The Four Essentials of 21st Century Banking

There's a powerful combination of pressures at work in the banking industry – some of which challenge the very core of banking business: information and delivery. Aside from the global political, economic and regulatory landscape, it is the emergence of digital technology that has been the major disruptor to business as usual and long term strategic planning.

Banking in the 21st Century brings a whole new set of challenges and opportunities. Voracious consumer appetites for omni-channel transactions, high expectations around customer experience, and low levels of patience and brand loyalty have put most banks on the back foot. The vast majority are playing catch-up with their customers today, let alone anticipating the needs of future customers. In a recent report, Forrester Research underscores that banks grasp the digital transformation imperative but it's the complex, inflexible, and decades-old application landscape elements that make the current state of digital banking is less than perfect.

That's why I wanted to outline what I consider to be the four essentials every banking institution should consider when thinking about how they address 21st Century customer requirements. 

1. The first is convenience. Sounds simple enough but you'd be surprised how many banks think about what their systems are capable of doing as their starting point, rather than understanding what their customers actually want. Banking services need to work around the consumer's busy life – not the other way around. That means looking at what customers want to achieve from their perspective. Those that can't be flexible in adapting their services to suit consumer convenience, risk jeopardising long term success and sacrificing market share. It is that serious.
2. The second consideration is relevance. The goal posts of customer engagement moved several years ago. Communication must be personalised and relevant to the context of the customer. Consumers expect their banks to know them as individual customers, with awareness of their requirements and even anticipating their future requirements. This involves the need to switch to real-time banking with maximised self-service that's underpinned with personalised, tailored advice when needed.
3. The third essential is responsiveness. This is probably one of the biggest hurdles banks face because they're typically working with disparate systems in a silo branch network. Many internal processes simply don't reflect current business need - which means they must change. But it's not just the systems that need to adapt. People must as well. There must be a consistency of message and service delivery, along with being empowered to do so. Employees need access to all of the latest and most relevant data if they are to respond accordingly. I think we'll see much tighter integration on this front moving forward as sales and customer service continue to converge. 
4. The fourth and final essential is reliability. In an increasingly fragmented industry sector (think disintermediation from the likes of Facebook, Apple and PayPal chasing the mobile wallet share), banks simply cannot afford to have an unreliable reputation. Recent research from The Economist Intelligence Unit found that consumers expect the same quality of experience as big Internet companies provide. Reliability is at the very core of quality experience.

As consumer needs and uses change, so, too, must banking. Traditional banks are already facing stiff competition from startups gnawing away at some of their key banking transactions. More established newcomers, such as Google and Amazon, whose reach into the consumer market dwarfs that of even the largest banks, firmly have their sights on becoming the nerve centres for all key transactions -offline and online. Yet despite all the posturing and discussion around 21st century banking strategies in the boardrooms, most banks remain stuck in 20th century processes. It's time to catch up, re-engineer, or get overtaken.

I'll be discussing the latest Banking trends with 450+ senior executives at the FSI Forum in London June 23rd -24th. Take a look here for more information: http://events.sap.com/gb/sap-financial-services-forum-emea/en/home