Research into consumer adoption of digital services in the UK has revealed that the banking sector is perceived by consumers to be leading the way. That’s according to new data from YouGov, which has found nearly a quarter (23%) of all UK adults say that the banking industry tops the charts for digital innovation, surpassing industries such as retail (14%) and travel (8%).
These findings are borne out by the latest UK Customer Satisfaction Index, which placed the Banks & Building Societies sector at its highest point in nine years, making it the second most improved sector compared to a year ago.
It’s no coincidence that the last five years have seen banks working hard behind the scenes on shifting dollars to support digital innovation. The infrastructure required to keep a bank running is among the most complex of any industry in the world. Combine this with consumers’ constantly evolving demands and expectations around what is considered to be a good digital experience, and it’s easy to understand why IT spend for banks worldwide increased by 4.5% last year, reaching more than $275 billion.
In an era where banks are migrating to newer, more efficient and capable technologies, it is vital for these organisations to have a clear view of how existing technology usage can be leveraged in the most effective ways. Benchmarking the options and realising these savings is a critical but often overlooked step in this process.
Recently banks have been able to unlock spend and fuel the fantastic uplift in customer satisfaction generated by the availability of new digital services and customer experiences. So in practical terms, how are banks finding the fuel for digital innovation?
Step one: know your spend
Just as sales has CRM and finance has ERP; today’s banking IT leaders are implementing business management systems to manage technology investments, plan for the future and communicate the value of IT to the wider business – especially when it comes to new investments.
Spreadsheets lack the sophistication needed to track, manage and plan for the billions large financial institutions spent on IT annually. So many have adopted Technology Business Management, or TBM. TBM equips IT leaders with a granular view into their comprehensive technology spending so they can make informed decisions about where to best direct resources – whether to keep the lights on or fund innovation. Using TBM, CIOs from companies like Goldman Sachs, RBS, JP Morgan Chase and Jeffries have been able to shift approximately 3-5% of their spending into innovation strategically aligned with the broader goals of their business.
Step two: channel the voice of the customer
Technology has become a driving force of customer engagement, retention and satisfaction. As a result, CIOs have stepped much closer to the customer in part because technology plays such an essential role in fulfilling consumer demand for digital products and services.
In customer-facing organizations like banking and financial services, customers serve as the source of inspiration for much of the innovation taking place in this industry. The shift towards mobile, online and automated banking was the result of customer demand of increased usability and convenience. CIOs must engage with their customers and deeply understand their needs and use cases and leverage this insight as the primary inspiration for future innovation.
Step three: plan for future innovation
IT strategy and planning has typically taken a cyclical approach, with annual workshops setting the roadmap for the 1, 2 and 5-year plan. With almost 3 in 5 consumers now using mobile banking apps, this style of planning isn’t sufficient in a modern bank today. The market is moving faster than the planning cycles banks make provision for, and IT planning must be more agile to support digital innovation.
Equipped with a real-time view of IT investments and infrastructure that TBM provides, IT leaders are building in more agile decision-making to their daily programmes. This improves flexibility and responsiveness – ultimately fuelling innovation.
Digital innovation cannot be a guessing game, and the most innovative banks are getting a close handle on costs to unlock new investments. The importance of crystal clear visibility over technology usage and spend for businesses is paramount as companies across the board increasingly make the move to become fully fledged digital businesses. The finance industry recognises the value in investing in innovative IT solutions, but in order to achieve true value, organisations need to have laser focus on where IT spend will be the most effective and profitable.
Chris Pick, Chief Marketing Officer of Apptio