The digital future of banking is bright

Podcast Ep 81: Mark Kenny, director of Banking and Payments at Expleo Group outlines the digital transformation challenge facing banks.

Banks are under pressure to innovate to secure their digital future, ensuring the right products and services for customers, at the same time battling competition from new digital challengers and defending against a surge in cybersecurity attacks.

Recent research as part of consulting giant Expleo’s Business Transformation Index revealed that digital inaction is being viewed as a legitimate threat to financial services businesses.

“There is a great opportunity to automate back-end processes for sure, but only so long as you keep the customer and the benefit for the customer up in front”

The Index found that 65pc of financial service leaders believe their business wouldn’t survive 10 years without digital transformation. More than a quarter (26pc) of financial service leaders believe their business wouldn’t survive five years without digital transformation.

Almost two-thirds (64pc) believe board members are now more likely to approve new IT strategies in the wake of the pandemic. 57pc say there has been an acceleration of digital transformation since the start of the pandemic (some estimate there has been seven years’ worth of transformation since March 2020).

And 51pc say there has been more automation since the pandemic.

Accelerated digital transformation


“Covid has been an accelerant,” notes Mark Kenny, Client Director of Banking and Payments with Expleo Group, who says the digital transformation is most evident in the rise of contactless payments. “Month by month we are seeing exponential growth and the requirement for carrying cash has most definitely eased for fear of catching the dreaded disease.

“But it is also the convenience, whether it be on your phone, your card, it makes transactions much faster and the adoption rate among Irish people in general is among the highest adoption rates of mobile payments across Europe.”

If anything, Kenny says, Ireland now closer becoming a cashless society than ever before. “I think cheques are still very strong in Germany, which would be one of the powerhouse economies of Europe.”

Kenny commends Irish banks for the speed with which they facilitated contactless and mobile payments but also how they are responding to the challenges posed by alternative or neo banks that have emerged.

“They are coping very well. They all have their programmes of continuous change and continuous innovation and they’re very much looking at putting the customer first.

“The challenger banks have certainly shone a light on the art of the possible and leveraging cloud-based technologies to bring new products and services to the marketplace. But I think the banks have responded terribly well and are continuing to change. I think there are probably some AS/400 systems and IBM mainframes in the back-end somewhere, but the technologies are advancing so quick and the fintech marketplace is developing new solutions that are helping traditional banks to come forward and meet the new challenges with customer experiences that are increasingly mobile phone-based. It’s about having quality apps that work well on phones and give you access to the services that you would want in a timely manner and fashion.”

Primarily, says Kenny, the pandemic has brought significant changes to the banking landscape in terms of branches and staffing.

“The essential branch networks stayed open and bank staff were routed to internal buildings to serve customers by phone, but we’ve also seen a huge uplift in banks moving customers to online services and in return customers are adapting to being online as well.

“When you peel back the onion a bit further, I’ve seen a lot of activity in banks improving internal processes that ultimately benefit the end customer, improving workflows, bringing in digitalisation, and making onboarding and account opening a more seamless and frictionless experience. In terms of the challenges posed by the challenger neo banks, I think traditional banks have definitely taken up that challenge.”

Skating to where the puck is going

The changes wrought by the pandemic include traditional high street banks closing branches as well as banks like Ulster Bank and KBC leaving Ireland. All of this is ushering a debate about traditional customer relationships and the move to digital relationships.

Asked if banks can maintain those intrinsic relationships through a digital medium, Kenny acknowledges the challenge. “I think there’s a great opportunity for technology to not just bring back the relationships in terms of business banking but also around individual banking. I’m seeing greater deployment of customer data platforms internally in banks. You might have credit card product or be a mortgage customer or have savings. Digital enables the integration of all of those data points into a single, unified product or view of me as a customer.”

Kenny says that banks can use this smart, single view of a customer to derive important insights and in turn mold products that they can offer the customer at the right time in their lives.

“The future is bright in terms of our individual relationships with banks. That relationship with a trusted manager that you used to enjoy is coming back, with the aid of technology of course.”

Terms like robo-advisors don’t do much to inspire confidence in this bright future, so what role will automation play? Kenny says you need to look at platforms like chat bots not as the fulcrum of future relationships but merely as agents that can speed up the flow of information to get to a desired outcome much faster.

“It’s about bringing the right, salient piece of data forward, whether it is for a new car loan request, to capture the right information and speed it through the workflow system so it brings it closer to the approver. There is a great opportunity to automate back-end processes for sure, but only so long as you keep the customer and the benefit for the customer up in front.”

What is coming next, says Kenny, is an opportunity for banks to be more proactive in relationships with customers and use insights to be there for the right moments in a customers life, whether they are starting university, buying a car, getting married, having a baby or planning holidays.

The lessons, he says are obvious. Steve Jobs brought out the first iPhone in 2007, Amazon has been teaching us how to sell online and master supply chains for decades now and every individual with a smartphone is essentially now a node on a vast network.

“Consumers are expecting instantaneous services on demand, they are no longer satisfied to stand or wait in line like they used to. They will compare their banking app with their Amazon app or Airbnb app.

“The challenge for banks is to make sure they make the right offers and understand where the customer is in the lifecycle and make pertinent offers in a timely manner. I think that’s where we’re going to see the banks going in the future.”

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