People often say that the only constant is change. While some embrace change for driving progress and others fear it for the uncertainty it brings, it’s clear that an industry’s ability to evolve has often been the deciding factor in whether it falters, survives, or thrives. The banking industry has been able to get by for millennia on incremental change, using stopgap measures to adapt to shifts. That approach will no longer suffice.
The transparency the bank provides about its offerings and operations is becoming a decisive factor.
Over the past 40 years, digital changes have increased the urgency for transformation. We, as clients, have new standards for our banking partners. Those who do not meet these expectations risk being replaced. Those that embrace opportunities to reinvent their relevance in today’s world stand to succeed.
There are three phenomena that are currently making the shift from a legacy banking partner to a contemporary one increasingly attractive.
- More and more people are looking for immediate, personalised services.
- The transparency the bank provides about its offerings and operations is becoming a decisive factor.
- Due to lower barriers to participate in the industry, more innovative new players are entering the market.
Setting new benchmarks
Historically, the standard of excellence for service delivery within the banking industry was assessed in relation to the legacy competitors. Today, that is not the case. The benchmark for success is technology companies.
Technology companies have redefined the way in which a service provider should interact with its clients. By leveraging emerging technologies such as artificial intelligence, robotic process automation, and application programming interfaces (APIs), technology companies have demonstrated that today’s client interactions can be simpler, more intuitive, and more powerful than those of the past, raising the bar for all other industries.
Most of us are no longer willing to wait several days to open a new bank account. We, from the client’s perspective, want to do it in 10 minutes or less. We want to be able to exchange currency at no cost and immediately. And we want to complete banking services wherever and whenever.
The digital tools that have allowed technology companies to individualize a user’s experience and outcome have not yet been fully realized in the banking industry. There is untapped potential for banks to optimize their user experience, taking less time to provide clients with a better overall output that is more tailored to their preferences.
Banks must actively listen to their clients. A successful strategy is one that puts people first.
Banks must also respond to increasing demands for transparency. The banking industry has traditionally been opaque and difficult for the average client to understand. Too often banks have unclear fees and fail to adequately disclose their internal values, vision, and impetus.
Yet in a digital environment where people have easy access to information – where questions can be answered at a click of a button and a competitor’s offerings easily compared – banks cannot afford to let clients remain in the dark. They must be upfront about all costs and open about the handling of the historically veiled inner workings of their operations. In today’s digital environment, increasing transparency is necessary to gaining and keeping the trust that is the foundation of banking. Entrepreneurs across the world have recognized both of these shortcomings, and many have mobilized to fill the gaps by introducing banking offerings of their own.
Rewriting the definition of banking
So, what can banks do to grow?
- Banks must transition from the notion that technology is a cost center to the belief that it is the differentiator. Technology cannot be a second thought in today’s market. Digital strategy must be an integral, integrated component of a bank’s forward planning.
- Banks must adopt an agile mindset and work in a constant state of improvement. It is no longer sufficient to plan annual, incremental evolution. Clients expect their service providers to be consistent about optimizing their services. This means adopting a flexible approach to technological changes that allow banks to pre-empt and react to shifting preferences. Instead of planning tech releases in the span of months or years, banks must strive for an ongoing, year-round model of innovation and implementation.
- Most importantly, banks must actively listen to their clients. A successful strategy is one that puts people first. The fundamental trust that clients expect from their banking partners will remain important, but banks must also work to ensure that clients believe their banks will rise to meet the changing expectations of service and transparency.
Today, there is clearly an effort to rewrite the definition of banking.
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