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Mobile innovation: The new battleground for financial services differentiation

 A simple truth

Today’s millennial banking customers (born between 1980 and 1996) are masters of the smartphone; accustomed to running their lives, and certainly their money matters, on the go. Through mobile devices they want to access their bank accounts, easy payment capabilities for shopping, easy ways to manage and move their money.

The phone is almost at the tipping point of replacing cash for these dyed-in-the-wool mobile customers, who find it entirely acceptable to use their phones to transact even the smallest of  purchases; a boon to the coffee-to-go industry.  It is second nature to them to compare loans and insure their car all from their phone, whenever they want to, wherever they happen to be to be at the time.

The arbiter of value for the services the customer of the future uses is simplicity; clear graphic interfaces, unequivocal signposting, superior navigability, and  lack of clutter. Financial service providers must meet these demands to stay relevant, competitive and profitable. They must strongly evaluate what they need to do to meet the demands now, before everybody else stakes a claim to the market. Behaviours are being significantly moulded by early adopters but the journey to mainstream and maturity is short. It is also unforgiving for laggards.

New behaviours dictate new business models

The services to which customers today respond most favourably tend not to be the kinds of services that banks have traditionally offered. The market has therefore been richly exploited up until now by innovative Fin-Tech start-ups responding to the sizeable business potential of the first truly digital native generation.

This generation has grown up with PayPal and Amazon, iTunes and Spotify – technology companies offering services that were once the exclusive domain of banks, record labels and supermarkets. As territories and audiences blur and overlap, the need for innovation and agility among traditional financial services organisations comes ever more clearly into focus.

Millennials are more demanding customers than previous generations. They also have a tendency to be  less loyal, primarily because they know more about shopping around, comparing offers and services, using mobile apps, closing and opening accounts; many of which behaviours were fraught with difficulties (real and/or perceived) by previous generations.

Digital native customers expect superior digital experiences from service providers. They're vocal when they don't get it. They share information, views, and recommendations on social media.  Brand loyalty in banking has given way to transactional relationships, easy comparison and one-click switching.

Collaborate to compete

IDC suggests that by the end of 2018, 50% of global Tier 1 and Tier 2 banks will offer at least five external APIs, partnering with Fin-Techs to drive the accelerated development of new services. Part of this is being driven by the new PSD2 banking regulations around sharing of customer data – which effectively forces banks to adopt a more collaborative approach to innovation in the interests of customer service. 

Of equal importance is the realisation by banks that mobile innovation to date has not been given the level of priority it should have been given. In-house efforts have been restrained to an extent by lack of appropriate technical talent, as well as traditional cultures which have been resistant to large-scale change in operating models.

Banks do have a very advantageous start point from which to bring about change, however. Through their capital, scale, data, customer trust and regulatory support they are superbly poised to attract partnerships with Fin-Techs who can deliver innovative new services such as frictionless digital banking, one-click payments, new cryptocurrency opportunities, password-free biometrics, locational services and offers, and conversational interfaces.


According to PwC, there are four building blocks for effective IT solution architecture to facilitate the mobile imperative:

  • At the visualisation layer, the customer interacts with a self-service dashboard and search capabilities, displayed through advanced visualisation tools that generate and present rapid insights. I
  • In the application layer, the visualisation layer is integrated into the business processes management with capabilities such as case management, alerting and reporting.
  • The analytics layer does the thinking, using advanced AI techniques to profile and predict behaviour, detect anomalies and discover hidden relationships.
  • data lakes will form the key layer of the solution, acquiring data rapidly from disparate sources and ingesting it so it can be used productively.” 

Because of the volumes of data in play, and the need for it to be processed, analysed and presented in real time, the extent to which the interactions within and between these layers can be automated will play an important part in the bank’s ability to deliver an outstanding experience and an effective personal service.

There will always be a need for human interaction in the banking relationship, but the nature and purpose of that interaction is changing. The time will come when all banks will have an identical ability to deliver exactly what customers want, when they want it, through the application of technology. At that point, personal – human – relationships could once again be a key competitive differentiator.For the time being, look to the machine for the magic.



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