Australian banks are amongst the most profitable in the world. However, changing customer expectations, rising competition from non-banks and pressures from the regulatory landscape are posing a threat to the historically stable revenue streams.

According to the latest Accenture analysis, the four leading banks in Australia will see a significant decrease in assets and deposits by 2025, unless the current trend is reversed.

Business at Risk

While Australian banks have been taking steps to refocus and uplift the existing customer journeys, these will most likely not be sufficient to reverse the trend. The need of the hour is a bolder approach to shake the status quo.

Even before the pandemic, customer expectations were rapidly evolving with new technologies and new ways of working. The boundaries between industries have been blurring, with large companies facing competition not only from their agile and digital-focused competitors, but also from leading technology players.

Today, banks’ competitors include fintechs such as neobanks and social banks, as well as media content providers, e-commerce firms and ride aggregators. And these experiential competitors are driving customer expectations and raising the bar for banks.

An Oxford University / Mastercard survey found that a majority of customers are ready to embrace change and would like it sooner:

  • 85 per cent of customers are frustrated with usernames and passwords.
  • 93 per cent of customers prefer biometrics to passwords.
  • 92 per cent of banks want to adopt biometrics.

We believe it’s time for Australian banks to adopt an outside-in lens—one that looks at the catalysts driving change from outside the industry and brings these lessons back to reimagine banking. This should enable them to convert current threats into opportunities.

There are plenty of examples of banks already adopting the outside-in lens:

A large UK bank with a blockchain-based payment portal launched an instant cross-border transfer service. Currently operating across the UK, Spain, Poland and Brazil, the currency exchange portal allows for same-day international money transfers.

A bank in the US adopted a digital mortgage solution that streamlines the entire lending process by providing customers with simplified steps, online access to documentation and a substantial reduction in loan closing time.

One large investment banking company has adopted a personalised card credit solution. It uses machine learning to track customers’ spending and suggests ways to manage debt. It provides transparency on how much it will cost if customers want to pay back their debt over time. It is widely considered the most successful card in the industry.

It’s clear that these outside-in approaches are the right bold steps for the future of banking. Australian banks would be smart to follow in these leaders’ steps and begin undergoing transformation to reimagine their customer journeys.

In our next blog, we will take a closer look at the catalysts driving change in banking and the lessons Australian banks can learn from non-industry change agents.

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