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Banks must think like technology companies to keep themselves relevant with their customers

The evolution of customer behavior is happening faster than firms can change their business models, processes, and technology. This is forcing organizations, including an increasing number of non-technology firms, to bolster their software expertise to keep up with customer demand and support the fact that greater proportions of their revenues are becoming technology dependent. Technology is their differentiator and the mechanism for customers to experience their brand and develop loyalty to that brand, even if the firm is a non-technology organization.


Where a non-technology company’s revenue becomes increasingly reliant on technology innovation, development and delivery this requires a new service to build products; organizations need to become technology oriented, and sometimes this is not possible. As a result, success in commercial software product development demands a level of partnership, collaboration and engagement that goes beyond traditional outsourcing. Software Product Development Services (PDS) enable the development of “product platforms” that offer core functionality and provide configurability for a wide range of usage scenarios, including the flexibility needed to sustain multiple product generations.


In a recent paper on trends in PDS, independent research firm Forrester wrote that as industries including retail, media, travel, entertainment, information services, and financial services evolve, an ever-greater proportion of the value of the product or service comes from software. Software capabilities are no longer a nice-to-have; they’re an essential asset to every brand and must be a strategic priority. Every product and service now needs to use software to interact with customers and this environment is forcing organizations to look to partners with the requisite software expertise. This demands a much more product-centric skill set and mindset compared with traditional IT projects and a different breed of suppliers is needed with a broader portfolio of skills, such as user experience design (UXD) and Agile capabilities.


The increased popularity and adoption of social, digital and mobile channels have transformed customer expectations and created an opportunity to firms to provide a broader, more innovative, customer-centric set of products. This is not just a business opportunity however, it is a must have. Despite this, a number of firms have fallen foul of not recognizing the impact that software and digital technologies can have on their business models and in enabling them to reach a broader and more diverse customer base.


Kodak is one such company whose long decline – that culminated in it filing for bankruptcy in 2012 – can be traced back its failure to reinvent itself in the digital age. Once a powerhouse in the film-based world of photography Kodak failed to create new revenue streams when their legacy business was in decline.


In contrast, Post-it and Moleskine, both non-technology companies with businesses founded on paper-based products, have effectively utilized software and technology to evolve their product offerings and make them relevant to a more digitally native customer base.


In September 3M launched the Post-it Plus App; a digital collaboration tool that allows users to capture and share handwritten Post-it notes online, making them easy to organize, refine and build upon. There were over 1 million downloads in the first week and the app was also an ‘iTunes Featured App’.


Similarly, earlier this year Moleskine announced the launch of a series of notebooks for use with Livescribe smart pens to capture and transfer notes and images from paper to a computer or mobile device, giving people the ability to access their ideas whenever they need them. Along with transferring their ideas from paper to screen, users can use Livescribe smart pens to record audio linked to their written notes and can tag and flag items by tapping the on-page icons with the tip of the smart pen. Moleskine have also been major exponents of Cloud technology through their partnership with Evernote that enables handwritten ideas to be transmitted and preserved in digital form for easy organization, search and sharing.


As digital experiences become intrinsic to companies’ interactions with their customers, they will increasingly look to suppliers to provide the necessary skills and expertise. In many cases these suppliers are software product development services (PDS) providers whom can both enhance firm’s software capabilities and their ability to deliver product-enabled services to their client bases.


The banking industry is one are where this is true, particularly when we ask what the bank of today looks like. Previously the identity of the bank used to be carried by the branch, its signage, the teller and the financial advisor however the reality is that banks are losing their identity and their brand recognition because the brand is no longer carried by the branch but by the software through which customers interact and buy or use financial services.


Apple Pay exemplifies this move away from purely digital banking services towards a broader financial services offering. Despite being a non-banking institution Apple Pay is a transformative, disruptive and game-changing financial service. Supported by almost 40 participating issuers including leading US banks it supports most of the major credit and debit cards across everything from personal and business credit and debit cards to rewards cards and pre-paid cards. Traditional card payment providers such as MasterCard and Visa risk losing out as Apple Pay becomes the brand that customers start associating with, not because of its banking tradition or banking credentials but because of the software that enables them to use banking and payment services.


Banks need to develop more products, become digital, technology organizations and use vendors who have the necessary skills and capabilities to support them in the Product Development Services. If they want to remain competitive and retain their brand with their customer banks must look to become product vendors and exponents of IT services; in short, they have to become technology companies if they are to stay inter mediated.


Customer expectations are more demanding. Competitiveness around time-to-market is forcing organizations to put a premium on getting products to market as quickly as possible; customers expect high levels of proactive business and technological innovation to be part of their relationships with firms; and customers expect firms to be ahead of the latest developments in technology and creativity. Banks must recognize this and have a depth and clarity of vision, backed up by specific investments in software and technology, to set themselves apart from the other banks and non-banking institutions in the eyes of their customers.



Comments: (1)

Ramani Balakrishnan
Ramani Balakrishnan - TCS - Chennai 28 January, 2015, 04:58Be the first to give this comment the thumbs up 0 likes

for the last few years, retailers and telecome have picked technology much faster leaving the banks far behind - with the definition of 'bank' itself is changing - if they dont catch up - they will become redundant

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