Sustaining Relevance: Banking Innovation

This post is part of a Sustaining Relevance series, covering different industries, pinpointing areas of focus for companies to maintain their relevance while withstanding the advent of disruptive innovation.

Technology has changed the way the world functions and is reinventing how industries and companies of old have done business.

The definition of innovation varies, but it is the result of technology paving a path of fresh thinking, providing relevant and contextual solutions to any customer, anywhere in the world.

Unprecedented advancements are forcing companies to quickly adapt and utilize technology to meet customer expectations of enhanced experiences. Innovation is not just about technology anymore, it’s technology being used by companies to ensure relevance in the new world.

Financial institutions have probably been the most impacted by innovation but also have access to capital that is fueling their adoption of new technology and platforms. Here are a few areas banks should and need to focus on to stay relevant during the advent of Banking 2.0.

Customer Experience

Customer experience, either digital or in-branch, is the bedrock of any banking relationship. Any interaction leaves a significant impact on the customer. Utilize technology to simplify processes, enhance in-branch experiences and minimize the hurdles of complicated transactions to remove ANY friction during the customer journey. 

There are very few times that I need to interact with my bank but when I do, any perceived shortcoming taints the bank’s ability to provide efficient and effective solutions.

AI and voice are two areas fundamentally changing the interaction banks have with their customers, opening up a whole new level of customer engagement. As of now, these two technologies are considered as one-way communication tools between consumers and brands. Take it a step further, these technologies could be redeveloped to provide conversation-like advisory services to the customer, factoring in the immense customer information that banks possess. 

The simplification of processes could also include a completely digital mobile platform (covered later) minimizing, if not removing, the need to visit a physical brand for any desired transaction. Certain digital banks in Europe allow the opening of accounts via their mobile platform with no need for customers to visit the branch.

Experiences can be revamped by banks predicting customer needs even before they know what they want. Shiny renovated branches and modern looking apps will not add any value if the customer experience doesn’t match customer expectations. Experience will continue to be the largest differentiator – make the most of it.

Payments

Technology has transformed how companies and individuals make payments to one another. Venmo changed the rules of the game. Interac in Canada stayed ahead of the curve by building out a trusted brand for P2P payments, unlike in the US, where Venmo changed how payments functioned. Zelle, the payment platform from the big banks, is clawing back market share and relevance.

What does this highlight? Mobile payments and banking are the future, we all know that. However, an integrated solution provided by a trusted institution can gain significant traction. Banks need to identify similar solutions in the P2B (Peer to Business) and B2B space that can enhance how payments are processed and viewed by their customers.

Advanced Data Analytics

Accurately predicting market trends and customer expectations is virtually close to impossible. However, it is possible to gain deep insight into customer behavior that can then potentially predict future behavior. Study customer data to get to know them better. Use this data to identify products that can be customized for customers, providing contextual and relevant solutions.

When I was much younger, I was brought into my bank, sat down in a room with three serious looking bank representatives in suits. I was then taken through a 45-minute presentation of why (and how) I should put money towards retirement – without anyone knowing anything about me. I walked out of what was the beginning of what was a terrible banking experience, leading me to close the account in a few years.

Banks cannot make that error anymore. Tell 21-year-olds how to save for that music festival in Europe, you’ll have their attention. Analyze customer data to design products that are personal and aligned with what the customers want to achieve from a banking experience.

Collaborative Partnerships

Take advantage of the technology that exists. Avoid spending time, money and other valuable resources on technology that evolves faster than it can be duplicated. Embrace disruptive fintech start-ups to quickly meet market needs and expectations. Though innovative, numerous fin-techs do not have the brand visibility and reputation that has been built over the years. Big banks need technology to revamp their perception of being slow to catch up, making collaboration the best path forward for everyone.

Digital Services

Launching a mobile app is just one step in the right direction. Digital should revolutionize the entire bank, not just specific customer facing segments. This includes digitizing back-end processes and systems to enrich customer experiences and services provided. Financial platforms such as N26 and Penta are integrating new technology across bank processes to provide a truly digital (and multichannel) experience. With the world going mobile, financial institutions need to continually upgrade their systems to eventually enable a holistic and seamless digital banking experience, across products and services.