Financial institutions sure want to make us think they know what’s in store for the future. Yet even they disagree on some of the fundamentals. You see this firsthand in Davos, Switzerland, this week, where world and business leaders have descended on the small mountain town to discuss what lies ahead for the world. Indeed, Thursday morning, during a panel discussion on the future of banking, we saw precisely these types of diverging visions.
At the event early Thursday morning, Fast Company editor-in-chief Stephanie Mehta sat beside Mastercard vice chairman Ann Cairns, Western Union CEO and president Hikmet Ersek, and PayU CEO Laurent Le Moal. During the hour-long conversation, she brought up the gnarly subject of security and trust. “You need to earn the trust of the consumer,” Le Moal said as a matter of fact.
To do that, he went on, financial companies need to do a variety of tasks. “It’s about promises getting delivered to the consumer,” Le Moal explained. “Money needs to arrive now—it needs to [have] almost zero fees,” he said. “If you deliver these promises everyday, you win the trust of the consumer.” His prognostication was clear: The only way to stay relevant in the financial space was to continually deliver cheap and reliable services to customers.
Not everyone was on board with this sentiment. Ersek, for example, visibly grimaced at Le Moal’s reference to no fees. When asked about whether it was sustainable for financial institutions to remove fees, his answer was blunt: “It’s not.”
“We’re all here to make money,” he went on. “There’s nothing wrong with making money off of consumers.” To the Western Union CEO, most consumers aren’t necessarily looking for zero fees, but simply the peace of mind that they can successfully do a transaction. “The customer in Uganda trusts us to go pick up the money,” he said.
Said Ersek, the issue is about the business model. Right now, companies rely on fees as a way to stay afloat. It’s possible that these organizations can completely uproot their models to make way for reduced fees.
“These things are changing over time,” Ersek admitted. “But at the end of the day, somebody has to pay for the service.”
Davos Dialogues, a series of editorial panels, videos, and news coverage, is produced in partnership with HCL Technologies.