How banks need to adapt to survive
The banking world is under significant pressure due to global markets slowing down and the cost burdens of regulation and restructuring. Technology has for some time been the centre piece of delivering products and services to customers. However, many of these systems are aging and fragile, driving the need to make critical decisions about if and how to implement new technologies. One of the most common themes surrounding these innovations is the need to offer an omni-channel approach to customers.
The modern customer is brand agnostic and their principal loyalty is to convenience and accessibility above all else. This is evident when you consider research from J.P. Morgan Chase Bank, which found that 2015 witnessed a 33 per cent increase in the number of people using mobile banking apps, with 35 per cent more using online websites or portals.
This situation becomes even more pronounced when you look specifically at the millennial generation, with 67 per cent of that key demographic having used a banking app. This generation of Digital Natives expects to have a seamless personal experience — whether through mobile banking as we know it today, or through a more social form of banking that will emerge in the future.
Social banking will provide a much more interactive experience, which can be accessed through a television, tablet or mobile device. It provides a clear dashboard to the user, allowing them to visibly see different sections of their account, perform fund transfers and other functions, and easily set folders up to save money for specific goals.
It is important to remember that this type of service benefits the bank not just by providing improved customer service, but also allows them to have greater accessibility and insight into their data, enabling a deeper understanding of their operations and business performance. On the consumer side, well-implemented social banking will fulfil the stringent demands of the anywhere, anytime, any device generation.
These and other innovations are leading to the capability to have one-click loan processing, which is advantageous from both a business and customer perspective. Businesses can capitalise on the peak of impulse with such a fast transaction, and consumers have faster, more convenient access to funds as soon as they require them.
Banks are the enabler that allows people all over the world to purchase their first home or get the funds to start up their business. With both of these important services undergoing major digital transformations, it is crucial that the banks keep up with the advancements in accessibility embodied in areas such as mobile payments solutions like ApplePay.
Yet, it is important to consider how these innovations can be incorporated while maintaining the business critical systems that ensure that clients are adequately provided for. As much attention as new technologies such as mobile banking draw, more often than not it is inadequate back-end systems that prevent banks from moving forward.
Traditional banks need to address the back-end services to create an underlying infrastructure that is flexible and modern enough to enable digital transformations to take place.
For instance, we offer a service that addresses this issue by connecting next-generation payment methods such as mobile, NFC/BLE and others, directly to the critical back-office systems that enable them to actually function. The key goal is to create a fully automated end-to-end operational model that runs smoothly across all of the bank’s business areas. Without this type of integration, you are simply adding to the issue of having front and back ends that do not interact coherently.
These types of initiatives enable banks to resist losing market share to smaller digital competitors with the ability to move quicker and take away the initiative — as has occurred in the mobile payments industry.
Banks should look seriously at automating legacy systems to enable better interoperability and free up resources to embrace the latest digital advancements. The goal is not simply to catch up with competitors, but to eventually take over and lead the way by striking the right balance between convenience and ease-of-access. This is the human interaction that the millennial generation expects.
Although banking will increasingly become more digitised, it is important to remember the significance of the human touch, particularly when customers are managing their finances. Digital innovations should be used as strategic lever to better utilise a bank’s human capital and build deeper connections with customers. Banking is and will always remain a human relationship business, and confidence in the people managing your finances is a key component of customer satisfaction.
About the Author:
Nitin Rakesh is CEO and President of Syntel, a leading provider of digital modernization, IT and knowledge process services. He has more than 20 years of experience delivering innovation and growth to financial markets and the outsourcing business. His core philosophy is to drive business growth by developing bold new business models and challenging the status quo with new thinking.