Capital is expensive, compliance is exacting, competition is intense and customer dynamics have changed – that, in brief, is the ‘New Normal’ in banking. As the pressure on margins and profitability mounts, banks will have to review and streamline existing operating structures to increase efficiency and productivity. Most importantly, being customer-centric is now more compulsion than choice in the new order of things.
But there’s been a radical shift in customer needs, preferences and behavior. Customers don’t bank the way they used to. Virtual banking, be it online or mobile, is the channel of choice. Social media has significantly altered their information search and consumption patterns. Banks are also being challenged by rank outsiders with business models built around contemporary technologies and customer attitudes. There are financial intermediaries offering disaggregated banking services and personal financial management applications. Virtual-only banks targeted at the digital natives have become a significant niche. And technology powerhouses are muscling into the payments space with cutting edge m-commerce and mobile wallet solutions.
To compete effectively, banks need to reinvent their operating and business models and the cloud can play a transformational role in helping adapt to the new conditions. The cost, flexibility and scalability of the cloud model can enable them to reconfigure banking operations around changing customer dynamics. This will mean faster development and seamless delivery of omni-channel products and services that conform to the expectations of the new demanding customer.
The cloud is already revolutionizing the customer engagement model in banking. A smartphone app from Spanish bank BBVA allows customers to transfer money to anyone by enabling withdrawal using a secret code sent via SMS. Commonwealth Bank of Australia has a mobile property guide app combining mobile augmented reality with real-time property information to help buyers. DenizBank customers in Turkey can now use its Facebook branch to manage accounts, transfer funds and apply for new products.
But the biggest impetus to customer-centricity will come from cloud-enabled big data analytics. The ability to parse huge volumes of structured and unstructured customer data, in real-time, can help banks personalize and pitch offerings even at the level of individual customers if required.
Operational excellence, innovation and an acute customer focus will be central to the banking sector’s ability to thrive in the ‘New Normal’. And the cloud has the potential to be a key enabler of all three.
Month: July 2013
What Banking IT Solution Vendors Can Learn From Peer Industries
The banking IT solution provider can definitely learn a lesson or two from the trends that are emerging from peer industries. An evaluation of the interesting developments in some of these industries, though unrelated, is food for thought and a source of innovative ideas.
Manufacturing (Prototyping, Product Customization) – Bouncing back from the slumber induced by the Great Recession, manufacturing companies are gearing up to reinforce their market share with new approaches. One such is the packaging and positioning of offerings as “solutions” and not “products” to map end customer requirements. Automotive companies have mastered the art of rapid prototyping and are able to efficiently conceptualize and design prototypes meeting specific customer requirements.
Pharmaceuticals (Collaboration) – The biggest lesson from the pharmaceuticals industry is the one on collaboration. Industry heavyweights cement the partner ecosystem by collaborating with health insurers or health care providers to promote their products. In a concerted effort to facilitate connectivity with doctors and (smart) patients anytime and anywhere, pharma companies are promoting apps, kiosks, online tools etc.
Hospitality (User Experience) – Personalization of the customer experience with amenities a-la-carte, face-lift of the hotel ambience with robots at the reception, capitalization of social media and leveraging the potential of different channels to create unified interaction, are some of the developments shifting the industry’s outlook.
Advertising (Communication) – The advertising world is undergoing a paradigm shift as it wriggles out of the clutches of traditional media to communicate with target customers through new, innovative interactions. Advertisers are continuously reviewing the positioning of their solutions to ensure that they are perceived correctly by customers.
The dynamics in each of the industries mentioned above are fast changing. The trends visible today might pave the way for more innovative ones tomorrow. It would be in the best interest of banking solution vendors to track these developments and learn from them, where possible.