National Australia Bank CEO Cameron Clyne once made the comment that should banks fail to significantly invest in technology they would struggle to compete over the next decade. The same applies for all organisations and their CEOS.
The National Australia Bank five-year blueprint heralded in technology growth as a major strategy in creating a better business model and $800 million in targeted savings.
Mr. Clyne views technology is a integral in his approach to fix problems created by difficult legacy assets within the bank’s British division.
“We would go so far as to say a bank that is not dealing to its technology from top to bottom will struggle to be a competitive force in the next decade, so it’s appropriate given the progress we’ve made since 2009 and where we’re at that we do refresh our strategic agenda,” he told analysts in a 2013 conference.
Mr. Clyne’s strategy was to simplify and digitise the business and customer management.
“We feel the investment we’re making in technology is essential to banks’ competitiveness over the next decade and failure to do it will not make us competitive,” Mr. Clyne said.
“Therefore we think from a strategic perspective the best thing we can do to add value to our shareholders is to continue to pragmatically work out our legacy positions and continue to ensure the Australian and NZ franchise is invested in to get them back to being number one in the market.”
A Roy Morgan poll conducted in December last year found different banks appeal to different Technology Segments. The report suggested that HSBC has the highest proportion of its customers falling into the “Technology Early Adopters” Segment (27.9% of its customers) followed by Citigroup (20.3%), ANZ (19.3%, highest of the majors), Westpac (18.4%), NAB (18.2%), CBA (17.2%) and Building Societies & Credit Unions as a whole (13.7%).
At the other end of the spectrum, “Technophobes” and “Technology Traditionalists” who are the laggards of technology adoption should not be ignored entirely as they make up a large proportion of an institution’s banking customers. Building Societ-
‘ Information technology is the foundation for doing business in the digital economy; savvy tech skills are crucial to competitiveness, customer relations, client services and even staff retention.’
ies & Credit Unions as a whole have the highest proportion of “Technophobes” and “Technology Traditionalists” at 50.6% followed by NAB & Westpac (both with 42.4%), CBA (41.7%), ANZ (39.9%), Citigroup (35.3%), and HSBC (27.6%).
It has become increasingly evident that institutions must not only design innovative new banking technologies for the tech savvy customer but also cater to the needs of the late majority and laggards who are not so inclined or interested to use new technology.
Norman Morris, Industry Communications Director Roy Morgan Research says:
“With the rapid increase in mobile technology, financial institutions have long been focusing on introducing mobile banking applications, thus making it easier for customers to do their banking on the go but this raises all sorts of questions such as, ‘is it safe and secure’? What needs to be done to make sure customers in the later technology adoption segment are ready and willing to take up these technologies? Are there educational and training programs in place for those that are intimidated by and don’t know how to use such technologies?
“‘ Technology Early Adopters’ are an important segment because they are the first individuals to purchase and use a new technology. They present an opportunity for institutions to tailor their online or mobile offerings to this segment. They are more likely to be young people and mature adults aged between 18 and 40 who are well educated, employed full-time, and earning an above average income. As such, their combination of higher income and risk taking behaviour enables them to readily take up new online banking technologies and mobile apps. It is interesting to note that Early Adopters and Professional Mainstream make up more than 50% of HSBC banking customers.
“On the other hand, ‘ Technology Traditionalists’ and ‘ Technophobes’ hold conservative values, are wary of change and are usually the last to take up new technologies. Technology Traditionalists are not great lovers of technology and really only take it up once it becomes mainstream. Technophobes will only adopt technology when they are forced to; due to disinterest and lack of needing technology in order to fulfil their lives. Technophobes are likely to be aged between 60 and 80, with low education, low income and lower socio-economic status. As such, institutions need to find effective ways to engage with this group so as to demonstrate the value and use technology can bring to their lives. Financial institutions such as Building Societies and Credit Unions need to pay particular attention to engage the late majority as they constitute more than 50% of their customer base.”
The banking sector provides an important case study in what CEOs face in terms of customer engagement as well as the imperative of their technology adoption schemes.
The world has changed: mobile devices, social media, data mining, videoconferencing, virtual reality, blogs, tweets...
The list of technologies that could offer companies big-time benefits, or lead to big-time disasters, is daunting. Information technology is the foundation for doing business in the digital economy; savvy tech skills are crucial to competitiveness, customer relations, client services and even staff retention. But companies must be brave in its adoption and not jump in too lightly. Where it does become daunting is knowing what technologies best suit your business. In other words, how will you do business in this brave new digital world?
An exceptional article in the Wall St Journal written by JEANNE W. ROSS And PETER WEILL listed four key questions that CEOs should ask themselves. Those questions were: 1. Are we using technology to transform our business, or are we just adding bells and whistles to existing processes? 2. Are you ignoring important business differences as you standardise processes across the company? One tenet of the digital economy is that standardising business processes is a no-brainer: It allows a company to operate the same way, everywhere, and creates a reliable, consistent experience for the customer. 3. Who is making sure the company’s digital strategy is being implemented? Somebody needs to own this responsibility. Thus, top executives must name an executive who will be accountable for every enterprise process, and who has the political clout to overcome resistance. A committee is not capable of such oversight. 4. Is electronic data empowering your people or controlling them?
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