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We've been hearing about relationship-based banking for nearly two decades. Still nothing much has changed on the ground. Meanwhile, financial services hasn't died. On the contrary, it has consistently been the most profitable sector in FORTUNE GLOBAL 500.

Heat from nonbanking players has actually diminished considerably of late. Most fintechs have failed to get a banking license and have pivoted to partnering with banks, rather than acquiring customers on their own. The few that have managed to get a banking license are launching current accounts with a great fanfare. They have no portfolio of products, so they're customer-centric by force.

All this hype about the need for banks to move towards customer-centric banking misses one basic consumer behavior reality: Many customers don't want to buy all their financial products from the same bank. A guy who buys a mortgage fears what will happen to his FDs in the same bank if he fails to make a couple of mortgage payments. Ergo, he consciously places his FDs in another bank, where the mortgage issuer can't touch it. Ditto for credit card and savings / checking account. Banks know this. Which is why they continue with their product-centric approach and it's been working very well for them. Facts simply don't support your claim that "product-centric banking is a thing of the past". It's very much alive and kicking.

Banks in India have recently announced cash transaction charges for cash withdrawal and deposit exceeding a certain number of transactions per month. AFAIK, this is the first time cost of cash has been made explicit anywhere in the world. So far consumers and merchants alike have been shying away from digital payments which come with explicit cost of MDR / fees and have preferred cash which has had no explicit cost. Customers are hotly protesting this move by banks. If banks succeed in their move, customers and merchants will start suffering an explicit cost for cash and will therefore be more open to accepting digital payments. Let's see what happens.

@ChetanGhadge:

+1. You've brought up a very important topic. Reconciliation problems are very real. And not just among handymen. As I highlighted in Enhanced Remittance Data Could Multiply Electronic Fund Transfer Volumes, many payers also prefer cheques (or cash) to avoid RECON challenges.

If only digital payments focused on solving real problems for real customers instead of harping about imaginary costs of cash and cheques, they'll enjoy accelerated adoption.

Not sure which part of my previous comment was not clear but let me try again:

Cheque cost = 0 explicit fee + some implicit fee (if any) 

Digital payment cost = X explicit fee + some implicit fee (if any)

Ergo, digital payment is costlier than cheque.

Amazon USA has been supporting Gift Cards that can be purchased against cash. To that extent, Amazon Cash is an expansion, rather than commencement, of Amazon't targeting of the unbanked.

Free is free. Every customer knows what is free and what is not. It's only the fintech crowd that goes around in circles with the "really not free", "actually costly" mumbo jumbo. As a consumer, I feel a cost when there's an explicit fee. On digital payment, there is. On cheque, there isn't. End of story.

As for all the behind-the-scenes implicit costs, even if they're not a figment of the fintech's imagination, it could be argued that they're applied on both cheque and digital payment. So, they don't matter while comparing two modes of payments. We're back to explicit cost being the only tenable measure of cost. Rest is noise.

I can't talk for customers in general, but, as a customer, I know very well that when I made a cheque payment, my bank does not charge me a single cent whereas when I make a digital payment - real time or otherwise - my bank charges me several cents.

James Furlo is Rental Property Owner/Manager in Oregon. Check out his reasons for taking rent payments in cheques:

https://www.quora.com/Apartment-Rentals-Why-dont-landlords-accept-credit-card-payments

Actually, it's ONLY about the employee experience, no matter how bankers spin the purpose of branches! Because better ability to sell is really the secret of survival of bank branches and employee experience counts far more towards achievement of that objective than customer experience!

How Banks Can Increase In-Branch Sales

Secret Of Survival Of Bank Branches

My tenant is supposed to give me three PDCs in advance ever quarter for my apartment. The next batch of cheques is due by tomorrow. He was traveling abroad for the past two weeks and hadn't carried his cheque book along. He came back home and found the cheque book missing. He then realized he'd kept it in his home town, which is five hours away. The earliest he can hand over the cheques is on 10 April. With so many hassles, we both deliberated an alternative to PDCs. India arguably has the maximum number of digital payment alternatives anywhere in the world - real time A2A, credit cards, debit cards, mobile A2A, mobile wallets, you name it, we have it. And many of us use them for all kinds of payments. However, not one of them can serve as an alternative for PDCs. There are many B2C and B2B use cases that use PDCs for very compelling reasons, which have nothing to do with age or demographics or Internet connectivity or whatever. Let's first create a digital payment alternative for PDCs instead of writing off cheque users as Luddites.