Banking Technology Goes Consumer

Customers don’t buy products, they buy benefits.

But for years, technology sales bucked this marketing wisdom, as vendors pitched platform against platform, arguing their case based on functionality and technical prowess to probing CIOs.

Not anymore.

The crisis marked a turning point, when banks started to monitor all discretionary spending more closely. Never before heard questions like “How will this platform support innovation” or “Will this solution differentiate our bank”, began popping up during discussions. These were asked by business users, who were increasingly involved in technology projects, either as stakeholders or even sponsors, and to whom technology meant nothing other than a way to change their business. In a way, the end customer (represented by the business team) began to call the shots in what used to be an IT-driven decision.

So today, our conversation with banking customers has new buzzwords. And our technology platforms are being assessed with new metrics, such as agility, customer excitement and innovation. In other words, things that really matter to the market. It is the consumerization of IT, and it is inevitable.

How will this change our business?

I believe that technology companies will need to place the end banking consumer (and not just the bank’s IT user) at the core of all activity. Now, when we create a mobile banking solution, for example, apart from all the good stuff like making it work on all devices and platforms, we also need to think of what applications we can offer on top. Because that’s what customers are interested in. (As Apple’s App Store surely knows… they recorded their 25 billionth download on 6th March 2012.

I know of several progressive banks, which are enriching their mobile banking platform with consumer apps, because they’ve realized that mobility is the best way to reach customers. Interestingly, this opens new doors to technology vendors, because banks are sourcing the best apps from different providers, not necessarily their existing technology suppliers.

This changing paradigm of technology evaluation is most evident in “social.” You’ll hardly see a CIO in a social media discussion. It is not social “technology” per se that’s exciting, but rather its ability to bring a business in direct touch with its customer, on an undreamt of scale. Now, as any number of surveys, reports and experts will tell you, banks aren’t the best users of social media, but there are one or two, which are piloting new product ideas with Facebook groups, or using Twitter to improve customer service. Just give it time.

What is evident is that the bank CIO (or IT team) is no longer the sole authority, or even the first among equals, in the buying decision. Different parts of the bank – marketing, product development, sales and service etc. – are claiming a place at the table, and challenging the existing view of technology evaluation and deployment. Some are even saying that they look forward to the day when large enterprise solutions, including core banking, will be available off the shelves of app stores.

A core banking suite as an app? I’m not betting against it.