In the first blog in this series, I highlighted the move by leading banks worldwide to become an “Everyday Bank” by unlocking the potential of their core banking function, harnessing the power of digital technologies to respond to changes in consumer behaviours and expectations. Whatever stage of life a customer is at – whether they’re looking to buy their first home or decumulate a lifetime’s pension savings – the Everyday bank will be trusted to help.
The transformation to the Everyday Bank is enabled by the same technology innovations – mobility, analytics, big data, social networks, seamless omnichannel delivery, connected ecosystems, and more – that are disrupting customers’ expectations, changing their behaviours, and opening the way to new entrants and competitors.
As well as having technology at the core, the ability of the Everyday Bank to position itself at the heart of customers’ lives will also require it to regain the trust of customers. And in many ways that will be the hardest task of all.
There’s no question that the banking industry has had bad press in recent years, and been seen as “unhealthy”: PPI, Libor manipulation, interest rate swaps, missed payments and resilience and more have all been highly visible, as have the fines and compensation to customers. But what’s been less evident to the public at large is the herculean remediation efforts that banks are making internally to prevent any recurrence of such events and rebuild confidence and trust. How are the banks tackling the challenge of ‘Returning to Health’?
There’s a strong argument that banks should be more vocal about these remediation efforts. By shining a spotlight on these, they could turn their Achilles’ heel of trust into a positive strength, through demonstrating how seriously they take the imperative to earn back the trust of customers. And again, this is an area where technology can play a vital role.
As well as being seen to behave in an ethical and compliant way, banks will also win trust by meeting customers’ needs more fully and responsively, through more relevant and personalised omnichannel service experiences and more flexible, tailored products that add value to people’s lives at a competitive cost. Industry leaders are now differentiating themselves in achieving these goals, through integrated fulfilment from a core banking infrastructure that can readily expose their richer services via low-cost digital channels.
Key to this are new capabilities like data harvesting, analytics and robotics, that simultaneously boost speed and quality while removing costly manual processes. However, there’s a significant bump on the road. In seeking to embed digital capabilities at the centre of their operations, banks often find that their legacy core banking infrastructures – built up though decades of bolt-ons and workarounds – are actually a hindrance rather than an enabler. To date, few banks have tackled their legacy core by replacing it with digital from bottom-up. In the next few years, we think many will grasp the nettle and do this.
The message is clear. Becoming an Everyday Bank – with digital at the core – is vital for any bank to be ‘fit for the future’. But customers will only allow the Everyday Bank into the centre of their lives, and embrace the solutions it offers, if they truly trust it. The good news is that digital can help to build and sustain that trust, creating a virtuous circle of trust and technology that will set apart the winners of the future from the also-rans.
In the forthcoming blogs in this series, we’ll take a closer look at the role of robotics in the journey to the Everyday Bank – and how and why unsecured lending will be a key product area.