Learn all about the key trends, companies, and players in financial services

Business Insider Intelligence: In your own words, what is the Banking vertical? And why launch it now?

Dan Van Dyke: Banking is a new research vertical that covers digital transformation in banking — a big area to cover given that nearly every player in the industry is in the midst of some kind of digital transformation.

Tech companies are trying to be banks. Banks are calling themselves tech companies. Fintechs are trying to be profitable. And all this change is accelerating thanks to consumer demands, technological changes, and regulations like Open Banking. The stakes are sky high: UK banks lost a total of $2 billion in brand value in the past year alone, according to Kantar.

BII: Who’s going to come out on top?

DVD: As far as winners, I’d point to large banks that walk the walk of transformation and seek talent beyond their immediate bank network. By that, I mean the ones making big acquisitions and partnerships, or those building internally with a healthy balance of talent from outside the industry, especially at the leadership level. Bank of America recently hired a former Disney executive to head its digital channels, for example.

I also see a small number of B2C fintechs winning out, but only after a big and long overdue cull. The ones left standing will carve out a niche with certain demographics and find a way to achieve primary bank status among customers. That sort of shift in focus to engagement and profitability is already underway, with Monzo no longer paying out £5 for new customers to sign up, for just one example. A possible recession would accelerate that change.

BII: Who’s going to lose?

DVD: For one, banks whose digital channel investments are minimal. I was recently at a conference full of smaller financial institutions, where the speaker asked what their biggest advantage is. Nearly every one of them said exceptional customer service. They can’t all be exceptional. Across every bank size, channel budgets need to rebalance to reflect where customer interactions are going: online and mobile banking.

From a marketing perspective, legacy banks that swing the pendulum back too far with brand identity refreshes will lose out. Banks have spent decades forging a brand identity in the mold of Jaime Dimon; someone smart, mature, and worthy of trusting with your money. Younger generations have been exposed to that marketing and are going to balk at a big bank that’s trying to market itself as edgy and youth-friendly as some of the entrants.

BII: AI in banking — is it over-hyped or not?

DVD: Conversational banking is somewhat over-hyped in the US, for now, in that providers are more interested in the features than their customers. Over time, as the technology matures, I expect consumer demand to grow alongside utility. I’d also caveat that conversational banking is actually a useful feature in areas with lower data penetration, as text banking can avoid using data, for example. Machine learning isn’t over-hyped — it’s useful for reducing false negatives and positives, for one — but it also isn’t particularly new.

BII: Blockchain?

DVD: Depends on the use case. There’s real utility for remittances, for example. Most cryptos are just bad investments. I’m going to get a lot of emails from saying that, aren’t I?

BII: Probably. Five years from now, how many brick & mortar branches are going to be around?

DVD: Fewer, but it’s not about to fall off of a cliff.

BII: Why?

DVD: There’s a very long tail of complex interactions — with complicated product needs and difficulties with communication — that will be better to serve face-to-face, at least for the near future.