The metaphor of Amazon being Santa’s grotto of the 21st century, has been used many times before. But it is an interesting one, simply because it illuminates where we are as a society.  Holiday gift shopping is now a digital-fest one night over a glass or two of red wine. Less and less is it about actually ‘going out’ shopping. The numbers back this up. On ‘Black Friday’, Amazon sold over 4 million items in Britain alone. That means over 46 items were clicked for each second of the day. On Cyber Monday Britons spent £600M on 7.7million purchases.  The figures are staggering.

If Amazon is Santa’s grotto, then the Banks who facilitate digital shopping have to be the magic that no-one really sees but makes it all happen. A crucial part, for without the magic none of this would be possible. However, untimely problems in a major Bank’s payment systems in the UK caused shopper fury.  Unfortunately banks have ‘out-dated’ magic up their sleeves, the magic of the previous generations, simply doesn’t cut it when satisfying the digital consumer. Instead the consumer is frequently electing to use the newer entrants instead who are more visible and digital. Recent research (Finextra Dec 4th, https://www.finextra.com/news/fullstory.aspx?newsitemid=25507) found a quarter of Brits would consider switching banks if it suffered a major technology failure. A dangerous position for the banks.

A couple of weeks ago I posted a video about the changes we are seeing in banking. It is exactly this push towards the digital that I was talking about. Can anyone think this is still years off? The research exposed the crux of the problem; identity security and poor customer service as the key elements along with IT failure drives consumers to switching.  State of the art cyber security and consistent excellence of customer experience across all channels are mandatory retention factors for the banks.  Consumers compare now, review now,  buy now, they pay now on whatever device they are using at that moment.  IPADS were the number 1 ‘technology item’ bought by consumers on Black Friday.  This is no longer a generational issue. The digital revolution really is here.

In order to meet the demands of the digital revolution banks have to move towards a more ‘customer centric experience’ approach and ensure their infrastructure operates at the real time speed of consumers. Many banks still think about digital channels in portal terms rather than customisable apps enabling consumers to customise their own lifestyle.  Customisable apps need core banking services coupled with third party data and services.  All available in a secure world and across all channel devices.  Infrastructure modernization is the key to unlocking innovation and placing the customer at the heart of the operations. Many countries now have programmes underway, funded by the banks to develop new payment real-time infrastructures upon which new direct bank to customer instruments can be developed. This innovation and delivery of new payment types, will see “value added” payments and new technology to meet the customer demand of “buy anything, pay anyone, bank anywhere anytime”. 

It’s not only in the retail space that banks need to rethink their business models. It is the same consumer who buys the end product, who is managing their corporate account. Think about all the distribution companies, packaging companies, wholesalers who are interacting with Amazon -the digital father Christmas – to make Christmas happen. They all expect the same seamless digital experience in their work life as they do in their personal life.

In order to stay in the game banks urgently need to focus on three programmes: digital customer centric experience; infrastructure renewal; and finally cyber security. These are the right programmes to drive revenue growth, customer loyalty and preference and superior profit.