It’s about this time of year that people start looking for Xmas gifts as well as looking ahead to 2016 and beyond and start to muse about what the next 12 -18 months might bring. For me, the core underpinning all developments will be the focus on further digitisation. Here’s how I think it will shape the world of people and organisations during the year of the Monkey, which as luck would have it is associated with smart and ambitious people – plus, according to Chinese lore, monkeys are best suited to science, tech, banking and engineering (amongst others). How very fortuitous then:
- Digital meets reality
Digital technologies have become so part of our everyday lives we don’t see it as digital purely logical. The Barclaycard Visa advert where a man goes from desert to wedding with only his card demonstrates how tech is now in sync with, and underpins, the flow of our everyday lives. From Apple Pay, NFC and contactless through to a plethora of reward cards, digital is revolutionising people’s expectations of service access, immediacy and most importantly: simplicity.
To assist this drive towards simplicity and more contextually aware, personalised services, we as consumers have provided companies with rafts of personal information. This exponential growth in data and information has spawned the next area, namely ‘Big Data’.
Big Data has a multitude of uses for all types of businesses; it influences customer relationships, can provide a basis for new business models and influence how a company can use their data to gain an edge over their competitors.
However, in reality people are not overhauling their personal processes – they’re re-enacting them in order to change the experience. Look at payments for example. The rise of alternative banks and payment platforms, whether that be PayPal or Apple Pay, has forged a new path, structures and approaches, but also meant that models of provision have had to be reinvented. Mobile phones, for example, are now a crucial tool supporting transactions from eCommerce to travel. However, if the activity is the same, have we really transformed anything? In 2016, I think we’ll see digitisation and hype align to create a much clearer roadmap of how digital will transform the process and thereby how we interact with it.
- Operationally efficient Customer-centric business
Change is now synonymous with doing business and the drive to increase operational efficiency, whilst looking at how to differentiate is the current conundrum. Putting the customer at the heart of the change is key to this — fundamentally, using customer data to shape products and services and influence decisions is key. For banks in particular, digital represents a chance at redemption. They’ve been around a long time, and have in the last few years been rocked by scandal, a loss of consumer trust and had their landscape disrupted by FinTechs.
All of which led the FT to run a three part series entitled ‘Beyond Banking,’ looking at whether the industry was simply facing a blip or in terminal decline. Such a question, before the 2008 financial crisis would have been unthinkable, but now, rather than looking to go into investment banking, MBA students in particular are considering careers in tech but with a service focus.
Often these students will fuse their interest in financial services with technology – and they are the single biggest threat to banking today. Banks need to cut costs whilst still differentiating – why should a consumer stay with one of the Big Four retail banks, if they offer nothing more than PayPal, with PayPal in many aspects, easier, more convenient and perhaps cheaper to transact with?
The simple answer is that they won’t. There is nothing to tether people to their bank any more, FinTechs have brought with them a revolution and financial services are struggling to catch up. One thing is clear — change is now a given and the ability of banks to be flexible in response to that need for change will be a key factor in their future success.
- Management of risk
Underpinning digitisation and the desire to streamline services means that companies are both consolidating and simplifying the approach to access. Whilst this data consolidation makes things easier for both the business and the consumer, companies are potentially also making it easier for hackers. Why? Because there is one point of entry, and once in the silo view is gone and replaced with data that leads directly back to you and your entire online portfolio.
Or to put it another way, ten years ago when you bought a tube ticket, there was no way to link you to that piece of paper. Oyster cards brought with them a shift in that dynamic, but contactless payments totally change things as you are using your card to make a journey and it is linked to your account, home address and other valuable information. And these links are hurting brands. Whether it’s 157,000 TalkTalk customers compromised, 76 million records stolen from JP Morgan Chase or 145 million customer records stolen from eBay’s database, each incident highlights that even the perceived experts are being outwitted by an ever-evolving opponent.
Whilst many companies have come to accept they can never be 100% secure, they need to know how to manage the risk of a breach. The reality is that, the process or how a company is seen to have protected its client’s data, the honesty and transparency with which it responds to breaches, and the governance frameworks it applies will undoubtedly become a differentiator and also a customer retention strategy.
Digitisation is making our lives easier, but a wider digital footprint needs careful management. For companies, consolidating data in readiness for digital projects brings with it serious risk. And not just cyber risk, but real business risk. There is a balance that needs to be struck – before, rather than after, a high profile incident occurs.