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Banking, as we know has been going through a massive digital transformation. In last few years, we have seen most banks initiate large and complex programs to digitize several of their manual processes. With the advent of mobile and other form factors, many of these services have been introduced on mobile and the evolution continues. So what next?

Given below are some of the macro level trends, which are further driving this disruption and transformation.

Moving Up the Digital Maturity Model

Most banks today have a digital presence in form of online and mobile banking. But the challenge now is to move towards a truly integrated and seamless experience across channels and all banking services (from retail to corporate to wealth and even bank staff facing apps). Some of the key themes emerging in this regard are
  • Move from being “Multichannel to Omnichannel”. Being omnichannel means that the banks need to have a 360 degree view of the customer across all the channels(branch, online, mobile, call centre etc) and then present intelligent and consistent choices based on this data. This requires significant changes to the applications and an overall strategy to do the same.
  • Another theme that has wide acceptance is around “Branch Transformation”. With more and more banking services moving towards self service mode, the physical branches need to be upgraded significantly in terms of the number of branches and the kind of context specific services which the branch could provide to the visiting customers.
  • Last but not the least, the banks also have to deal with a new customer segment of Millennial’s. Millennial’s look at banking in a very different way and are much more digital savvy and also much more likely to quickly change banks if their expectations are not met.

Below is a good depiction of a digital maturity model which is evolving.

Emergence of Fintech

Of all the challenges, Fintech appears to have the most disruptive impact on banking. Fintech organizations are primarily technology companies with the aim to solve a specific banking problem. Fintech companies are fast challenging the traditional banks in their own turf and resulting in a phenomenon, which has been termed as “Unbundling Of a Bank”. Refer the below info graphic which depicts this very nicely. What the below shows is the home page of a well known bank and how different fin tech organisations are targeting specific domains and problems with their disruptive and much more nimble and agile solutions.

As a result, most banks are forced to deal with tho phenomenon by either partnering or buying these fintech organizations. For example Moven or Simple (acquired recently by BBVA), which are pure digital only banks have caused a lot of disruption in the retail banking space (savings account, checking account etc). Same applies to companies like Square and several others in the payment and credit cards space.

Banking the Unbanked — Mobile Based Payment Solutions

Despite all the banking advancements, there are massive amount of people with no access to banking services, especially in the emerging markets like Asia and Africa. However, a significant majority of these unbanked customers have a mobile phone. Overall in Africa only 23% adults have bank accounts, whereas 80% people in Africa region have access to mobile phone. Of this, mobile based payment solutions are used by over 40% people. Interestingly, the mobile money revolution in Africa was led by telcos and not banks. It is only now that the banks are picking this up and they are looking at technology led innovative solutions to expand the banking services, beyond the payments and transfers supported currently.

Social Banking

Social banking has been around for a while now, but like the maturing digital model, the banks are also just beginning to understand the impact (positive as well as negative) of the social media and hence maturing their response to this new channel. Earlier, most banks were using the social media only as a means to interact with the customers and use it as a platform to handle customer complaints. However, there are some very interesting and innovative solutions, which various banks have undertaken. For example India based Kotak Bank has come up with a whole range of hashtag banking functions. Similarly another Indian bank Axis Bank has come up with a new product “Ping Pay” which supports banking transactions through Twitter, Facebook and Whatsapp.

Below link even does a social banking index for banks across the globe and how active they are.

Few More Unexplored Areas which are waiting for relevant business model include

  • Wearables (Bands, Smart Watches) — This seems to be a very interesting and niche area(specially post the launch of Apple watch) and many banks like Barclays have already build few apps around bands. However, this is still a evolving space.
  • Deeper Customer engagement using Gamification, Crowdsourcing, Hackathons, API driven services etc.
  • Beacons (Location Based Services within and outside branch)

To summarise, the banks of today need to look at each of the above trends and respond timely and appropriately to stay in the game !!

Originally published at