Author: Randolph McFarlane
The financial services environment is facing dramatic shifts: new demands, new possibilities and new regulations. Contrary to popular belief, traditional banks are best positioned to succeed in the new environment. Are you ready?
The dawn is breaking on a new era in Financial Services and with it comes immense opportunity for all.
Those banks that fully embrace the digital era and reinvent themselves for the new world can expect great rewards; those that fail to do so risk becoming mere utilities processing transactions for the winners in the new landscape.
Now is the time for companies to explore the many riches that the new environment has to offer and decipher how they can take full advantage of them. And I’m not just talking about the fintech start-ups that have grown up in the age of digital.
The banks that have been a familiar sight on our high streets for over a century have, in many ways, a head start on these newbies. Not only do they have the deep customer understanding that the younger, less experienced companies lack; they also have a long established relationship with their customers built on a solid foundation of trust.
The new financial services landscape
The new landscape is carved out of multiple evolutions all taking hold at the same time: new ways of working enabled by new technologies, new demands driven by higher customer expectations and new regulatory requirements.
Mobile, Internet of Things, big data and analytics are just some of the technological changes that are allowing banks to gain a better understanding of their customers’ needs and behaviours and allowing them to deliver the more personalised services customers desire – and deliver them where and when customers need them most.
After all, the technology giants – the likes of Google, Amazon, Apple and Facebook – have changed customers’ expectations of what a good online experience looks like. They have shown that it is possible to deliver a highly engaging mobile experience and it is possible to deliver a personalised experience. And this is what people also now expect from their banks.
The regulatory environment is changing too. The revised Directive on Payment Services (PSD2), General Data Protection Regulation (GDPR) and the E-Money Directive (EMD) all come into play between now and 2018.
Banks have a choice: they can simply do what they need to do to meet the new regulations or they can explore what the new regulations mean in the context of the digital era – transforming their business to embrace the desires of their customers, the needs of the regulatory and the possibilities opened up by the new technologies.
In a nutshell, banks could become the Blockbusters of the financial services world and disappear into oblivion or they could reinvent themselves for the digital world and thrive in the way that Virgin does.
So, what does this mean?
Let’s look at PDS2. It requires banks to give third party providers at least some access to some bank accounts.
Rather than simply provide the APIs required, banks could form partnerships with those third party providers. Doing so would allow them to expand the services they offer their customers while keeping control of their customer relationships.
Imagine a banking portal that was a one-stop-shop for customers to access the everyday services they need. I’m not just talking financial services but their insurance, their utilities, their entertainment and more.
Banks already hold a great deal of information about their customers and they could leverage this to ensure their portal really hits the spot when it comes to meeting each individual customers’ needs. They could tailor the interface, offer relevant promotions and make suggestions on how to manage their lives better.
Simply put, they could become the ‘go to’ for all their customer’s needs. But if they choose not to, someone else – the fintechs or the technology giants – will. Banks must make a move now while they still have a head start.
Have you explored what the new landscape could mean for your bank? Have you started on your digital transformation journey?