Last week, Canadian bankers gathered from across the country for a seminar held by Temenos and Deloitte. Ideas bounced back and forth as attendees shared a variety of diverse perspectives on what defines digital banking. Is it channel strategy? Technology applied to business process? Cost management?
The underlying theme that rose to the surface was the desire to discover “what’s next” that would enable banks to create competitive advantages through the digital channel.
Beyond the “lipstick on a pig” approach
31% and 27% of consumers, respectively, would rather bank with Apple and Google instead of a traditional bank.(Amarach, 2017.)
That is not to say that banks will go anywhere anytime soon. However, this statistic does show that seamless engagement with consumers is expected and essential. While banks have substantial data on their customers, traditional financial institutions largely remain a place you “go to” or “login to”. In contrast Apple or Google are always there, running in the background for you and helping you proactively manage your affairs. Google is so engrained in all aspects of consumers’ lives that the company is used to help manage schedules, travel, and sports events, help commuters get to work on time, and to keep consumers up-to-date with movies, TV shows and the latest news.
To combat this, organizations like Veriday have created an employee-to-customer (E-to- C) digital engagement model. Veriday’s unique model is based on the premise that employees are the organization. Your website or shiny mobile app, while vital to your digital strategy, are not your organization. Veriday’s E-to-C engagement platform allows brand-controlled websites for financial advisors at traditional financial institutions to build trust, share knowledge and digitally engage with their clients to drive business.
People buy products and brand, more so than experience
EQ Bank, one of the leading challenger banks in Canada, launched last January with an attractive savings product that boasted a 3% interest rate. Launched with the support of Temenos and Deloitte in just one year, the experience was sleek and differentiated through additional services to add “stickiness” once customers were on-boarded. The new offering was an overnight success, bringing people from all walks of life, including a 90-year old who stayed on the phone with their call center to work through the technicalities of the online account opening just to get the product.
Clearly, having a strong product engine driven by flexible configuration and parametrization options that allows a bank to proof, launch (and sunset) products quickly and efficiently is absolutely key. In addition to the product engine, having the right user experience platform is a key success factor as well.
Let’s be clear, banks are not reinventing themselves in the digital era with a “lipstick on a pig” approach. It starts with engagement in customer lives, which drives the right offering to the right person at the right time through the right channel.
To add to the complications, while many banks are shy of touching legacy systems, as “lipstick on the pig” may seem like a sensible option to appear digitized, the end-to-end straight-through-processing enabled by modern banking platforms will inevitably underpin open banking.
Data is being dissipated – should we be nervous or hopeful of what’s coming?
It’s impossible to miss the buzz around PSD2 (The Revised Payment Services Directive in Europe), which will change banking as we know it. As PSD2 goes into effect, banks’ monopoly on their customer’s account information and payment services will start to disappear. The directive opens the door to any company, to access this data, with consumer’s consent. In a global world, Canadian banking will not be insulated from this, and it is just a matter of time until we see the impact in the country. In this context, it becomes even easier for non-banks or FinTech companies to play an increasing role, and to break into the market with their own financial service solutions.
Banks are in a strong position to own the digital ID for their customers. Since they already have rich personal and financial data, they can eventually hold digital health records, insurance records, or simply digital safety deposit boxes for their clients. This creates opportunities to monetize data, brand strengths and relationships.
However, this is dependent on the incumbent banks’ ability to reinvent their roles in the new digital era, which goes beyond the creation of a “digital lab” into dramatic culture shifts. In traditional banks, the motivational and incentive systems are designed to continue on the current path, rather than to encourage dramatic change.
Reinvent from the inside out
The pace of technology change and consumer expectations is driving the need for inside our reinvention too. The quip attributed to Peter Drucker, “Culture eats strategy for breakfast,” comes to mind.
Assignments instead of jobs
Some organizations like Vancity Credit Union have opted for an evolving organizational structure to keep up with the fast pace of change, where people have goal-driven and time-bound assignments instead of permanent positions. This creates the needed fluidity and cross-pollination in skillsets and viewpoints.
Look beyond the experts
In the new economy, knowledge evolves so quickly that the subject matter experts of today will not be the experts of tomorrow. Knowledge is dispersed at larger scales, and the “golden nugget” may be in communities outside of your organization. During the seminar, John Wang of Deloitte stated, “You don’t want experts, you need a culture of innovation”.
Friction is actually healthy. Much has already been written about creative abrasion – creating a culture where ideas are challenged and new “intersections” are constantly made. Technology leader Apple became a legend by capitalizing on this method. The Apple team members themselves, were hand-chosen by Steve Jobs, and included a wide array of artists, musicians and deep thinkers, not just tech gurus.
The group came to the consensus that successful financial institutions are the ones that are able to drive re-invention from both outside-in and inside-out.
From outside-in, the bank starts with the experience-driven journey and contextual driven advice. This is supported by a digital engagement platform. But re-invention is powerful when also tackled from the inside-out, which means honing in on those traits and organizational DNA that enable exponential thinking, agile execution.