New technologies are overwhelmingly changing the strategic context of the business world across industries by altering customers’ behavior and expectations, the structure of competition and business conduct. The banking industry is no exception. It is forced to evolve not only to secure existing sources of revenues but also to find new ones.
To achieve growth, banks need to use digital assets and capabilities to create new value for their customers and partners. In particular, banks have the opportunity to monetize their privileged position in the value chain by providing proactive, cross-business offers and services in real time. In addition to focusing on life events, banks can actually engage with and add value for their customers at almost every moment in their daily life, and through the customer lifetime journey.
While the rapid evolution of technologies is one of the key forces disrupting the prevalent business models of incumbents. We believe, banks can leverage the very same technologies as a catalyst to drive sustainable growth. Let us briefly hark back to the previous section, which started with the two aspects of digital business evolution. Those two aspects, namely optimization and business creation, tie in neatly with the Infosys Renew and New strategy, which says that to succeed, organizations must renew their existing systems, processes and landscape to improve efficiency, while investing in new systems, processes and technologies to build unprecedented value. Banks will hence need to carefully balance this approach of renew and new to reimagine banking with technologies.
Looking back at the customer journey and the prospects of digitization, we see that banks must integrate seamlessly into the life experience of their customers. Transactions and interactions must become smooth and invisible. Banking must be simplified to the point where it becomes abstract. In essence, it should move from the current ‘Straight Through Processing’ standard to the next-generation ‘Touch Through Processing’. Integrated platforms can also facilitate access to products and services beyond financial services, as well as to peer-to-peer advice and activities, engaging and creating value for customers.
In addition, core banking products must become simpler, modular, and transparent. Customers are looking for products they understand, that they can buy without worrying about the small print, and that they can change easily (and without penalty) as their personal situation evolves. New value-added services such as wallet solutions or peer advisory can then uplift those products.
Another crucial element is the notion of proactive advice. Customers expect banks to help them manage and optimize their cash and investments. For instance, when some money is left dormant in a low-interest rate account, banks should spontaneously suggest transferring it to a higher yield account. Suggestions should be accompanied by a clear simulation of the expected gains and based on the customer’s profile. Similarly, customers expect to be informed of unnecessary fees or redundant product combinations. Notably, in most cases these proactive suggestions can be fully automated and should be offered in real-time, taking into account context and location. Further, to enable the bank to visualize and become a part of the customer journey, banking activities need to be increasingly integrated.
Banks will use technologies to create a differentiated customer experience that reflects their brand and values. This means offering more accurately personalized and contextualized services to customers beyond mere products through the smart use of customer data.
An example of differentiated and personalized customer experience:
Identity & Property Document Management: Barclays offers cloud-based document management system in which customers can upload and store important personal and business documents, such as bills, birth certificates and passports. Barclays is also rapidly moving with biometrics and voice recognition.
New technologies pave the way to componentize the banking business. This componentization may result in more independent business activities that can be more freely mixed and matched with each other (or with the services from third party providers) to create a whole host of personalized products and services. This approach is akin to the service-oriented architecture (SOA) concept in and may eventually culminate in new business models that disrupt long-standing approaches.
The Time has come when Banks would not limit technology usage to address their own business pain points with the customer having to adapt to new technologies – but increasingly newer technologies and practices are adapting to customer needs and preferences – This is the Digital Age Mantra for growth and competition.