It isn't enough for banks to woo customers with nice-looking apps concealing patched-together systems. For innovation to translate into customer satisfaction, banks need to master the bare necessities, says Ben Robinson
In a world where already a third of all banks' interactions with their customers are on mobile devices, digitisation is no longer a 'nice to have'; it is vital. As a recent survey from JD Power shows, customer satisfaction closely corresponds to the breadth and depth of a bank's digital offer. Every dissatisfied customer is a lost opportunity; especially now that it is easier than ever for them to take their custom elsewhere.
Digital banks must meet increasingly high consumer expectations. We know that user satisfaction dwindles fast when technology fails to deliver the expected experience, serves up data that is insufficiently tailored to the individual, or is unavailable on a favourite device. So offering the digital experience that customers expect requires a system that can deliver certain basic functions. Here I've picked what I believe are the simple bare necessities.
1 Any-time, anywhere, any-channel banking
According to Capgemini, a third of all banking interactions are on mobile phones, and mobile banking will soon overtake internet banking in popularity. Customers demand a consistent user experience across all banking channels, and banks must be ready for new and emerging channels such as chat bots, which have the potential to transform consumer banking experiences.
2 Analytics that deliver the personal touch
Banks have a wealth of customer and market data, and need to use it to enrich interaction. By embedding analytics into the front-office platform, banks can provide their customers with product offers and personalised content, on the right device at the right time. Products can be tailored to the individual, with pricing, rates and terms that suit their lifestyle.
3 A joined-up approach
If a bank modernises its digital channels without addressing the disjointed nature of the underlying infrastructure, it risks alienating customers. They expect to see a complete and real-time view of their financial affairs, and want to be able to use all products over all channels.
4 Instant fulfilment
Customer experience is heavily dependent on how quickly needs are met. People expect transaction information – whether a balance enquiry or product offer – in real time. This is where an end-to-end stack matters, allowing minimal human intervention in handling orders, so demand is fulfilled instantly.
5 Openness to open banking
In the most recent Temenos annual banking survey, 69 per cent of respondents saw open banking as much more of an opportunity than a threat.
An extendable system that offers customers access to the most innovative and relevant products and services, whether in-house or from a third party, is key to allowing banks to benefit from the massive opportunity available. Banks who can harness open banking will not only be able to grow their revenues, but also be better placed to act as trusted advisers, helping people understand their affairs to make the best possible financial and commercial decisions.
6 Low-cost low-risk systems
A system with high levels of integration and automation leads to lower spend on IT and back-office staffing, and better cost efficiency.
In addition, the more automated the system, the lower the risk of user error or outages caused by large queues of transactions being processed in batches. Both can eventually affect one of a bank's most important assets: its reputation.
7 Future-proof systems
Customer expectations when it comes to banking are changing fast, and successful digital banks need a system that can cope with constant upgrades. A patchwork of interconnected but not integrated systems cannot do this without data duplication, high risk of failure and massive maintenance bills.
A better solution is a packaged approach for their front and back-office applications.
8 Ability to launch new products, fast
When banks are slow at getting their products to market, it gives their competitors the edge. We know that unfit systems put a brake on innovation, with 80 per cent of banking executives surveyed by Ovum in Europe saying that outdated core systems were making it harder for them to bring out new products.
Parameter-driven systems cut out months of coding and testing when launching new products or extending a current range.
9 Systems that can scale up
As mobile payments and micropayments become the norm, the number of transactions carried out online is increasing exponentially. Banks need to plan for a hundredfold increase in the number of transactions and enquiries handled by their platforms over the next 10 years. PSD 2 and the Internet of Things will only add to the pressure, opening up bank platforms to a myriad of new intermediaries and interactions.
Digital banks must choose systems that are linearly scalable and able to continue to operate fast and accurately as the demands on them increase.
10 Cloud compatibility
Not all banking institutions are ready to run core processing in the public cloud, but the only way to drive down cost and work at scale is to do so. Operating costs can be as much as 50 per cent lower for institutions that run in the cloud. Security can be higher, too, since data-centre providers invest heavily in cyber protection.
It is significant that regulators around the world are now open to banks putting core applications in the cloud, with Singapore introducing new guidelines and the UK FCA indicating that cloud-based systems could increase competitiveness.
The banks that succeed are those who offer what customers want and expect, not once, but time and time again, creating a bond of trust between them. With these 10 necessities in place, banks can be sure that their investment in digitization will translate into customer satisfaction – and from there into growth.