At a recent financial services summit, I asked several senior banking executives how they defined digital banking. The responses were varied, although they all had a common theme: customer centricity. Some talked about embarking on a different customer journey. Some said it’s about really starting to think customer not channel, others mentioned complementing existing channels. But one in particular struck me as being most spot on: “incremental innovation”. Currently that’s what we, as customers, are receiving from the big banks. Not a radical shift, but a slow burn. Understandably perhaps, as one senior executive put it, “Big banks are like sleeping giants.” Read: slow, unresponsive and lacking agility. Like it or not, incremental change is the reality.
Change is afoot in the banking world. But, according to Hilda Jenkins, Digital Experience and Engagement Director at Barclays UK, it’s five years behind retail. Having worked in that space, she witnessed the transformation take hold of UK supermarket giant Tesco. Jenkins puts some of this down to demand – after all, every service responds to the expectations of its customers. According to her: “It’s only when customers are comfortable with mobility that they’ll demand the same from their banking.” It was only this year at Barclays that the number of customers on mobile superseded the number of customers using the online banking site.
But ‘getting comfortable’ has one hold-up when it comes to banking – security. While customers may be ready to use their mobile phones for purchases (in the UK) of £30 or less, this is part of a bigger shift in mindset currently underway and doesn’t mean customers are ready to access all things financial via their phones. Of course, once you’ve made the leap of faith there is no going back but until you’re convinced, thoughts of cybercrime and hackable accounts remain powerful deterrents.
Defining digital banking may not be straightforward. But ultimately most big banks are aiming for the same goals: build a frictionless customer centric experience that goes above and beyond what is available today. This is how Ana Perales, Strategic Transformation Director at Barclays put it, “Our digital offering to our customers is amongst one of the best, but change happens too fast to be able to get ahead of the game ever. So there is still a lot to do.”
The new order of banking will mean less loyalty and banks need to prepare for that. It used to be the case that we were more likely to get divorced than change banks but digital banking is set to change that and customer habits will too. In the same way that consumers look around for the best deal online and purchase from the lowest priced competitor, so too will they start using different banks for different services. As Roberto Mancone, Global Head, Disruptive Technologies and Solutions at Deutsche Bank told me, “It won’t be about products anymore, but services.” And that’s a commonly held view these days. So, does that mean banks are becoming commodities?
Fintechs would say not…
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