Author: Randolph McFarlane
Adopting a digital banking platform is no longer a choice – it’s now a must. Digital banking brings with it so many new opportunities for new revenue streams, new operating models, and more besides. Banks wanting to succeed in the digital era must start working on their digital banking strategy without delay. Let me explain why.
Traditional banks are often still reluctant to move on from the tried and tested branch-based banking they’ve relied on for so long. But moving to a digital banking platform offers many exciting new opportunities – after all, it connects today’s real and virtual worlds in ways that allow for new business designs.
From gaining a deeper understanding of customers and reaching deeper into their ever-more-connected homes to freeing up staff to focus on more complex customer issues and reaching out to new markets, digital banking has so much to offer – as we shall see.
Deeper customer insights
The digital banking platform allows banks to gather more intelligence about customers than ever before. That deeper understanding allows them to open up new streams of revenue. They could, for instance, leverage that insight to offer their customers a combination of products and services that fits more closely with their needs. They could even offer their customers relevant third-party services, such as insurance, further enhancing the value they bring.
Moreover, the insight that only digital banking can provide helps banks design their services to suit customers’ needs and behaviours. Consider banks’ online and mobile banking services. The intelligence gathered through digital banking makes the statistical analysis provided by A/B testing available. Banks can adapt their services to how their customers use them.
Products and services become more valuable and more usable. Customers are happier. As well as seeing revenue grow, banks see attrition rates fall and the uptake of multiple products rise.
Reaching into customers’ homes
The digital banking platform can also easily connect with anything digital: from smart wearables and connected cars to heating and lighting systems. It allows banking to bridge the connected customer’s real and virtual worlds.
In earlier blog posts, we looked at what could be achieved with an Internet of Things banking platform, for instance. The IoT digital banking platform connects customers’ accounts with smart consumer devices around the home, in the car, on the body, in clothing and more.
Take smart devices such as the Nest Thermostat, or the Pavlok wearable. Connecting these to their bank accounts allows customers to take control of their spending. Customers could, for instance, set their banking app to turn down their Nest Thermostat – and their heating – automatically if their account balance gets low, to save them money. Or they could set the Pavlok to deliver an electric shock if they ever overspend.
These are just a couple of very rudimentary early ideas. In the coming years, I expect to see the digital platform connect to customers’ increasingly digital lives in new ways. These new connections will allow banks to create new sources of revenue, develop new business operating models, and deliver new digital products and services.
I mentioned earlier that the digital banking platform frees up staff to focus on more complex customer issues; it allows banks to adopt a new approach to workforce management.
The digital banking platform empowers end customers to self-serve. In a Collections and Debt Recovery scenario, for example, customers make payments, conduct I&Es, set up payment plans, etc. With these tasks migrated to the digital platform and customers self ‘curing’, call centre staff can spend their time looking after more vulnerable customers and dealing with more complex debt situations.
More than that, banks also have new FCA guidelines on treating customers fairly to consider. The digital banking platform means banks can monitor and audit customer calls more easily, ensuring support staff don’t call anybody more frequently than they should.
While digital is fundamentally changing customer service, we should not forget that the opportunities it offers will also require organisational – as well as cultural – changes.
Last, but by no means least, the digital banking platform allows banks to open up new sources of revenue. Banks can open their doors to potential customers who would have previously been beyond reach. No longer constrained by geography, the digital banking platform enables an operating model that gives banks access to a market beyond the local area.
Consider a provincial building society, for example. It may be seeing its customer base dying off simply because the disposable income of people in their local area is diminishing. With digital, it can rebrand to both attract a new customer base and reach out to these potential new customers.
The digital banking platform offers some great opportunities. Start working on your digital banking strategy. Wait any longer, and you may find your competitors have already taken the biggest pieces of the pie.