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Elliot Howard of financial IT leader Sopra Banking Softwaredescribes the threats and opportunities that will shape the future of UK financial services

Digital technologies are already revolutionising how we bank, with online and mobile becoming the norm for checking balances and making payments. But not many are paying enough attention to the deeper trend – that such new channels are also starting to impact more complex banking services, notably loan applications.

Even more complex loans such as mortgages can also be perfectly practically (and safely) initiated and completed in time spans of under an hour. What makes this a really attractive option is that such a process can be stopped and re-started and complemented with web chat, telephone or videoconferencing. Indeed, the latter is rapidly becoming highly attractive for customers whose branches don’t have mortgage advisers, with video-link facilities enabling a conversation with a specialist in another location.

Elliot Howard
Elliot Howard

Underpinning this whole move to quick, flexible, digital retail banking is an ability to deliver the right content to each digital interface, content that is both device- and context-specific. This has to be subtle, responsive; it means recognising that applicant intentions while interacting via a mobile device on a fast-moving train during rush hour are different to those when using a lap-top at home in the evening.

At the same time, those customers want a fully ‘joined-up’ view of their affairs from wherever location or context they are dealing with you –with on-line interactions recorded in call centre systems so staff can see them if the need for a conversation arises, and so on.

Data = the route to omni-channel

Many trends like this underline the need for data to beshared across all channels, digital and non-digital, a phenomenon called ‘omni-channel.’ And right at the centre of the omni-channel move has to be the realisation that digital channels will continue to evolve. Exactly what these new channels will bein five years time is open to debate: smart televisions or games consoles could come to dominate home-based digital interactions, increasing the resolution available to user experience designers, wearable technology such as Google glass or Apple (smart) Watches could replace the mobile of today as the primary device for out-and-about digital activity.

Of course, services already exist on today’s smartphones for customers to check balances and make payments using speech (voice commands). Mobile technology that is always-on, geo-spatially aware and constantly listening is already in widespread use. And the emergence of wearable technology will only expand this trend further and allow for even richer interactions. On the horizon, perhaps, with the advancement in processing power and bandwidth for mobile or wearable technology, augmented reality interactions are no longer restricted to the laband may start to play a part in how banks interact with customers; we may even be looking at haptic, or ‘feelable,’ tech before too long.

It truly looks like the picture of advertising we saw in 2002’s science fiction blockbuster Minority Report is on its way. So picture a customer walking down the High Street who stops and looks in the window of a tech-friendly shop of the near future. Their ‘eyewear’ interacts with the banking application on their mobile to lock on to any offers that are available through the brand’s loyalty programmes, programmes that could easily include virtually enhancing the poster with personalised discounted prices.

If the customer then walks in to the store, that smart banking application of tomorrow calculates a budget in real-time based on their spending habits, savings, known out-goings and in-comings, and presents it to the customer so that it is routed to both mobile screen and eyewear. The system can then suggest alternative savings accounts which will give better rates and monthly amounts to enable them to save enough to pay for their new tempting, big-ticket purchase – and as they sit down and start booking the holiday, say,the technology recognises that the sales representative is talking about holiday insurance. The banking code immediatelynotifies the customer of the bank’s preferential loyal customer insurance rates as an alternative to those provided via the hypermarket to enable comparison. And once the customer has booked their holiday or bought their new motorbike, they can then choose to action any of the recommendations from the banking app. This may be taking out the bank’s holiday insurance, opening new savings options and setting up the proposed monthly transfers.

There’s a sexy future for the branch, too – if you want one

There are many ways of imagining the power and range of a data-driven, smart banking of 2020 and beyond. However, what thismeans today is that you need to begin to optimise the experience for each channel and on all devices –embracing both what is technically possible and the context in which the device is likely to be used.

Secondly, there is a need to ensure that there is a consistently relevant experience across channels. Doing that entails integrating data into single customer views, capturing and consolidating the digital interaction data trail across channels (and, given its scale, also managing archiving and deletion) as well asintegrating that with off-line interaction and transaction data.

In addition, financial service organisations need to be able to deliver easy-to-use, engaging, fully device-optimised interfaces that are integrated to ensure that customer interactions are managed as a whole. It really has to mean an end to the silo. For ever.

But how do we deliver a consistent omni-channel experience? Under the customer-facing layer is a rich data eco-system that creates and delivers personalised products and services, delivered via preferred channels. A standardised core product with variation allowed in presentational elements –as per Barclays, which enables customers to design their own cards with a photograph of their choice –and interfaces is likely to become the norm.

Underpinning this customisation will bea mechanism for capturing internal and external data trails to inform the offerings engine and the customer interface layer in turn.

Don’t let legacy cripple your flexibility

All the above will be a challenge for most Tier One banks, though, given theirnow-notorious reliance on legacy technology in their core infrastructure, which restricts flexibility, constrains innovation and increases costs.

Yet given the pressures on bank profitability, these legacy systems just will be phased out, albeit incrementally.

The good news is that the increasing maturity of the IT supply chain and availability of cloud-delivered core banking services mean institutions can pick and choose rather than build – then augment these externally provided capabilities with internal ones.

That’s an approach that can deliver the benefit of lower cost and quicker time to market with greater effectiveness in the form of differentiated offerings and products with scope for personalisation.

It’s also the one that will give you the possibility to grasp the digital future we’ve talked about here – and not get left behind.

The author is Executive Vice President and UK Managing Directorat Sopra Banking Software (http://www.soprabanking.com/), a leading provider of specialist solutions for the European financial services sector

Find out more on the new digital age of retail banking by downloading a special Sopra whitepaper ‘Transforming Business Performance with POST-Digital Capabilities’ here