In the financial services sector, customer needs are changing frequently. End users now demand more immediate and efficient interactions which are seamless, consistent and relevant to their everyday lives. Alongside this change, customers still require transparent but secure exchange of data and more importantly, someone who cares about, listens and supports them.
Regulations like PSD2 and Open Banking in the UK are fuelling challengers. Digital-born banks like Monzo or Starling or newer AISP/PISP entities are threatening larger, traditional banks as they have the ability to create more personalised experiences for their customers. Disruption is also coming from non-financial entities into the merchant acquirer, payments and financing services by leveraging the size of their recurrent and satisfied customer base.
This means that there is a myriad of options that will satisfy current business and consumer needs. For example, access to information with industry standards of CASS (Current Account Switch Service) or Bank account checklists should encourage customers to transfer to the next best provider. But despite the increasing awareness of Open Banking, figures of switching suggest that most businesses are adamant or neutral to find a different FS provider. In retail, however, we can see the opposite with more volatile figures that are derived from more robust competition and seasonal rewards.
Given this context, trust in an organisation or business partner is crucial for a bank to differentiate and grow.
Some companies have achieved this by building streamlined services to be more convenient for customers. This could be the process of client on-boarding, opening a new product or leveraging data their customers have agreed to share to provide more frictionless experiences in other interactions. Others have opted for reinforcing feedback whilst some have also delivered features that customers demand most.
So far, features such as marketplaces, P2P lending facilities, accounting software integration and card management tools have been the main focus for businesses. Looking ahead, there will be further opportunities for banks to help customers better understand and manage their financials. This could be by increasing visibility of their future situation and options in end-to-end journeys, fulfilling the demand for staying connected and moving money internationally in a secure, transparent and cost-effective way, or perhaps even embracing Digital IDs.
In addition, enabling conversational banking will become more common. It will make banking even more convenient and relevant for customers. We will also witness the evolution of the branches concept and how they can adapt better to customer needs.
However, in order to overcome these challenges and challengers, and reap the benefits of the opportunities ahead, innovation in technology is key. Technological advancements are allowing businesses to align with their customers’ needs more than ever before and in a more efficient and secure manner.
At everis we’ve identified how these challenges might affect the business banking industry. There are newer collaboration strategies that have started to emerge in a response to the shift in demand:
• Incumbents are investing in and nurturing start-ups to add value to their existing offering
• Incumbents are segregating lines of business or targeting specific segments by creating a digital brand to provide more tailored solutions
• Companies are seeking flexibility and scalability by leveraging technical capabilities from third parties
• Young challengers are also joining forces to become a more robust competitor in the market.
Apart from Retail, the Business Banking industry will see the biggest potential for increased competition. It currently has a population of 5.7million professionals, representing 99% of all business and 60% of turnover in the UK and historically a very concentrated market of financial providers. This year the Alternative Remedies Package (ARP) will certainly mark an important milestone for tech innovation in banking. The ARP will disrupt the market across the banking industry, putting more pressure over other participants to evolve quickly and adapt to the changing demands of their customers.
Banks must find solutions that go beyond the bounds of expectations through innovation. Investment in innovation and technology is required to harness the vast opportunities ahead; to stay competitive and current by aiming at excelling in customer experience.
We work together with our clients to help them achieve their vision, whether it is to defend against competition, grow despite the competition and/or disrupt the market. We know that being innovative with our services will help our clients reach their targets. So, we make sure we are different in the way we deliver Analytics solutions to understand customer behaviour, AI algorithms to anticipate potential needs or risks, NLU/NLP enhancements to open and improve new methods of communication leveraging chatbots technology, DLT solutions to execute near Real-time cross-border payments and RPA to drive new efficiencies - to name just a few!
Our teams are continually exploring the market and have partnered with leading companies in their remit to facilitate these new demands. This is not limited to only local markets but NTT Group’s global footprint. We leverage our combined expertise in legislation, managed services and operational efficiencies to advise clients on using the right data in the right way and securely, and to drive customer engagement.
“Nowadays, innovation is not an option, but a key factor to improve competitiveness”