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Innovation needed in digital banking ...

PwC has released a report this week (The New Digital Tipping Point) that investigates consumer trends in digital banking. It’s an interesting overview of the challenges facing retail banks in 2012, not only to deploy market-leading digital services, but also to compete with new players that are using digital technology to disrupt the traditional banking model.

I agree with PwC that the pressures in this space are significant and coming from all sides. Many banks lack the skills set (both specific and quantity) to truly innovate using new digital channels. They also don’t have the in-house infrastructure and therefore technology foundations to launch multiple mobile platforms at a pace. The report from PwC analyses these difficulties and highlights the role that specialist partners must play to help financial institutions to fulfil the demand for digital banking.

The biggest danger that banks currently face when it comes to introducing more innovative banking and payment services is to underestimate the task at hand. To launch a mobile banking solution that simply offers the same services as in branch or online is not enough. The PwC report highlights the value that must be brought to bear from the richer feature set that mobile devices enable.

Location-based features, timely and relevant marketing opportunities and interactivity are all achievable through the mobile channel and also far more compelling for the customer. And with the Vickers Report recommending that banks must enable easier account switching, now is the time for marketers in particular to foster better relationships and true loyalty from their customer base.

So, yes, 2012 will be the year of the mobile in financial services, but which institutions will really take this new channel seriously enough to make it count?

James Richards - Director, Mobile - Intelligent Environments


Comments: (2)

A Finextra member
A Finextra member 20 January, 2012, 16:29Be the first to give this comment the thumbs up 0 likes

James, good post and summary of the challenges suggested by the report. Banks will need to evolve from sustaining innovations to truly disruptive innovation or they will relinquish hard-won customer relationships to more agile and inventive entrants. The reality is that retail banking will need to be re-imagined to meet the needs of constantly connected, canny and empowered customers. This involves a wrenching change in innovation mindset. As you say mobile offers huge potential but it remains to be seen which banks will be bold enough to take the opportunities.



Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 23 January, 2012, 11:40Be the first to give this comment the thumbs up 0 likes

The real challenge is for banks to be able to think of adequate number of use cases for deploying various existing technologies. For example, it is technically feasible to make a geofenced offer for a checking account on the smartphone of a potential customer walking past the bank branch. But such an offer has limited scale since checking accounts - unlike books, DVDs or sandwiches - are not bought and sold everyday.

On the other hand, stock trading is a great usage scenario for mobile phones and several banks already offer this product.

Mobile payments could be another strong use case for mobile but banks might be thinking that they're doing the smart thing by ceding the m-wallet market to third-party providers. It's quite likely that a typical customer might prefer to store details of their cards issued by Bank X, Bank Y and Bank Z in Google Wallet, ISIS or some other independent m-wallet provider than in the one provided by their bank (if any). As long as the payment eventually happens on the card network rails - as it does with almost all m-wallets today - banks X, Y and Z earn no less interchange revenue than if they'd incurred the cost of providing the m-wallet. While it's difficult to predict the long-term repercussion of their approach, banks' reluctance to jump into m-wallets or mobile payments seems justified from the perspective of topline and bottomline in the short term. 

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