Disruption has become the banking sector’s undeniable reality. Fintechs disrupting the ecosystem, new regulations around Open Banking, margin pressures, sluggish growth, outdated technology infrastructure, next generation ways of working, and rapid digitisation of customer experience are all rocking the boat. Now is the time to adapt, and to stop doing things the way they’ve always been done. In fact, the clock is ticking for those banks that have yet to start innovating.
While digital transformation makes innovation possible, having an open platform centered architecture with strategic customer insights in place, will prove to be the real game changer.
Recent SAP research found that gender, age, business type and turnover determine a variety of customer attitudes and behaviours. Just one in five UK customers are satisfied with the support they receive from their bank. And one in three customers over the age of 55 say they’re open to switching banks based on interest rates and sign up offers – compared with just 16% of Gen Z.
There are also differences around gender relevance, as women are also more likely to check their account after every transaction and almost three times less likely to have moved money from online-only providers to high-street banks. Likewise, the digital literacy of many SMEs with a younger digitally native management, demand real time financial insights to drive their business.
The combination of ongoing industry disruption and widening generational preferences are redefining the challenges banks face and also the necessary response. Banks must act now if they are to do more than just keep pace. And more importantly, as the rate of disruption accelerates, lack of innovation is an expensive form of inaction from both a market share and legacy maintenance perspective.
That’s because it’s hard to innovate with legacy siloed systems. To be truly effective, banks need a single, unified, open platform that supports modern development, vendor agnostic integration and real time insights to truly get the benefit of contextual data intelligence; consequently driving customer centricity.
It’s like the famous quote from renowned MIT professor Alan Kay, “Context is worth 80 IQ points.” Once you know the context, you can remove risk and innovate intelligently.
Opportunities to innovate in the front office are progressively becoming obvious. Transformation can deliver far richer omnichannel customer experiences including hyper personalisation and bots to push simplification and engagement. Designing customised product offerings and intelligent new product recommendations including making instant loan offerings at point of sale, using real-time data, and leveraging predictive, targeted marketing using Machine Learning and AI are real and executable use cases.
Harnessing seamless integration of bank and partner solutions for better user experience and creating new disruptive customer offerings with back-end integrations will drive the growth agenda.
Now is the time to explore processes across the operating model and identify priority use cases that could benefit from this type of innovation with technology driving the transformation to help monetise investments. By experimenting with new ways or working, leveraging learning and using ‘fail fast’ methods in proof-of-concept environments, banks can now execute rapidly with their vendor partner of choice. By focusing on long-term benefits and identifying value drivers, banks should put innovation into practice through flexible and agile commercial models based on need and usage.
Innovative modern platforms are here and are disrupting the disruptors. Are you ready to lead the road to innovation?
Anuj Kumar, Industry Strategy and GTM lead for Financial Services at SAP, UK
