Other parts of this series:
So far in this blog series we’ve talked about how an outside-in approach to banking can help Australian banks convert the current threats and challenges into opportunities.
We believe this bold approach to shaking the status quo will be guided by four key principles: 1. Be married to nothing. 2. Re-establish trust with customers. 3. Be data-driven. 4. Act now.
Be married to nothing
Historically banks have favoured a multi-year strategy and transformation roadmaps, which has resulted in latent resistance to proactive enhancement of their vision and their change plans.
In today’s disruptive landscape, banks should view everything as a sunk cost and not be afraid to start from a blank slate. They ought to strive for perfection by removing and changing everything that is not perfect. In order to improve agility and shorten project delivery times to months rather than years, banks need to have a dynamic funding model for their transformation efforts.
Re-establish customer trust
One in three Australians reported that their trust in banks had fallen from 2019 to 2020, compared to only 13 per cent in the US.
To turn this around, banks should make the financial wellbeing of the customer their primary focus. They need to simplify managing money and educate customers to make the right decisions for themselves. The mantra for the future should be, “Don’t do anything unless it improves the customer experience.”
As per Accenture’s Global Banking Consumer Study 2020, including a sample of 2,000+ Australian consumers, almost 50% customers said that banks provided them with the support they needed. Banks now need to build on this trust and confidence and continue to assist beyond the crisis.
Most big banks have extensive technology debt, disparate processes and a lack of relevant skills, which makes it difficult to streamline data to generate insights and calls to action.
Australian banks have the opportunity to take the first-mover advantage of Consumer Data Right (CDR) regulations to create new ecosystem partnerships and leverage them to provide enhanced experiences to customers.
As we noted in the first blog post of this series, our recent analysis shows that Australian banks could see a drop in revenues by 2025, unless they act fast.
They could forestall this by focusing on immediate CDR-driven opportunities such as balance aggregation and payment initiations to remain relevant in the market. Going forward, they need to relentlessly prioritise execution of digital transformation and scaling-up through technology platforms and channels.
Banks need to continually analyse the changing customer expectations and prioritize technological flexibility and agility, to provide innovative digital offerings with a touch of personalisation.
The disruption Australian banks are facing now is akin to the story of the Choluteca Bridge in Honduras. Originally built in 1930, the Honduran government commissioned it to be rebuilt in 1996 to withstand extreme weather conditions. Two years later, when Hurricane Mitch wrecked Honduras, the Choluteca Bridge survived the category 5 storm. However, there was one problem—the approaching roads were washed away and the storm changed the course of the river, which no longer ran under the bridge.
Successful Australian banks will be the ones that take an outside-in approach to the future of banking and make sure that their strong foundations don’t end up being indestructible bridges in places where they are no longer needed.