Never has the face of banking changed as much as it has in the past decade. Trust is low, innovation in user interfaces is increasingly driven by consumer technology and security sees experimentation with biometrics and multi-factors for authentication and access.
But the change in the next decade is going to be more fundamental as some of the world’s largest firms focus on this space. Ones such as Google, Apple, FaceBook, Amazon, and AliBaba (dubbed “GAFAA”) are bastions of innovation and have billions of regular users. Even if they shy from full banking licenses, under PSD2 there is a significant aggregator play easily available to improve customer experience.
Even for smaller Challengers with banking licenses such as the UK’s Atom, Tandem and Starling Banks, their agility grants them the capability to launch new offerings. German’s Number26 (now N26) only started in 2013, but since then has reinvented current account services and has operations in over six countries. And with their recently awarded banking license, they are free to integrate new functionality rapidly, such as Transferwise, through the use of open API interfaces. N26 believe that being digital not only enables geographic expansion and new products, but can offer accounts at 10%-20% of the cost of traditional banks.
Do traditional banks stand a chance of surviving the decade?
Since consumers started to challenge bank ethics in the wake of the scandals exposed following the 2008 crisis, the Retail Banks have been at the frontline of attempting to improve customer perceptions. The progress is slow, but for some banks their services have transformed.
At the centre of this transformation has been a range of technological advances. A paradigm shift in retail banking occurred with the proliferation of online banking: the first step in putting the customer experience first.
Whereas rates and charges were once the centre of fierce competition, retail banks now compete based on customer experience and their digital services. Online and mobile banking, cardless ATM withdrawals, contactless card payments and automation in branches are all examples of technology driving the transformation of our banks. But does true technological innovation lie behind the customer-facing apps and machines that are starting to dominate our banking experience?
Putting the Customer at the Heart of Banking
It’s a clear part of the banks’ agendas: put the customer at the centre. Making banking easy and providing customers with the service they want, at the time they want it and in a way they want it is the idea that is driving retail change.
With 46% of consumers now only using digital channels such as smartphones, PCs and tablets to conduct their banking, a new phrase of ‘omni-digital’ banking customers has emerged, and 82% of Millenials, traditional systems built pre-2000 cannot cope.
In some respect, technology is solving problems that the banks never knew they had. People lead busy lives and in a world of choice (combined with highly-targeted marketing), customer loyalty has become fluid and both convenience and experience that have become the focus for increasing loyalty. In the past, you chose a bank and you stuck with it for life – much in the same way people had life-long careers with single employers.
So retail banks have started to deploy front-line technologies which create convenience for their customers. Barclays, for example, have started to use an identity verification technology in their mobile banking apps which allows customers to make a direct call to a contact centre, without the need to go through authentication (the app authenticates on the customer’s behalf).
Such an experience-led innovation is not unique: NatWest recently reintroduced a service where customers can withdraw cash from an ATM without their card. ‘Get Cash’ uses the bank’s mobile app to provide a secure withdrawal. Industry insiders say that cardless ATMs are set to become the norm over the next few years, too.
The rapid rise of omni-digital bank customers has major implications for the way that branches are used and staffed. For those organizations that have differentiated based on personal customer service, there are particular issues in translating this to a digital platform whilst maintaining ‘traditional’ service where demanded by the customer. It is becoming increasingly complex, costly and critical that the right technology supports such challenges. Getting it wrong may be a 10X impact, not a 1.3X impact.
What’s Next to Be Innovated?
We have seen a lot of attention based on ‘front-end’ improvements, and worries about potential GAFAA aggregation plays, but so far way too little by way of ‘fixing the plumbing’.
Despite all of this technology in customer-facing applications, many retails banks appear to be hopelessly devoted to outdated, legacy communications management systems – some are reluctant to change, others do not see the problem, those that do are fearful of the change. Older systems restrict the ‘always-on’ convenience and rapidly responses that customers increasingly demand – the underpinning capability to output customer data through modern communications channels is often the problem.
Banks continue to use financial jargon in their communications despite increasingly strong consumer demands for plain English. Indeed 60% of UK customers (and 73% in Italy) admit to being confused by such language. Now the FCA is applying pressure to Financial organisations of all types to communicate with clarity. This means not only plain English (or other native language of the recipient), but the use of graphics to assist understanding of financial illustrations.
However many UK banks face a major problem; their systems for producing regulated communications at scale cannot adapt easily to such requirements. Many are using legacy systems which require weeks or months of work simply to change a sentence or insert a graphic. Worse still, once such content is updated there is almost no UK bank that has the capability to efficiently distribute such content on an omni-channel basis (i.e. to not only print and email, but also to PDF, Social Media, Web Portals, SMS, etc.).
Allowing customers to receive or access their information across a range of multiple channels will not only provide a much-improved convenience factor for them, but allow banks to reduce costs in contact centres and branches as customer-led access removes a portion of the demand for information that would traditionally require contact centre or branch teams to retrieve, access and share. ‘Modernising the legacy’ is as much about enabling superior engagement methods as it is of controlling cost and compliance.
How can Icon UK help?
For Icon UK, transforming customer communications is our business. We believe in providing secure, simple and convenient access to data, allowing your clients and their customers to stay informed, feel appreciated for their custom and be able to make informed decisions around products and services. Improved loyalty comes as a natural by-product of these ideals, when implemented correctly.
The technology to do all this from just one system is already available and used by some leading Financial organisations in Europe, such as ING DiBa (Europe’s largest Direct Bank), Allianz, Union Investment, KFW Bankengruppe (“world’s safest bank”), Ergo, etc. Take a look at some of our testimonials.
Investments in customer communications can create long-term value across a range of retail banking operations, which is why we believe that it’s time for the banks to look closely at how they can facilitate convenience, starting from the back office and reaching the customer – wherever, whenever, however.
Get in touch with us if you’d like to find out more about our clever customer communications solutions and how they could benefit your bank. Email and a member of our team will be in touch.