SAG_Twitter_MEME_Happiness_Disruptions_880x440px_Aug18Digital-first competition has given traditional banks incentive to kick-start their focus on innovation. The past 10 years saw banks in a low growth era, in a cost-savings mode and spending a lot of time and money on complying with a tsunami of new regulation.

Now the environment is changing; with interest rates rising and the foot off the gas pedal of net new regulation, banks are shifting gears to focus on innovation. Fintechs and big technology competition is nipping away at the traditional value propositions of the banks. This competition has not yet made a big impact on market share, but has raised the bar expectations for innovation and good customer experience (CX).

So how are banks responding to these trends? Mainly, they are re-engineering their value propositions so that they go beyond what we might think of as traditionally as “banking.”  For example, instead of a consumer going into a branch to get a mortgage, they would go online with their bank and have a home buying experience curated by the bank.  Services from mortgages to real estate agents to insurance could be part of the overall experience.

This works by banks operating an ecosystem of third parties, assembling the components to deliver new value – and generate new sources of revenue.  This could mean partnering with and/or acquiring fintechs.  And all of this has to be delivered by a seamless and frictionless CX that rivals what is offered by Amazon or Google.  This is especially important for younger generations like the millennials who have higher expectations and less loyalty to banks.

So, what does “good” look like? It is a focus on CX excellence – engaging in real time to support, market and prevent fraud to protect clients.   This involves getting a 360-degree view of the client and analyzing behavior in real time.

It is a focus on open banking – developing a platform that enables secure, authorized sharing of data with external parties so that new value props can be developed.

It means business and IT transformation are prerequisites for innovation; automating key processes in the back end so that the front office is focused on higher value activities (not transactions).  And rationalizing the immensely complex banking IT architecture to allocate more budget to innovation.

And because these are banks, there is always a focus on risk.  The best banks are taking a strategic, integrated approach to risk management:  managing risk and business performance together.

A great CX, better managed risk, operational efficiencies - that is what “good” looks like in banking today.

Watch the Video



    Most Popular Blog Posts