Retail banks are harnessing technology and devising new business models to deliver differentiating products and services. Here are ten of the key trends we’re seeing today:
1. Monetisation. In order to capitalise on big data investments, many banks are looking for ways to get money out of their data – although at the moment most of the benefits are in terms of differentiation, not the bottom line. If we think of data monetisation as the ability to deliver co-branded offers based on customer habits, it’s a game every bank can play with success. But if we think of it in terms of selling business insights based on your internal data to your SME clients (for example, Nedbank’s Market Edge), this is an arena for large-scale players only.
2. Social value chain. We’re seeing a new generation of open banking processes that are increasingly shaped, designed and operated by customers. This trend – also known as ‘corporate crowdsourcing’ – has its roots in design thinking, where customers are involved in assessing process quality to directly optimise entire pieces of a process. A broad range of applications are emerging, from CBA’s application that lets customers directly support their peers, to Widiba, which asked its prospects to conceive the new bank, from the name to the services portfolio.
3. Robotics. Robotics is a typical example of a technology-driven trend that needs many years for the technology itself to become effective and cost-manageable. The potential impact of robotics on advice components, massive customer service and process automation is impressive. But if we look at robotics from a maturity curve perspective, we’re quite far from what Gartner calls the ‘productivity plateau’.
4. Banking of things. A key example of innovation in this area is ASB’s Clever Kash, which gives a new digital life to the traditional piggybank, making the concept of saving easy and fun for children through simple interaction using a mobile phone. This kind of technology is still in its infancy, so it will be a while before we are surrounded by smart objects that can interact and learn from us. However, with the falling costs of networking and processing, that world might only be a few years away.
5. Intermediate everything. Banks started to intercept and serve non-financial needs at least seven years ago, when BNP launched Les Servissimes to offer services like babysitting and gardening to its customers. Banks continue to invest in this area because of its potential impact in terms of customer stickiness. So far, only one bank from the US and one from Poland have been able to generate relevant economic returns through this lever, but that hasn’t discouraged new players from trying.
6. Distributed payments. In the 1985 movie ‘Back to the Future Part 2’ – in which the actors travel to 2015 – a character pays for a taxi ride by scanning his finger. Thirty years after the film was made, we can finally say that was an accurate prediction. Confirmation of this came from Singapore where this year’s Sibos focused on ‘immediate payments’. Innovations such as the La Caixa bracelet represent a bold step towards a future where mobile devices are simply a hub and payment means are totally dematerialised.
7. Talking transactions. Personal finance management (PFM) functionality is not new, but it has changed – just look at the recently-launched Moven Impulse Savings. Moven was among the first players using PFM as the backbone of its digital banking proposition and many banks, including giants, are following its example. Further, if you replace ‘personal’ with ‘business’ then ‘PFM’ becomes ‘BFM’, which is expanding to new SME territories.
8. Small business is back. For many years, innovating for SMEs has meant adapting a retail innovation approach to small businesses. But a new trend emerged at the last Finovate conference, where around half of the innovations were targeted to small businesses. Banks are following fast, trying to intercept a wide set of needs including non-financial ones, and leveraging a wide ecosystem of partners. Kumsal by Deniz is a great example: a digital platform where the bank’s business customers can sell goods online, manage targeted marketing campaigns autonomously and communicate one-to-one for sales and service.
9. Dialogue at your fingertips. In September 2013 Amazon introduced the Mayday button on its Kindle Fire to contact customer service via webcam. Today, 75% of customer service interactions occur through that button. Faster dialogue has become a must-have, and the Always-On service by Standard Bank shows how this trend has emerged in banking. Banks are extending the boundaries of their communication with customers, enabling them to get in contact through any messaging or social contact service.
10. Digital customer platforms. In the last ten years we’ve seen several cases of bank specialisation, but with a siloed approach: special products for youths, sites for the affluent, contact centres for customers who are divorcing, and so on. Today we are seeing a different path to specialisation: a 100% tailored proposition combining products, services, touchpoints and a dedicated relationship model. Aligning all those components calls for flexibility, and digital plays a decisive role in making it possible. Idea Bank is the greatest example of this trend, with a great focus on scale-up companies: a smart, BFM-based digital platform, a set of branches acting as SME offices and an on-demand mobile ATM.
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