During my review of the top payment stories in May, 2015 – I came across the Oracle Financial Services report “Banking is changing… With or without banks“. It is a fascinating read for anyone wanting to understand digital and the challenges that traditional banks are facing. If you have read the post 9 challenges posed by legacy ERP systems you’ll see that the same challenges faced by traditional banks are also being experienced by traditional corporates.
The Oracle Financial Services report focuses on retail banks, and is interesting because it presents a global view of top execs within the sector. Read the Oracle Financial Services report for further details and the stats – in this post I wont delve into the stats, but will highlight some high level themes that I took away from the report.
1. The Importance of Digital
Kind of stating the obvious here…. But the banks recognise overwhelmingly the importance (over 90%) of a digital strategy for customers
Corporates also need to recognise the importance of digital, and embrace it sooner rather than later….
2. Digital Priorities for Retail Banks
The 6 main priorities are:
- Increasing profits (APAC – 2)
- Achieving regulatory compliance
- Increasing revenues (APAC – 1)
- Reducing costs
- Developing digital services (APAC – 3)
- Understanding the customer
Interestingly the report highlights some key differences between regions, and above I have highlighted the top 3 priorities for banks in the Asia Pacific region.
Of course we expect the usual priorities to come up such as increasing profits and revenues, but now digital is also up there. I’m pretty sure even 5 years ago it wouldn’t have been there.
3. Who are the Retail Bank Key Competitors ?
The following list indicates the top 5 competitors to retail banks. Interestingly, new banks and alternative providers were top across all regions (APAC, EMEA and NA).
- New banks
- Alternative payment method providers
- Credit card providers
- Social media platforms
- Telecommunication companies
4. What does Digital Customer Engagement look like?
The following list indicates the 4 main responses. Note, this is what people within the retail banking sector are thinking. It would be great to see what customers think digital customer engagement looks like, and how this compares.
- Payments via mobile devices
- Real time data across all channels
- Real time spend analytics
- Digital advisory – consisting of personalised digital services for customers
I’m surprised that security, and specifically online security, isn’t raised. Corporates, does your digital strategy align with the above?
5. The Real Time Challenge
The report highlights the challenge in delivering real time services. While banks recognise the benefits and added value real time services will bring, they are lagging behind in both implementing and therefore enabling these services for their customers.
Interestingly, the report talks about how most banks (77%) are not really implementing a complete digital strategy, rather opting to ‘bolt on’ digital services to their existing legacy platform.
6. What are the Barriers to Digitisation?
In the indicated order:
- Inability to ‘let go’ of existing models and practices
- Costs of implementing digital services
- Technology is unavailable in the organisation
- Time required to implement digital services
7. Drivers for Omni-channel…
There are regional variations, check out the report for full details – but for now know the following indicates the top 3 key drivers for multi-channel offerings:
- Customer retention
- Cost savings
- Additional revenue streams
Plenty of room for thought there for both banks and corporates. Clearly the landscape is changing. In this changing environment reports such as this provide an invaluable insight into what chiefs across the industry are thinking when it comes to digital, and what is preventing them from making it happen. In addition to this, the report highlights some key regional variations. Overall, its clear – digital is happening. The question is, how quickly can banks and corporates adopt digital… only time will tell if its quick enough!