The pandemic has caused a massive shift in the way the public interact with financial services, most notably with their banks. Users found it very easy to access and use the new apps to solve simple queries that did not warrant going to a branch.
As simplicity and accessibility become the top priorities for a successful company, Bharat Bhushan, CTO, Banking and Financial Services at IBM UK & Ireland, looks at how the development of digital platforms will affect the banking sector:
The pandemic has reshaped our expectations of normality forever. Adapting to new patterns and ways of living and working has led to some of the biggest societal changes in recent history. One such change is our indisputable reliance on digital connectivity and infrastructure for all aspects of our lives – at home and work.
Relative to some sectors, the pandemic accelerated digital transformation programmes and meaningful delivery at banks; several months’ worth of work was completed in weeks and days. Customers responded positively and adopted these new services, albeit in some instances there was no other choice as physical branches were shut and call centres had long wait times. The following three factors will play a key role in the upward trend shaping the further development of digital services:
First, increased digital awareness and comfort amongst customers. Millions of customers of all demographics downloaded their bank’s mobile app for the first time during the pandemic, used it and did not delete it. They overcame a big hurdle and enjoyed the convenience and speed of solving simple enquiries. Analogue ways of working are going to be just too slow for customers for most of their interactions with banks.
Second, the existential necessity of delivering operational excellence. Banks will need to continue to optimise and streamline people, processes, places and technologies, and focus all resources on core services and concrete objectives and outcomes. Until interest rates and revenues start to rise again, banks will continue to automate and redesign processes.
And finally, regulatory and compliance requirements will continue to rise across the board. The complexity and cost of compliance can be much higher if the organisation hasn’t been investing in its digital capabilities that allow internal and external applications and systems to provision access and interact with each other quickly, without lengthy human-to-human interactions.
Rising expectations for personalised experiences
A new UK research survey by YouGov, conducted on behalf of IBM, revealed that younger generations want personalised services and help to manage their money. 61% of people aged between 18 and 24 said they wanted their banks to offer tailored support for their finances; and 54% approved of banks using artificial intelligence (AI) to achieve that goal.
The push for open finance could facilitate these demands using application programming interfaces (APIs)—the connections that enable applications and systems interaction to build new offerings. These APIs allow developers to create new applications that use capabilities from a much broader ecosystem of service providers, enabling banks to innovate with more agility and speed.
A six-point plan for success
As banks mature in their digital and organisational capabilities, the following plan can help them transition into a technology-enabled platform business:
- Transformational journey of this scale and magnitude requires new sets of hard and soft skills. Make attracting, developing, and retaining talent a top priority.
- Centre everything around customers. Use data to understand them and create relevant offerings, experiences, and interactions. For the selected segment, ask how essential banking services can be simplified, automated, embedded and even made invisible. Start with a smaller number of use cases and learn from them.
- Adjust internal metrics to measure what matters in operating a technology platform business. For example, trends in the number of defects per X lines of code, developer productivity improvements, the speed of provisioning environments, or releases and digital customer interactions.
- Explore forming commercial relationships with external partners that are willing to share investments and rewards.
- Technology and Architecture. This presents the biggest risk and opportunity for banks as systems get more complex and interconnected. Using emerging and exponential technologies can help banks simplify and personalise customer interactions. Working with vendors that have security and controls baked into their offerings can accelerate building end-to-end solutions and services.
An agile, data-driven future
The role of banks is shifting from taking deposits and lending money to providing embedded services.
In response, the financial-services sector can drive fundamental change by adopting an agile digital-platform model, rich with opportunities for interactions to generate user data that can be used to personalise services, add value for customers and, as a result, find new sources of revenue.
Super exciting! These two words sum it up nicely.