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By Dee Houchen, Snr Product Marketing Director – ERP Apps at Oracle 

Not so long ago, banks didn’t need to be exciting. People simply chose their bank based on how conveniently its branches were located and its reputation for stability and solidity, giving little thought to factors like the “customer experience” they received.

All this has changed, of course. The rise of digital devices has transformed the way we engage with businesses in virtually every industry, and banking is no exception. A range of new challenger banks have been quick to seize on the public’s cry for branch-free digital services, putting traditional banks on the back foot as they try to untangle their legacy processes and keep up with rapid change.

The success of these new players is largely thanks to their greater agility, and to how they use customer data to offer more convenient and personalised experiences like the ability to manage one’s finances through a mobile app or self-service portals. This is in stark contrast to most traditional banks, whose antiquated business models make it difficult to work in this agile way.

Where established players do hold a major advantage is in the reliability and security of their service. This why the current wave of data compliance laws, most notably the EU’s General Data Protection Regulation (GDPR), promise to level the playing field. Public concern over the way companies collect, use and share their personal data has reached a boiling point, and the fast-and-loose approach to data that has helped some start-ups rocket to success will come under closer scrutiny.

Traditional players may be able to outperform upstarts like Monzo in the UK, N26 in Germany or Simple in the US, all of which have carved out significant market share by delivering an excellent customer experience. However these companies offer varying levels of reliability and trustworthiness compared with longstanding industry leaders.

Financial institutions are feeling the pressure of this heightened regulatory burden, particularly digital leaders that are advanced in their use of customer data. Recent research from RoubiniThoughtlab reveals 71% of these companies expect the greatest regulatory pressures to be around data privacy. This pressure is also coming from below, with these same digital leaders acknowledging their customers also have rising expectations around data protection.

Banks that have been racing to develop data-driven customer services must now ensure that their approach is compliant every step of the way. With their heritage of security and reliability, established banks are ideally placed to achieve this, though they must adapt and deliver the digital-first services today’s customers expect if they want to remain relevant.

To marry customer service with compliance, banks must also enable collaboration between back office operations and customer-facing business units, two very different lines of business that have until now managed these processes in relative siloes. This includes an open exchange of data between teams, which ensures customer information goes through the same rigorous security and compliance filter as sensitive financial information.

For their part, this helps operations professionals gain a better understanding of customer demands and habits, which in turns allows to them to better support the organisation’s roll-out of new digital projects and strategies.

Consider the case of digital on-boarding, which is becoming the industry standard as banks look for ways to make life easier for customers. By using third-party APIs, banks can combine vital compliance elements, such as credit scoring and verifications, with the convenience of mobile on-boarding. This allows them to take on new customers more quickly while ensuring they respect all regulatory demands.  Oracle recently completed an on-boarding project in a few weeks by using five APIs from different providers, and process that would have traditionally taken nine months.

The regulatory landscape is finally catching up to the market, giving established financial institutions that can adjust to the habits of digital customers the chance to compete with disruptive challenges.  Greater alignment between the back office functions and customer-facing teams is crucial to helping banks realise their advantage, allowing them to deliver convenient digital services on the front-end while ensuring that data remains transparent, trackable and secure across the organisation.