Thanks to the COVID-19 pandemic, the Internet and anything digital has made deeper inroads into our lives and demand for digital banking services has accelerated manifold. Customers expect to be able to access up-to-the-minute and relevant information on their finances. Gone are the days where a banking customer will patiently wait multiple days for a transaction to process. This in turn has put immense pressure on banks to deliver real time and personalized services. How can banks address this challenge and make this a win-win for all?
Make the Most of the Core
Core banking systems handle a high volume of transactions and must function without interruption, as outages can mean regulatory issues, customer dissatisfaction and significant revenue and reputation loss. Large and small banks around the world are currently spending millions of dollars to maintain their core banking systems. The core is meant to be a system of record but has been stretched over the years to do more. It now delivers additional capabilities, but it often also acts as a bottleneck for banks due to its lack of agility and flexibility.
If banks want to deliver a new level of customer-centricity and personalization, they must strategically analyze what applications directly impact their customer and lift those out of the legacy core. In short, they must ‘hollow out the core’ so these applications sit in a digital layer above it, a layer that is intelligent, prescriptive and forms the bridge between current customer-facing capabilities and the legacy core. Introducing this type of middle layer will allow banks to simplify complex operations and infrastructure, embrace intelligent technology and forge partnerships that create the right service bundles for their customers. It will also allow them to understand how to leverage customer data to offer service-first models, stop looking at the legacy core system as a hindrance and identify ways to maximize the core to their advantage.
Say Goodbye to Large ERPs and End-to-End Systems
Technology innovations continue to impact the banking landscape with platforms, products and interoperable point solutions created to address specific customer needs. That will only continue as banks are forecast to spend 11.4 per cent more on enterprise software in 2021.1 More banks will turn to digital operations platforms (DOP) that combine back-office business tools into a single product and are viewed as a replacement for legacy enterprise resource planning (ERP) software. New DOP offerings will become AI-based and ecosystem-oriented, tailored to industry and even micro-vertical use cases and requirements.2
Agreement from all levels (especially the top) is imperative if banks want their legacy system upgrades to be successful. This type of holistic buy-in and commitment is a must for such a significant transition – or else banks risk wasting their investments and damaging the customer experience. The foundation of any change must be focused on data, analytics and technology, but the human element cannot be ignored. Banks must augment legacy skillsets with fresh skills as they go digital and adapt to today’s fast-changing environment.
Build Ecosystems and Embrace Personalization
Customer retention and trust are key to any bank’s overall success, but customer loyalty is fragile. Banks must therefore create ecosystems that provide value-based engagement and hyper-personalized services, empower their customers, and help meet their short and long-term needs to build and retain their loyalty and trust.
Banks can no longer afford to neglect their customers’ changing preferences. The post-pandemic world will force banks to remember the value of face-to-face service. For many, in-branch banking will play a pivotal role and will remain an important vehicle for banks to attract new customers, retain existing ones and engage more deeply with them. Bank branches are therefore likely to become experience centers like Apple Stores, offering a place for customers to explore products and services, and to solve more complicated banking problems.
These types of physical experience centres will offer customers the access they desire while also allowing them to perform their banking functions and transactions digitally via their mobile phones, tablets or laptops as they wish. Whether they opt for the physical or digital realm, customers want to be certain they will enjoy an enhanced level of security, comfort and confidence, especially when it comes to financial issues that can be complicated, highly sensitive or both.
Banks and financial institutions have already started to separate their external presentation layer from their back-office data layer to create enhanced digital consumer experiences. Take for example the collaboration Google has created with several financial institutions. Slated to roll out this year, Google Pay will launch its “Plex” bank accounts in partnership with 11 banks and credit unions in the United States – offering Google users an attractive chance to open checking accounts with traditional, trusted financial institutions.3
The concept of a bank has evolved past mere payments and transactions; it now represents so much more, including mortgages, education and healthcare. Future banks must also evolve to offer more than just financial products and embrace, build and orchestrate ecosystems and support integration with fintechs and other “non-banks.” If banks can build this type of integrated/ hybrid banking model, they will be able to move beyond pure-play banking and into needs-based banking – making the one-size-fits-all template redundant.
Banks must treat the customer as their guide to ensure they are successful and add real value throughout their digital journey. If they can evolve past traditional customer service models and adopt an empathetic mindset, they can fundamentally transform their offerings to deliver truly differentiated customer-focused services.
This article was originally published in Bankless Times, Read More
“The views or opinions expressed in this article are those of the author. They do not purport to reflect the opinions or views of SunTec’’.