking experience for the customer – a world where digital and bricks and mortar fuse?

The debate of ‘Digital versus Brick-and-Mortar’ is perhaps over. They are not competing ideas. Digital won’t lead to the death of the brick-and-mortar bank.

In actual fact, digital presents retail bankers with the opportunity to enhance the banking experience, making it more attractive for customers by offering them further options on products, pricing, convenience and personalization. The landscape in Pakistan has changed. 40 million people can access the internet, 72% have mobile phones, 16.6% have smartphones and is expected to rise to 51% by 2020. 8% of the population is connected to social media of which 75% are millennial. There are 139 million subscribers of cellular service in Pakistan. We are a young, tech-savvy nation.

Despite customers adopting mobile and digital banking at a pace we’ve never seen before, the importance of having a branch in a convenient location is as important ever for consumers. Every day, millions of customers walk in to branches, be it for advice, or to transact, banks must give their customers that option, as a need to establish a certain footprint of financial institutions.

There are customer segments who value the experience associated with familiar faces and interacting with people they know. While certain banking products lend themselves to automation, other products such as those pertaining to commercial banking and wealth management perform best with the deeper level of interaction found in branch banking relationships.

Consumers continue to see the value of branches for the “human factor.” Although 24 per cent of consumers say they would consider a branchless bank, nearly 90% of customers believe that they will continue to use their branches, and an increasing number of consumers believe that the branch is the single most important channel.

There are many reasons for the continued necessity of branches, including concerns over internet security, simplicity of use and a lack of knowledge surrounding the capabilities of online and mobile banking. However, the most powerful force that will keep physical branches alive and well for many years to come is the instinctual human desire to meet the people they are entrusting with their money. There is no technological substitute for the trust building that occurs when you can meet with someone face to face and shake his or her hand.

There is no denying that the way people bank has changed over the years both digitally and traditionally. Digital banking has exploded in recent years as consumers are able to bank regarding virtually anything, at the click of a button. However, traditional branches have also embraced the new technological era and branches today act as showrooms integrating the in-branch experience with online banking as consumers view and explore their options before returning home to apply online. The branch plays a part in generating the sale; it’s almost a fundamental catalyst for the transaction which completes online.

We have seen recently a number of prominent bricks and mortar branches struggling to compete with their digital counterparts. Maybe it’s time for a U-turn and for retail to return back to bricks and mortar. Retail bankers should perhaps remove the “versus” in the equation between digital and bricks and mortar and replace it with a “+” to create an omniscient customer experience as the way forward.

Instead of moving away from physical branch locations, the bank of the future must continue to work on enhancing the branch locations’ digital capabilities and on staffing each branch with digital specialists that receive additional training in newer technologies. These digital specialists will help bank branches introduce new capabilities to their customers.

The key to success will be to create a new mission for branches—moving away from simply serving customers—to adding tangible value for customers by educating them through digital tools, assisting them through problem-solving and enabling them to make their own financial decisions with thoughtful and well-timed advice.