The future of banking

There is no doubt that new technological innovations are profoundly changing the way in
which financial services is conducted around the world. Not only has the banking industry been
redefined, but that the expectations of financial customers have been dramatically altered with it. At
present, traditional retails banks are being forced to evolve not only to secure existing sources of
revenues, but also to find potential new ones. Adding even further complexity to the challenges
facing banks is that financial customers, are now taking an ever-increasing control of their personal
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finances. As people move from researching to eventually selecting a product or service, they are
now showing an increased propensity to switch from website to website and from channel to
channel, questioning service providers, reading online reviews, and seeking advice on various
social networks as they go through the process to determine the best deal available to them.
As the larger more established high street and main street banks continue migrating to a
digital banking world, this will ultimately lead to further fragmentation in the financial services
market. As well as the digitalization of financial service being accompanied by a significant shift in
power and influence from existing financial services providers to their customers, as well as to
other parties and intermediaries. When some of these banks start to make changes, they will find
that migrating to this digital world will prove difficult, due to decades-old back office legacy
technology systems. The expenditure required for being able to digitize customer-facing channels
when IT systems require manual interventions, or even extensive add-ons just to be able to
connect everything can be expensive. However, how many retail banks will be able to potentially
achieve the agility, and openness necessary to thrive in this financial service revolution, will be
through equipping themselves with a complete new set of innovative digital solutions which should
include:
updating multichannel customer experience platforms;
ensuring operational processes for the bank have been streamlined with technology;
implementing advanced analytics for CRM, business development & marketing; and
providing applications via platforms such as Apple and Google stores.

All these threats which banks currently face, do come at an inopportune time for them due to
mature markets currently experiencing stagnant growth. This coupled with decreasing profit
margins due to the competitive pricing of new entrants, and with financial customer loyalty
becoming ever increasingly more tenuous. (See Figure 20.)
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 Figure 20. Over 47% of consumers have little or no loyalty to their bank. Source: NGDATA © March 2015. The
Financial Brand.

If traditional retail banks want to remain relevant, within this highly competitive market they
will need to ensure that they nurture the customer experience, by constantly listening to market
demands for convenient, simple-to-use, easy-to-understand banking products and services that
integrate seamlessly into their customers’ lives. Taking this into account, I have outlined several
areas below, which I consider of the utmost importance for retail banks to not only focus on but to
facilitate going forward:
Go beyond banking — Deepen customer relationship by offering solutions that go
beyond banking products, and address all aspects of the important stages of customers’
lives.
Make it easy — Grow customer-centric digital platforms, and enable the banks sales
team to be able to give customers real-time, anytime access to products, services,
support, and advice.

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 Make it personalized — Leverage market and customer insights to build
relationship-based products, and pricing that is delivered seamlessly across all channels.

Keep customers’ interests at heart — whenever possible, because this is not only best
way to build a reciprocal, long-lasting loyal relationship but the only way!
Make trust a top priority — Promote transparency in all bank dealings, and transactions
as well as take proactive steps to protect customers from data, privacy, and
cybersecurity threats.

Despite the amount of varied challenges that retail banks are now facing, they still, however,
possess an inherent competitive advantage in this digital era. This derives from their larger
customer bases, vast amounts of customer and transaction data, and years of built-up valuable
know-how in the fields of payments, security, compliance, and financing. These competencies are
exceptionally difficult to replicate by financial start-up firms because they will act as financial
intermediaries, and banks will continue to have vast experience when it comes to the transactions
carried out between their customers and merchants. This transactional information is one of the
greatest assets of retail banks and will continue so for many more decades. This type of
information will allow retail banks to better understand their customers, provide them with
value-added services, and facilitate financial services in a variety of new ways. Although, as
financial service innovators are increasingly becoming more disruptive to the banking industry,
banks will need to ensure they move much more swiftly than before, and to always keep abreast of
the latest in digital changes.
Those banks that fully embrace these rapid digital changes, and make a concerted effort to
carry on adapting, evolving, and innovating will in the end ensure their continued growth, and
relevance in the banking industry well into the future. Innovative disruptors such as: Apple,
Amazon, and Google have created new worlds of customer experiences that were not even
imagined until they created them. Yet nowadays, their technological advancements are now so
firmly entrenched in peoples’ everyday lives that it’s hard to imagine life without them.
Retail banks and Fintech companies have similar opportunities to surprise, delight,
revolutionize, and ultimately normalize new ways in which to conduct financial services.
Leveraging opportunities enabled by digital technologies will be a critical part of the path forward
for banks; however, their current most pressing need is for them to shift from defending the old
way of banking, to now going on the offensive by producing innovative financial technologies of
their own, ensuring they are back at the forefront of providing disruptive banking solutions of their
very own.

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