By Ben Gale, Vice President and Managing Director, Diebold Nixdorf UK/I
The banking industry is changing. We’re now in an age where banks are competing on customer experience – and when it comes to making that experience better, using data to create connected customer journeys equals power. That’s because data can give banks visibility and control over the whole customer journey, rather than just the transaction at the end. Connected commerce is more than just omni-channel banking and it represents a fundamental shift in UK financial services – putting the customer experience at the centre of every interaction between a bank and its customers.
The industry’s drive towards digitisation, and its resulting quest for data, has been prompted by a massive expansion in mobile technology. Consumers have adopted this technology at a rapid rate – let’s face it, we all love our digital devices, so much so that an astounding four out of five of us in the UK now owns a smartphone. What’s more, there’s a strong appetite among consumers for using these devices to bank on the go, with the use of banking apps jumping 356% between 2012 and 2017. Vast numbers of consumers are, therefore, quite literally carrying their banks around in their pockets with them, bringing an end to static banking and changing the banking customer engagement stakes forever.
Connecting the physical and the digital
But having a mobile banking app is simply not enough for banks that want to achieve true customer engagement. Financial institutions must now also start to think about how they connect their physical and digital touchpoints. This represents a major challenge to financial institutions, but it is also where the power of data comes into its own.
Consumers have become accustomed to receiving a highly personalised and connected experience from the retailers and other organisations that they interact with, so it’s only natural that with the explosion of mobile banking, they would start to expect the same service from their banks too.
Integrating channels and connecting the customer experience is a key objective for banks – however integration like this is also a major challenge. It requires a seamless flow of data between different IT architectures, systems and processes. To make the system successful, financial institutions need a common platform that can underpin all channels, allowing for this data flow, and erasing the boundaries between mobile, branch, online, and ATM.
Banking as a service
This new model, inspired by and designed for the customer, is inherently connected to mobile trends. Yet, it is still in relatively early stages, with just one in four banks currently building mobile tools such as personal finance management, appointment booking, and account aggregation into their offering.
Those that are bringing these facilities to market are simultaneously developing innovative ways of interacting with their customers, providing an experience that amounts to ‘banking as a service’. A good example of this is start-up bank Starling, a mobile-only bank with an extremely user-friendly interface, and which offers helpful services – such as automatically categorising purchases to show a user their spending habits. Other examples include app-only account and mortgage provider Atom, and mobile-run Revolut, which allows customers to take control of their own money transfers in multiple currencies. These forms of banking are very consumable for customers that are used to digesting information on a mobile device. Their lifestyle inspired approaches are incredibly personal – and ultimately, they put the customer at the heart of their services.
Data is power
Putting personalised and adaptable banking in place is, of course, easier for start-ups or mobile-only financial institutions like those mentioned above. But for the bigger banks that have a greater number of legacy systems to work with, banking as a service requires a more notable change.
Nonetheless, there is an industry-wide acceptance that this change is necessary, with mobile technology ranked as the number one trend to impact our sector in the next five years. Those that embrace the trend, can expect to reap the rewards – because connecting their systems will allow banks to manage their data and put it to work to offer more personalised services.
In a more connected banking world, financial institutions will have better visibility over the entire customer journey, and understand how different customers react to different platforms and touchpoints along the way. Big data analytics can also be used to gather consumer insights across different demographics or locations. Which, in turn, can help banks offer their customers relevant services that are likely to appeal to them, creating new revenue streams in a very targeted way.
Data and creating a connected commerce business model hold the power, not only because they will allow banks to offer customers the more personalised experience that they crave, but also because they can establish new models for banks, help them spot opportunities, inform future branch or technology strategies, and make their platforms work in harmony.
The ability to put data to work is already making some banks stand out from the crowd. It is this digital trend that is changing the shape of modern banking forever.