Second-wave technologies in Banking; an opportunity or a distraction for 2018?

To mark the start of 2018, we wanted to give our top predictions on banking industry trends for this year. Over the coming weeks, we’ll be writing about the main opportunities and potential risks facing our clients.

First up is a look at the new technology trends for 2018 and their potential impact on the banking industry.

Second-wave technologies; an opportunity or a distraction for 2018?

A big buzz looking likely for this year is the emergence of second-wave digital technologies, set to increase personalisation and improve accessibility for banking customers.

These technologies include artificial intelligence, chat bots and voice activated banking. Regulations coming our way support this change; they’re all about protecting the customer and mandating smarter use of customer data.

As new, digital-only competitors continue to disrupt the banking landscape, the pressure is mounting for the larger retail banks to provide the same customisation. For example, Starling, Monzo and Tandem have all recognised the shift to digital and through their innovative apps and are offering services such as spend analytics and in-app chat.

Some traditional banks are starting to respond, and adoption is on the rise. Apple Pay has been implemented at most of the major players. NatWest has enabled finger print login for their mobile banking app and video-enabled digital services are also increasingly being used. For example, Barclay’s video banking enables you to make a video call from your app to talk directly to an advisor about account services without going into a branch.

While we will continue to see more examples this year, it is important banks get the basics right first. Let’s be frank; digital transformation in banking isn’t new. We’ve seen a bricks and mortar industry transform into a digital marketplace, with customer interactions moving out of branches and into a predominantly cashless world.

While first-wave digital technologies are no longer new and shiny, we continue to see branches closing and mobile banking is looking to overtake online. So, existing channels need to improve first.

Retail banks and their customers are still dependent on call centres to resolve basic queries, branches to pay in cheques and marketing for customer engagement. Average service times for mortgage applications in the UK range from 24 hours to 11 days, and cheque imaging is still due to go live this year for some banks. This broad range highlights the increasing gap between leaders in innovation and those who aren’t adapting to digital expectations quick enough.

Fortunately, plenty of fintechs are making the move to digital easier. For example, Bank Base provides a plug-and-play, omni-channel digital banking platform that’s flexible to suit different banks. And ACI offers electronic payment solutions for banks, helping to drive omni-channel payments through real-time, immediate payment capabilities.

This year, we advise our clients to prioritise their mobile banking and ensure key customer journeys are paperless and easy. Work hard to reduce reliance on call centres and branches and use fintechs to help expedite this. In parallel, understand new technologies and their implications, and build realistic strategies. Develop an operating model and change methodology that will make adopting any new technologies in the future easier and quicker.

The bottom line? Be smart and don’t run before you can walk.

Look out for our next piece where we’ll be talking about the rise of customer experience and developing a culture of innovation to respond to this rise.