Fifty years ago, every bank client probably knew their bank manager. There was a personal point of contact for them at their branch, and they could expect personalised service.
In today’s increasingly digital world, however, many clients never actually go into a branch to conduct their day-to-day banking. They bank online, on a mobile app, or through one of the many avenues that allow them to bank without ever having to speak to an actual person.
Even when they actively need to communicate with their bank, younger clients especially don’t want to make a phone call and get placed in a queue. They want to be able to use the instant messaging or online chat services that they use in their day-to-day interactions with their friends and family. They want to be able to bank in a way that is familiar and comfortable to them.
Erwin van Helden, head of payments and digital channels for the Middle East and Africa at Temenos, says that this presents both challenges and opportunities for modern banks.
“What is increasingly happening is banks are moving away from bricks and mortar branches in an effort to reduce their cost per transaction and also in response to an overwhelming shift in how customers are choosing to bank,” Van Helden says. “The issue here is that, in many cases, once banks reduce the branch network the client is now at something of a distance both physically and emotionally.”
The answer, he believes, lies in banks making better use of the information they already have about their clients, and therefore being able to efficiently respond to their personal circumstances in an engaging way.
“The interesting thing is that your bank already knows almost everything about you,” Van Helden says. “It knows how much rent you pay, what your salary is, where you go on holiday, what local club you belong to, and where you buy your groceries. Banks have the opportunity to analyse that data in order to personalise every contact point with their customers.”
In its simplest form, for instance, if a bank sees that you recently bought a car, it can offer you insurance. If you buy an air ticket, it can propose solutions for travel insurance or forex. By using this information properly, banking becomes intuitive and responsive, digitally making suggestions that a branch manager or teller may have made in the past.
“If banks listen well, it’s actually very easy for them to create a strong, intimate relationship with their clients,” Van Helden points out. “They just have to pay attention to the communication that is recorded in transactions.”
Digital to the core
To fully harness the power of this information, banks need to be what he calls “digital to the core”.
“Many banks run huge sets of applications, servers and networks,” Van Helden says. “It can be a ‘spaghetti environment’, where the front office, middle office and back office don’t integrate fully with each other.”
In this kind of set-up it is very difficult to implement and control the kind of effective analytics that give clients a seamless experience.
“Some banks try to patch a digital front office on a legacy back office, creating something aesthetically pleasing but lacking in smarts, which essentially is just putting lipstick on a pig,” says Van Helden. “There must be seamless integration.”
If clients are predominantly, or only, communicating digitally, banks need to be able to process and respond to that digital communication across all of their systems. Only then can they truly ‘listen’ and interact proactively with customers.
As banks are inherently large, complex environments they can find this kind of change difficult. The modern digital landscape is therefore creating opportunities for new players to disrupt the industry. Last year, for example, the South African Reserve Bank issued new licences to three banks that are all going to operate entirely without physical branches.
Discovery, Bank Zero and TymeDigital are all promising an improved customer experience. Without having to deal with legacy infrastructure and architecture, they can build systems from scratch – systems that are integrated end-to-end from the start.
“The benefit of being a newcomer is that you can be fast, innovative and immediately do things like video chat, social media and biometric authentication,” says Van Helden. “But, at the same time, you don’t have any goodwill, reputation or trust to leverage.”
Established banks still have that advantage, and in an industry where trust is such an important factor, it is a significant one. To avoid being completely disrupted, however, they can’t simply take their position for granted, and must properly utilise the trust and information that they have at their fingertips.
Today’s banking customers are savvy. They will recognise those banks that deliver the kind of digital service they want: a service that makes banking easier, faster and most appropriate for their needs.
“Banks have to be able to deliver front end services across online and mobile channels that not only look and feel the same, but that connect to the very core of the bank and offer a fully seamless and integrated experience,” says Van Helden. “They have to do away with cut-off times and be able to deliver services and customer interaction 24/7. Clients want seamless opening of accounts where they don’t need to go into a branch and sign documents. This is a once-in-a-generation opportunity for innovators, challengers, visionaries and trailblazers to reinvent and reimagine what digital banking actually means.”
Brought to you by Temenos.