Technology and the Banking Industry

Thursday 14th, January 2016
Banking photo

Photo by GotCredit

Bottom line – technology is changing pretty much everything. More and more businesses are adopting technology into their processes, to either increase productivity or to free them up to do more strategizing or the like. But not so with Banks.

Did you know that 35 percent of Indian consumers feel that their bank does not know or understand them?

But this does not have to be so!

The potential is huge

Banks have a tremendous amount of data about their customers. Just based on this, they can revolutionize the way they banks interact with their customers. Customers interact with the Bank through many different touchpoints – this includes a walk-in at a branch, or a stop at the ATM, or through a Bank’s web page or a mobile App. And each of these interactions, creates data. And all this data has the potential for a bank to really know its customers so they can, on the one hand, offer a uniform experience across touchpoints or help the Bank cross sell or upsell to him – making offers that are truly relevant to him, on the other. When analytics is thrown into the mix, it is possible to make predictive, targeted and relevant offers to the customer at the right time. This makes the customer happy and keeps him loyal to your bank.

Customer data can tell a bank, if a particular customer has plans of taking his business elsewhere – and the bank, in turn, can do all it can to retain him.  With the market being saturated and all banks offering similar products, every customer counts. Even otherwise, actually. But more so, in the banking scenario. With analytics, Banks can make informed decisions and also formulate marketing strategies that are powered by data.

What Banks can do

They can, at the start, offer a better level of customer service. Most customers are of the view that Banks don’t know or understand them. They feel entitled to a more personalized service, which they don’t get, and are disappointed. They feel that Banks don’t handle complaints well. The list seems endless. All this can be easily sorted out by understanding customer data. Regardless of the channel that a customer uses to interact with a bank, he looks for personalized and consistent communications, rewards and service.

Customers want to feel that the Banks know them – know how long a certain individual has been their customer, how many products link them with the bank, etc. and they expect to be rewarded for their loyalty. This becomes extremely simply when technology and analytics come into the picture. Customers also want real-time engagement with banks. Which is also possible through technology. Banks can track spending patterns of their customers, know what kind of offers would actually interest them, and take care of their best customers well.

Customers look for convenience – right from the expectation to pick up right where they left off at the last instance. Or when they switch channels, they don’t want to have to go over their whole story all over again. Banks can easily offer this to their customers when they consolidate customer data, make a single view of each customer and make this information available at each touch point.

Problem

But this doesn’t seem to be happening, particularly in this part of the world.

Some banking leaders say that it is the essence of some core banking systems that are preventing the adoption of technology. Some say it is a cultural thing. But they seem to reluctantly agree that sales and revenue are more important than customer needs and customer experiences. Some bankers even seem to think that ‘customer centricity’ is an overused term. And if they invested in technology, it is only to improve sales and revenue and not customer services. Most banks have not fully explored online and mobile channels to engage with customers.

The future is digital

But the future of banking is truly down the technology road. The West has been quick to jump on that bandwagon what with branches closing down, making way for the whole process to go digital. There are video walls and digital assistants. Biometric verifications and electronic signatures. Media kiosks and interactive work benches. All these go a long way in enhancing the customer experience no end. Some banks in Japan have ATMs with 19-inch screens, biometric identification and the ability to print new debit and credit cards!

A certain European bank, as part of its Basel II compliance effort built a technology platform to track, measure and manage its credit risk exposure and develop better insight into managing credit risk limits for its customers. Through this, the bank would achieve a reduction in the amount of risk capital on its balance sheet (thereby decreasing its cost of capital) and would be able to price its customers far more effectively. Automating some processes in the back office of a bank will also certainly help to some extent. For instance, it might be a great idea to use image and workflow technology to automate manual, paper-based processes and minimize process duplication.

Process automation is a great benefit that technology can bring to the table. Technology has the capability to totally replace several processes that have remained manual for years. There are ways to reduce paperwork and automate processes. By implementing cloud computing, for example, you could store information cheaper, do your accounts in a cost effective way, and even run a content management system online. You could use the internet to communicate with your staff, suppliers and customers. And flexi-time for employees with options to work out of home, works great.

It would be a worthwhile exercise for banks, in our side of the world to analyze all their processes from end to end and see how digitization can have a dramatic impact. And just as in all the other industries and realms of the world, technology has the power to truly revolutionize it. All it takes are the appropriate tools and the right strategy. And you can sit back and watch the magic happen – customers are happy. Loyalty increases. Processes are simpler and automated. And it becomes SO easy to send the right marketing message to the right customer at the right time.

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