Heroes, villains & the digital transformation of banks

Cloud is not a villain; it is driving the evolution of intelligent banking

 

Technology isn’t a villain. Technology should help, but if you just use the technology for the sake of technology, then you’re cheating your audience. You’re not giving them the best story and the best direction and so forth. – Stan Lee

 

2019 was the year when more than 65% of banks have become digitally active. It is a significant shift because only two years ago many of them were still in the process of digitalization or wanted to aspire to this status. As much as they feel it as one of Thor’s asgardian quest task, digital transformation is the safest way towards customer’s heart and loyalty. However, all these opportunities come with a backdoor warning: financial crimes.

So one of today worldwide banks’ concerns refers to IT priorities, more precisely about their challenge to implement a digital strategy in order to survive in a competitive environment and to manage a growing risk of cybercrime.

Last week, our colleague, Serban Popa, was speaker at an event Digital B@anking & Cyber Security  discussing digital transformation for banks and about trends in cybersecurity. The main ideas that drive the conference were that bank customers focuses today on the experiences they gain. Mr. Popa talked about trends in the digital era and how can banks stay safe in the front of financial attacks.

 

Next big dream: total shift to the cloud

 

Those who love Marvel and Stan Lee comic books know the Ragnarok scene when Thor, the god of thunder, learns that his power is not in his hammer, but in himself. This forces the hero to rediscover himself and his powers to save Asgard and its people. Now think of the banks as Thor. Having an app and a great website is like hanging around with that fancy hammer, but this is not at all digital transformation.  A digital transformation means to embrace a cultural change first, to be agile, not only to move faster but also to have an agile mindset, to understand your customer and to be there where he is. This is difficult because many institutions lack the vision of a new business model.

According to a Deloitte survey[i], consumers around the globe expect their banks to act and interact more like top technology brands. Therefore, the banks next big dream is the total shift to the cloud. Held back by regulations and fear of security issues, now so many are deploying applications in the cloud to lower costs and cope with all the demands of a digital economy.

One of the examples shown within above mentioned event was the usage of the “Conversation as a service” or even easier, the ChatBot: please visit this recording: https://www.youtube.com/embed/R8R19n18kxM [1]

41% of the banks are already seeking to act as a true digital ecosystem. The forward-thinking banks want to provide a greater ability and accelerating the speed of innovation. Already for many retail banks, mobile channels have become as important (or more important, take a look at ING Romania) than branches and ATMs.

 

Satisfaction is relative and it depends on competitive environment

 

In the Emerald Insight, the research paper Perceptions are relative: An examination of the relationship between relative satisfaction metrics and share of wallet[ii], the authors describe satisfaction as “the consumer’s emotional response to the fulfillment of needs, expectations, wishes or desires. It is a judgment that a product/service feature, or the product or service itself, provided (or is providing) a pleasurable level of consumption-related fulfillment, including levels of under- or over fulfillment.” Moreover, they believe that satisfaction results primarily from disconfirmation, as such, expectations tend to play a strong role in consumers ’satisfaction judgments.

Since satisfaction is relative, banks found themselves in a competitive environment with leading technology brands like Apple, Google, Amazon, who lead the way to digital engagement. They change the role in retail and other industry due to their fantastic transformation, increasing the customer expectations. Only last week, Apple has officially launched its own card, which means that if banks want to keep up, they have to love the digital experience and to have emotional connections, which, ultimately, could translate into sticky interactions and more customers that are profitable.

 

Only 33% of customers are loyal to their financial institutions

 

Digital transformation is not about systems and flows; it is about customer needs, about satisfying fast-changing customer requirements. The young generation of customers are placing own values above financial concerns, and they are loyal to institutions which share the same values. Banks now have the possibility to portrait themselves as trusted intermediaries to educate people in order to understand how their data is being used.

By 2020 many banks want to improve product agility and master digital marketing.

56% believe that by 2025 they can create a better value for the customers by improving customer personalization. While 44% believe that customers are uncertain about security issues, many banks invest in cybersecurity (39%), while 68% believe regulations will tighten cybersecurity authentication protocols by 2025.

One of the latest strong solutions proposed by Microsoft is the Graph Security API, a unified gateway for all statistics and security actions both from existing Microsoft products or services existed in your infrastructure but as well other products and services proposed by other software providers. Please visit the following presentation https://youtu.be/Rtbx6L_2wuw  or the following video presentation from the official Microsoft site: https://www.microsoft.com/en-us/videoplayer/embed/RE2JDOR?autoplay=true.

Banks have the role of heroes. Among the challenges that are undermining a bank profitability are meeting regulatory requirements (17%), securing customer loyalty (17%), using data effective (15%), addressing increased competition (15%) and managing the growing risk of cybercrime (10%).  The way they communicate with customer faces new changes. In the next 10 years, more than two-thirds of banks customer interactions will be through chatbots and social apps. Only 7% of interactions will be in person (physically or by videoconference).

For further information on how cloud computing can transform a banks anatomy, please read our article.

 

 

[1] ChatBot made with Druid platform based on Microsoft Azure technology – Bot Framework (for more info please contact us on serban.popa@unity-solutions.ro)

[i] https://ffctn.com/clients/dup/banking/M3c/e4926b9abd09/expanded.html

[ii] http://resource.owen.vanderbilt.edu/facultyadmin/data

 

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