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Embracing digital transformation: The future of banking

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Embracing digital transformation: The future of banking 1

By Steve Tipping, Vice President Sales UKI & Benelux, Selligent Marketing Cloud

 Financial services are undergoing a huge period of digital transformation, as advanced technologies radically transform the way the industry operates. AI, machine learning and robotics are fundamentally changing the sector and it’s time we fully embraced the amazing opportunities they have surfaced. However, added to the impact of digital transformation, financial services are also undergoing a crisis of trust with PWC reporting that British consumers have lost trust in the industry. With rising competition from fin-tech disrupters, the question is how can financial services succeed in this increasingly digital world? How can they embrace and deliver the digital innovation that customers demand without compromising security and ultimately consumer trust?

The Customer is still king

The financial sector has historically been a digital slowcoach due to strict regulations, legacy systems and senior decision makers being slow to recognise potential ROI. Whilst banks are now increasing I.T. spend and are automating business processes through artificial intelligence (AI), there is still a lag in meeting consumer expectations for seamless mobile apps, alternative technologies like person-to-person payments, mobile wallets and more. The problem is that many banks still believe that digital transformation is about systems and workflows rather than customers. Many banks are also hindered by fears that new technologies will lead to new security threats.

It’s misguided to let security concerns eclipse the fact that consumer behaviour in banking is changing. Studies show that instead of speaking in-person to an advisor at a local bank branch, most customers will prefer to interact remotely via digital channels. In fact, the average consumer will initiate up to 10 digital interactions with their bank per month. These changes in consumer behaviour are opening doors for a new breed of fintech disrupters who are ready and waiting to take market share and customers. Digital-first providers like Monzo and Revolut are giving dissatisfied consumers the opportunity to literally take their money elsewhere, and with multiple challenger banks shaking up the industry, consumers are spoilt for choice. Consumers are enjoying digital transformation in other sectors and now expect the same from financial services; disrupter banks are simply giving them the innovation they crave.

Learning from the competition

So what can be learnt from the boom of disrupters entering the financial market? Without a high street presence, disrupter banks have prioritised the user experience, as every point of contact for their customers is now digital. It’s clear from their successes that other financial services companies must follow suit in order to regain consumer confidence; put simply, banks must evolve or die.

Despite the threat from disrupters, traditional financial services organisations, such as banks and credit unions can win back favour with today’s entitled consumers. Financial services must generate trust and long-term dividends by establishing themselves as stewards of consumer financial assets, namely money and data, and by ensuring their service is relevant and bespoke.

Meeting consumers’ demands with new technology

Consumers are aware of the value their data has for banks, especially in this post-GDPR world. The good news is they are willing to share; but with this comes higher expectations of the service they will be getting as a result. Research by Accenture found that almost half of UK bank customers expect relevant advice and product information available at their fingertips that they can access easily. They expect banks to inform them of the best rates to suit their individual financial situation. What’s more, Big Data provides significant opportunities for banks to outshine their competition. Migrating data onto a cloud platform provides a 360-degree view of every customer and this deep insight shows banks where they can provide a higher level of service and create more value.

For example, if a customer is in the process of buying their first house, their bank can contact them with relevant and useful information to ease the process. With all the data available to financial services, customers expect their bank to know what they want and need, before they do, offering them next level personalisation that caters to their every possible financial need. AI and machine learning has finally made it possible for financial services to personalise marketing messages which truly resonate and drive revenue.

Creating seamless experiences

Another aspect of the customer experience that needs to be improved is flexibility: giving customers the freedom to access and manage their finances on the go is vital. Consumers expect to perform transactions anywhere, at any time, and only a seamless omni-channel experience will meet this demand.

British consumers want the flexibility to access and manage their finances from wherever they are, whenever they want to. If offered by their primary bank, for example, over 75 percent of Gen Z US internet users would use the financial tech services offered such as apps that can be accessed on the go.  It is the responsibility of the banks and financial services to ensure accounts are quick and easy for customers to access, whilst also being highly secure in order to avoid catastrophic data breaches.

Despite the ongoing fundamental changes to the industry, three things remain certain: customers want to bank with companies they can trust, customers demand individual financial advice, and customers insist on full control over their finances. Prioritising customer experience in these ways is nothing new, but financial services must wake up to the new technologies at their disposal in order to match changing consumer behaviour. Through a data-driven blend of personalisation, prediction, and true omnichannel reach, financial services can create a much brighter future for their customers and, ultimately, themselves.

Banking

Citigroup considering divestiture of some foreign consumer units – Bloomberg Law

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Citigroup considering divestiture of some foreign consumer units - Bloomberg Law 2

(Reuters) – Citigroup Inc is considering divesting some international consumer units, Bloomberg Law reported on Friday, citing people familiar with the matter.

The discussions are around divesting units across retail banking in the Asia-Pacific region, the report https://bit.ly/3pD57WP said.

“As our incoming CEO Jane Fraser said in January, we are undertaking a dispassionate and thorough review of our strategy,” a Citigroup spokesperson told Reuters.

“Many different options are being considered and we will take the right amount of time before making any decisions.”

The move, part of Fraser’s attempt to simplify the bank, can see units in South Korea, Thailand, the Philippines and Australia being divested, the Bloomberg report said.

However, no decision has been made, according to the report.

Revenue from Citi’s consumer banking business in Asia declined 15% to $1.55 billion in the fourth quarter of 2020.

The divestitures could be spaced out over time or the bank could end up keeping all of its existing units, the Bloomberg report said.

The firm is also reviewing consumer operations in Mexico, though a sale there is less likely, the report said, citing one of the people.

Last month, New York-based Citigroup beat profit estimates but issued a gloomy forecast for expenses. Finance head Mark Mason said the lender’s expenses could rise in 2021 in the range of 2% to 3%, weighing on its operating margins. (https://reut.rs/2ZwXRB1)

(Reporting by Niket Nishant in Bengaluru; Editing by Maju Samuel)

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Banking

European shares end higher on strong earnings, positive data

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European shares end higher on strong earnings, positive data 3

By Sagarika Jaisinghani and Ambar Warrick

(Reuters) – Euro zone shares rose on Friday, marking a third week of gains, as data showed factory activity in February jumped to a three-year high, while upbeat quarterly earnings boosted confidence in a broader economic recovery.

The euro zone index was up 0.9%, with strong earnings from companies such as Acciona and Hermes brewing some optimism over an eventual economic recovery.

The pan-European STOXX 600 index rose 0.5%, as regional factory activity was seen reaching a three-year high on strong demand for manufactured goods at home and overseas.

Another reading showed the euro zone’s current account surplus widened in December on a rise in trade surplus and a narrower deficit in secondary income.

Still, the STOXX 600 marked small gains for the week, having dropped for the past three sessions as investor concern grew over rising inflation and a rocky COVID-19 vaccine rollout.

But basic resources stocks outpaced their peers this week with a 7% jump, as improving industrial activity across the globe drove up commodity prices.

“This week’s slightly adverse price action has all the hallmarks of a loss of momentum temporarily and not a structural turn,” said Jeffrey Halley, senior market analyst at OANDA.

“There is not a major central bank in the world thinking about taking their foot off the monetary spigot, except perhaps China. (Markets) will remain awash in zero percent central bank money through all of 2021 (and) a lot of that will head to the equity market.”

Minutes of the European Central Bank’s January meeting, released on Thursday, showed policymakers expressed fresh concerns over the euro’s strength but appeared relaxed over the recent rise in government bond yields.

The bank’s relaxed stance was justified by the euro zone economy requiring continued monetary and fiscal support, as evidenced by a contraction in the bloc’s dominant services industry in February.

The STOXX 600 has rebounded more than 50% since crashing to multi-year lows in March 2020, with hopes of a global economic rebound this year sparking demand for sectors such as energy, mining, banks and industrial goods.

London’s FTSE 100 lagged regional bourses on Friday due to a slump in January retail sales and as the pound jumped to its highest against the dollar in nearly three years. [.L] [GBP/]

French carmaker Renault tumbled more than 4% after posting a record annual loss of 8 billion euros ($9.68 billion), while food group Danone and German insurer Allianz rose following upbeat trading forecasts.

(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Sriraj Kalluvila and Shailesh Kuber)

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Banking

ECB plans closer scrutiny of bank boards

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ECB plans closer scrutiny of bank boards 4

FRANKFURT (Reuters) – The European Central Bank plans to increase scrutiny of bank board directors and will take look more closely at diversity within management bodies, ECB supervisor Edouard Fernandez-Bollo said on Friday.

The ECB already examines the suitability of board candidates in a so-called fit and proper assessment, but rules across the 19 euro zone members vary, so the quality of these checks can be inconsistent.

The ECB plans to ask banks to undertake a suitability assessment before making appointments, and they will put greater emphasis on the candidates’ previous positions and the bank’s specific needs, Fernandez-Bollo said in a speech.

The supervisor also plans more detailed rules on how it will reassess board members once new information emerges, particularly in case of breaches related to anti-money laundering and financing of terrorism, Fernandez-Bollo added.

Fernandez-Bollo did not talk about enforcing diversity quotas, but he argued that diversity, including diversity in gender, backgrounds and experiences, improves efficiency and was thus crucial.

“Supervisors will consider furthermore all of the diversity-related aspects that are most relevant to enhancing the individual and collective leadership of boards,” he said.

“Diversity within a management body is therefore crucial … there is a lot of room for improvement in this area in European banks,” he said.

(Reporting by Balazs Koranyi, editing by Larry King)

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