Bhupender Singh, CEO of Intelenet® Global Services says all is not lost for banks
Banks are operating in a challenging environment with increasing competition from nimbler FinTech providers who are rapidly gaining market share and capturing the imagination of customers through their targeted & innovative product offerings. To thrive in this environment, Digital adoption & innovation for internal processes and in all aspects of customer journey should be the top priority for every CIO. It is essential that Banks innovate their products & services leveraging on emerging technologies like Blockchain, Robotics and Cloud Computing, whilst also upgrading their IT systems to be more integrated and nimble. This will help them compete with the disrupters in the market.
According to McKinsey’s Cutting Through the FinTech Noise: Markers of Success, Imperatives For Banks report, banks are competing with FinTech providers in areas like customer acquisition, customer servicing, credit provision, customer retention and loyalty. Customer behaviour is undergoing a dramatic shift; traditional banking models and practices will no longer be sufficient to meet the ever-increasing demands of the digital native generation. With the creation of FinTech banks, new regulatory requirements, and changing customer habits, traditional banks must take action to keep up with the times.
Nowhere is the impact more evident than in the way consumers transact with increasing volumes of payments moving to more convenient solutions like Apple Pay & Google Pay or the significant impact TransferWise has made in money transfers in the UK & EU. Peer-to-peer lending and lending to SMEs by Online platforms where they sell products is another emerging threat to the core business of Banks.
At the moment, it may seem that disruptive FinTech providers are racing ahead at a pace that will make it impossible for traditional banks to compete. However, a distinct advantage for banks is their large customer base established over years which most FinTechproviders lack. By truly embracing Digital disruptions and emerging technologies, banks can transform their own processes and enhance the customer experience for each step of the customer journey. This will help them increase customer retention & loyalty increasing the barriers to entry for newer firms.
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Disruptive players and emerging technologies should act as motivators, inspiring Banks to enhance their own offerings. By digitally transforming & modernizing the back-end and core systems, Banks and financial services firms can build on their strengths. Legacy systems put a strain on product & service innovation and hinder Banks’ ability to thrive in the Digital World. However, by leveraging the massive and invaluable data on customer profiles and behaviour, Banks can stay a step ahead of the FinTech firms by offering customized products and even predicting future customer behaviour.
At times the challenge is that Banks are not digitally proficient and need support to build solutions that help them to adopt swiftly. External partners with experience in the industry can offer tailored advice to Banks and help customize / automate their processes, products and services. Partners with deep domain knowledge and proven track record in the industry possess the skills and solutions to help Banks stay ahead. Banks need to move swiftly & with a sense of urgency and purpose to ensure that they are not left ruing the ‘WhatsApp moment’ in Banking.