We all know this but it doesn’t make it any less true: banks are under veritable FinTech attack in several areas.  Their most valuable existing and future customers are being actively seduced by other banks (often not their traditional competitors) with a better service, better products and a better customer experience. FinTech organisations are attacking across a broad base, including lending, payments and remittance services, to name a few. So, how do you compete?

A changing landscape

Bank executives know their infrastructures are not yet ready to support a digital banking ecosystem. In the low-interest-rate economy that many global banks are facing, it is crucial for banks to reduce costs in order to maintain profit margins. This means that banks must change their business models in order to improve operational efficiency.

Regulatory pressure, in the wake of the financial crash of 2008, is also increasing. This also links to an increased emphasis on doing the best by the customer, in order to avoid penalties.

Such pressure provides an opportunity for banks to either co-operate with players (for example, by opening up APIs) and offer innovation labs, invest in start-ups or acquire new FinTech capability. 

Out with the old, in with the new

Organisations must be able to recruit brilliant resources and attract experienced subject matter experts well versed in all things digital. They will bring with them intuitive design and the ability to deliver compelling customer experiences driven by efficient business processes that are essential to maximise end user engagement and optimise digital investments.

For example, in this environment continued business success will not happen by continuing to do what you always have done. Significant change is required and this has always been the case, it merely needs to happen faster than in the past pre-technology evolution.

While most banks have already begun transforming their digital journeys, keeping pace with consumer expectations is a challenge.

Customer insight

According to Capgemini and Efma’s 2016 World Retail Banking Report, the number of customers who are prepared to leave their banks is up around 8% since last year. The number of customers unwilling to make referrals rose by over 9% in some regions, and the unlikelihood to purchase a second product increased by as much as 25% in Western Europe. There is a real risk if this trend continues that established banks will see many of their best and most valued customers become disenfranchised by their experience and vote with their feet.

Technology and expertise that can drive change

Banks recognise the need to deliver a unified and seamless customer experience. They are evolving from providing basic account-based services to more enhanced contextual and personalised digital services. These services are enabled with advanced social, mobile, analytics and cloud solutions.

Cloud-based solutions help banks provide 24/7 services, and build portable, scalable, and agile solutions. Advanced analytics enable banks to understand their customers as individuals rather than accounts, and use predictive analytics to service customers based on their lifestyle and preferences.

Innovations in mobile technology and smartphones enable banks to simplify their services on mobile devices, as a convenient channel providing a host of self-servicing facilities to customers. Yet, no amount of social media, mobile services or cloud-based infrastructure will make a difference if banks cannot leverage that technology to innovate and ultimately improve business performance.

The way ahead

It is key for banks to manage their customers and channels in new, innovative ways and empower their people to deliver better value to customers as well as the organisation. Banks can then leverage digital to re-define their existing business processes and the value they deliver.

This digital banking journey starts with a digital readiness assessment. In doing this banks must demonstrate a proven ability to operationalize their digital vision into a fully executable digital transformation that delivers measurable results.

A simple approach to digital banking can be separated into 4 categories:

1. Customer and worker digital place

Portal capabilities can take a variety of different forms (including web information portals and role-based portals) and provide customers with more autonomy in how their accounts are managed. Mobile banking solutions help banks address customers and digital workforce needs, and customers can experience a plethora of account management services and transaction services. For the digital workforce, mobile solutions enable application extensions on devices, automation, collaboration and productivity applications are supported by a “bring your own device” (BYOD) service platform.

2. Customer and enterprise business process digitisation

60% of negative customer experiences emanate from back-offices. Without higher levels of maturity, banks will lack the agility to remain competitive in meeting customer needs. Banks need to build intelligent business processes to be more agile, and deliver faster, as well as achieve substantial cost savings. Banks will need to help to build solutions by leveraging technologies to enable continuous efficiency gains.

3. Customer Relationship Management (CRM)

Typically banks will require assistance to understand, implement, upgrade and maintain innovative CRM solutions that enable FS firms to exceed customer expectations, increase profitability, and improve sales and marketing ROI.

Systems implementation needs to span across areas such as business processes, design and prototyping, process automation and s re-engineering, data cleansing, system integration, and testing. This enables financial services firms to enhance their base application from both a technical and a business perspective.

4. Enterprise Content Management (ECM) & Unified Customer Communications Management (CCM)

Banks need to build smarter, future-ready enterprise content and communication systems enabling them to capture, manage, share and leverage content to gain business insights in real-time and at reduced costs.  This should include the consolidation of ECM systems and implementation of shared service models that result in ~100% uptime.

Whilst banks face a rapid period of change, challenge and, within that, risk, there are undoubtedly great opportunities and prizes on the table for those willing to embrace the challenge and really adapt to meet it. It will be an interesting ride for many banks in the next few years, and only the most prepared will survive the journey.