Financial Institutions Not Prepared For Digital Future
?? Jim Marous
Top 5 Retail Banking Influencer, Global Speaker, Podcast Host and Co-Publisher at The Financial Brand
There is no question that banking is quickly becoming a digital business, supported by enhanced online and mobile offerings from traditional financial institutions as well as new market entrants. But how ready is the banking and credit union community for this transformation?
According to a Bain & Company report entitled, “Building the Retail Bank of the Future,” more than half of the 78 global financial institutions benchmarked lag substantially in the ability to create the “bank of the future” experience that customers already expect – integrated, on demand, real-time banking services via a combination of digital and physical assets.
Bain found that while many banks have focused their digital investments on digitizing transactions that reduce brick and mortar cost, less has been done to make consumers’ banking experience more convenient, easy and engaging through a seamless integration of channels. While consumers have definitely appreciated digital innovations such as remote deposit capture, remote bill pay and other simplified transactions delivered through a mobile app, winning the digital consumer in the future will require more.
“The biggest threat the digital pure plays present to incumbents is that they don’t have hang ups about cannibalizing branch networks and how the requisite shift in revenue delivery will compromise the business case for branches,” stated author, speaker andMoven CEO/Founder Brett King in an interview with The Financial Brand. “In fact, while lower acquisition costs and lower distribution costs are key metrics for neo-banks and P2P lenders, their ability to generate business purely through digital is the biggest single threat to the existing model of retail financial services.”
The impact of not being able to provide the digital capabilities customers desire is difficulty in defending against more nimble, low-cost, digital-only entrants that are increasingly grabbing market share. The cost of losing these digital natives can be high.
In fact, in a survey of 77,000 banking consumers, Bain found that consumers who conduct the most digital transactions also have the greatest satisfaction with their banks (as measured by Net Promoter Score) and do more business with them as well. As shown below, customer loyalty scores were nearly three times higher for digitally-active customers than for less digital counterparts. There was also a correlation between digital channel use and affluence.
A significant part of this is the point of departure - If you start with an internal focus on cost reduction and migration rather than focus on the customer and making it easy for them to do business, you will end up with different results. Banks need to start designing every element of the customer journey with the customer. They need to get the entire process design right [with the best tools and technology] and then work really hard on the user experience. Especially, user experience design to address problems and service failures.
Manufacturing Technician Test IV
10 年Don't be left behind by technology. You should always be learning and changing your business tools.
Department of cyber security
10 年Incapability of facing the situations leads to that decisions. Initially people used to have type writers and now using documentums. To come out of corruption and fear of other institution growth are few factors. Every nation has got its statistics of GDP. NPR. Perhaps still they are in the walking generation when people are traveling to other planets using the same technology. Seems there is a Gap at the finance institutions which are accepting.