CMA banking report reveals pivotal role of digital tech

Lindsay James
Lindsay James
By Lindsay James on 19 August 2016
CMA banking report reveals pivotal role of digital tech

The latest report of the Competition and Markets Authority’s (CMA) investigation into the UK retail banking market has outlined how digital services can be used to inject competition into the £16 billion personal current account and SME banking market.

The report concludes that older and larger banks do not have to compete hard enough for customers’ business, and smaller and newer banks find it difficult to grow. It sets out a vision of how digital services can empower customers and strengthen the position of banks. However, challenger banks have criticised the report, saying that it focuses on the needs of larger players who dominate the field and does not highlight other measures to increase competition and choice for customers.

Nitin Rakesh, CEO and president of global digital solutions provider Syntel, believes that customers should be at the heart of any digital business strategy. “The banking sector is undergoing many changes as a result of technology, digital modernisation and new entrants,” says Rakesh. “It’s like changing the wheels on a moving car. Banks cannot afford to stop operations, but need the necessary tools to modernise their services to develop the digital capabilities they need to engage the digital native consumer.”

Research from the Social Market Foundation revealed that high street bank branches play an important role in the management of customer money, as 63% of consumers prefer to talk to someone face-to-face when making a big financial decision.

“In the new digital landscape, customers are brand agnostic and loyal chiefly to accessibility and convenience,” says Rakesh. “Paradoxically, they also desire a level of face-to-face interaction. Banks must understand that going digital doesn’t mean everything is online. There must be a balance between the in-store branch and online activity. Through back-end automation, banks are able to relocate resources to the front end to promote a better level of face-to-face customer service.”

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