The emergence of challenger banks has been a recurring theme in recent years. The changing environment has bred a wave of so-called “fintech” start-ups; some seeking to disrupt established banking business models, others working with established banks to
provide the customer with the best experience possible.
But what do these changes to the banking landscape mean for technology innovation in banking services and for customer experience?
There is no denying that the banking has moved into the digital age. We’ve seen a surge of new technology move into the banking and payments world, with the introduction of finger vein readers and digital signage, along with new solutions, such as Apple
New banks, like Simple, established in 2009, are branch-free, only online and transparent about how they profit from customers. At the same time, traditional banks are also augmenting their digital offering to compete with these firms by pioneering technology,
for example Barclays Pingit.
So consumers are being offered a multitude of choices, driven by digital disruption. In its
Gamification 2020 report, Gartner suggests that by 2020 emerging technologies, including gesture control and augmented reality, could mean the use of game mechanics to engage
customers digitally will be commonplace, even for our finances.
But currently there’s a gap. Traditional retail banks don’t always manage to match the pace set by alternative financial services industry players, such as challenger banks and large consumer technology groups.
And with regulators, politicians and customers demanding greater digitisation of banking systems, traditional banks need to continue harnessing new technological solutions or risk losing customers to new and more nimble competitors. And so banks are reconfiguring
their branches and call centres to deal with these developments. Not so easy when they are laden with legacy technology.
Cloud technology offers a silver lining for traditional banks and means that banks don’t have to go for big bang solutions. New generation cloud services allow large organisations around the world to connect easily and securely to the applications and the
data they need, independently of where they are hosted, connecting their private clouds. And so banks can trial new technologies alongside existing ones using cloud solutions to adapt to growing demand. The traditional banks should remember their key differentiator:
that they are stable and have a core infrastructure in an app-driven world.
So the new digital environment doesn’t just pose challenges to traditional banks – it also offers opportunities. Sourcing and adopting new digital solutions may become the driving force for retail banks’ financial sustainability. Digital innovation allows
banks to offer better, more efficient and more personalised services to clients, as well as cut costs.
One such service, uptake of which is rapidly gaining momentum, is highly personalised video solutions allowing banks to communicate complex financial information in an easy-to-understand format. In the UK, Barclays was the first to roll-out a personalised
video banking service in December last year, in collaboration with BT. Other banks are likely to follow.
Banks can overcome legacy technology hurdles by partnering with established technology providers who can help them to leverage their core infrastructures that provide stability which customers can trust. This will allow the banks to embrace collaboration
to drive innovation, without redefining their business models. This will ultimately lead to a better customer experience.