How Banks Can Drive The Re-Birth Of Banking

The ease with which we perform multiple life tasks on our phones would have been unthinkable as little as a decade ago. In the modern age, we think nothing of using an app to pay utility bills and order a takeaway—all the while simultaneously being transported in an Uber and streaming our favourite songs.

This simple example from daily life is a timely reminder that customer expectations are rapidly changing, at a pace that is as unprecedented as it is volatile. Put simply, rapidly shifting customer expectations and behaviors are disrupting multiple industries in a manner that is unprecedented.

Traditionally, conventional banks have had two key roles to play for the customer: being the custodian of money and the mover of money. Banks have historically done a great job of storing money, but when it comes to moving it many institutions are still operating in a manner that is slow, arduous and expensive for the consumer. This lagging type of service opens up a wide opportunity for nimble and innovative digital payment providers to make immense inroads into the banking industry—both in terms of acquiring customers and playing their part in disrupting the core DNA that makes up a bank.

TransferWise, which recently took the mantle of being Europe’s most valuable fintech ultimately came about when friends wanted to move money without paying the large fees that banks charge. From that to a company that moves over $5 billion for 5 million customers saving over $1.2 billion a year is built on the fundamental purpose of bringing hyper-convenience at a very low price point.

Successful companies in digital payments, such as Amazon Pay, don’t see themselves as being in payments but in trust and mediation by not limiting themselves to just the checkout. Removing friction from the end-to-end process is what the company strives to do, focusing on meeting customer expectations of buying.

One of the newest entrants is Facebook, which recently announced its Libra cryptocurrency, built into Whatsapp and Facebook Messenger. Then there’s the Apple credit card, which is integrated into the iWallet on every iPhone—this convenient and innovative technology has the potential to instantly dwarf some of the world’s biggest banks based on customer acquisition alone.

Banks like DBS in Singapore and Sberbank in Russia are already gearing up to compete against Amazon and Apple, in a quest for total control over customers’ spending. These banks have already successfully mapped another up-and-coming trend in the market by creating a fully integrated ecosystem linked together by digital payments and loyalty schemes.

Given the meteoric rise of digital payments and the opportunity this presents, banks have to transform to survive, as fast as customers’ expectations evolve. But how can banks capitalize on this growth opportunity and constantly evolve the way they operate to deliver high-end customer-centric experiences that meet expectations and prosper in a new competitive landscape?

The answer lies in finding the right balance between understanding changing and volatile customer expectations, and acting on them. While it is a fine and complex balancing act, for those banks that get it right the rewards will be immense. For conventional banks to be sustainable, they must also embrace new technologies, partner with fintechs and be bold in introducing change.

In getting fit for the now, banks need to build a startup-like culture within the organization and set up teams radically different by driving specific KPIs per teams and delivery squads. This coupled with empowering teams to drive key decision making lower down the chain can help banks to act on customer insights, develop and iterate faster, which ultimately leads to success.