Despite the number of articles, studies and research on the digital journey, findings of a McKinsey report state that 90 percent of European banks invest less than 0.5 percent of their total spending on digital. As a result, most have relatively shallow digital offerings focused on enabling basic customer transactions.
The journey towards digital transformation started by offering omnichannel banking, but with this comes more touch points, an expansion of complicated IT systems and increasing amounts of different data. The varying channels means that lots of different types of data sit on different platforms – with many organisations not even realising what information they have.
There has also been a continual rise of “digital first banks”, such as Monzo. Born without the legacy provided to them by established customer models, the economics of a digital bank will give it a vast competitive edge over a traditional incumbent. Whilst legacy banks are investing in the fintech industry, they also need to think about their own transformation journey. It’s fair to say that getting digital banking right is a do-or-die challenge.
The FS industry must begin to transform their business and the products they offer. In order to successfully keep pace with disruption in the market, banks must:
- Put customers first – In the FS industry, customers are usually long-standing and loyal and tend to stick with one bank for years. But with this, customers have an expectation that banks have all of their information. FS organisations can now get value from a customer’s data content such as mortgage contracts, history of transactions on spending behaviour, as well as audio conversations. By changing their mentality and taking a more customer-centric rather than product-centric approach, and using customer data to help deliver new services, banks can drive a more successful, customer centric approach to banking over the long-run.
- Break data out of its siloes – As mentioned above, information is trapped in all sorts of different file formats. FS organisations must work on implementing solutions that pulls all of this information out of the relevant silos. This should be an essential priority in order to get a 360-degree view of a customer. Extracting intelligence from the data and content they hold will help to enable new and more personalised services to customers, as you obtain a more complete 360-degree view of the customer. In addition, it also means that businesses can improve customer targeting, attracting both new customers as well as old, through tailored pricing and product building. However, this data needs to be ‘clean’ and in a usable format before any real value can be derived from it.
- Use all data – Information fluidity is key to helping develop new services. FS organisations usually should keep hold of data over long durations for compliance reasons. However, FS organisations should also be able to leverage the historic data that they are holding. Like the term “you can’t run before you walk,” organisations must go back to basics and combine old data with new data – to move forward FS organisations should capitalise on the key principal information asset, i.e. their customer data and knowledge that they already hold and own. By doing so, organisations will be able to then use this with emerging technology such as artificial intelligence (AI), to better predict future patterns. AI can transform the FS industry, but for organisations to realise the benefits, they must make sure they have cleaned up their data and can extract knowledge and information from it.
There are currently strong discrepancies between customers’ expectations and the actual way information is managed. Streamlined, integrated systems, a single customer view and omnichannel, personalised services are all objectives that FS organisations must work towards.
Key to this is putting the information they already have to work. In essence, banks must take out the intelligence from all data to tailor new services and offer a more personalised approach for customers. The need for managing this data in the right way will influence new innovations in the industry.
Solutions such as InfoArchive automate and help FS organisations to better manage this data in non-intrusive ways, whilst also having the net benefit of saving cost. Having a single, consolidated repository of information and/or metadata helps to store all related structured data and unstructured content.
Data must be at the heart of any future business strategy, as it continues to disrupt traditional retail-banking business models, in many cases overnight. The good news is that there is plenty of upside awaiting those FS organisations willing to embrace it (see points one to three). The bad news is that change is coming whether or not banks are ready.