23 October 2018
SIBOS day 2 – The importance of customer experience for the future of banks
It is impossible to know what banks will look like in ten years' time. The question whether the current banks will all still exist in a decennium is even justified. More than half of the visitors of the session The bank of Tomorrow on the second day of Sibos expect that only 40 to 60 percent of all banks will survive the technological and social developments. A quarter of them think that eighty percent of the banks will still exist in ten years' time. The bottom line: once again it became clear that the disruptive nature of new technologies, innovations and changes in customer behavior has major consequences for the future of banks.
Agile banks can move in different directions
I realize that banks are going to change radically, but I am a little surprised that so many people in the audience have doubts about the future of banks. Around me I see banks scaling up, improving their front- and back-end and becoming more agile. I read about an increasing number of collaborations between banks and fintechs. So, in short: banks innovate, sometimes on their own initiative, sometimes forced by legislations like SEPA or PSD2. Becoming compliant is no longer the primary goal; becoming sustainable in the future is even more important. As long as banks become agile in time, they can still move in different directions.
Banks will probably come up with different development solutions for the future. Because, although it may not always seem like it, the markets they operate in are quite different. Mark Buitenhek, Head of Transaction Services at Dutch ING, pointed out the major cultural and other differences. Buitenhek: “It is sometimes thought that we all do the same things in the financial services industry. That’s not true. If you zoom in, you’ll see big differences, even within Europe. For example: Mediterranean countries still pay heavily with cash, while the Nordics have already gone almost entirely digital.”
Customer experience is key
During the panel discussion, Buitenhek listed a few of those different directions that banks can follow: a bank can focus on providing low-cost infrastructures on which others can connect their payment solutions, focus on delivering great payment products or put an enormous focus on customer experience. Looking back, I can say this was the key note during the session: customer experience.
Banks should recognize that they are enablers for other things. Customers do not want to buy a mortgage or credit card at all, no, they want to buy a house, or they want to be able to pay easily and quickly for their groceries in the supermarket. In addition, disruptive innovations developed by fintech and bigtech companies are fully customer-focused. Examples from around the globe are WeChat Pay, Apple Pay and AliPay. These quick, easy and safe payment solutions that don’t require endless registration procedures are forming a threat for banks that are somehow unable to move forward. It’s these types of innovations, that push the banks towards a customer-focused approach.
This requires a different way of thinking. Buitenhek: “In the future, the bank should become more modest and follow the customer.” Raof Latiff, Global Transaction Services at DBS, largely agreed: “In the future, banks will have to become more supportive and accept that this will make their banking services less visible.”
On the other side, the idea that banks are the single go-to platform for the financial needs of their customers was rejected by Robert Bell, Chief Executive Officer at Australian challenger bank :86400. According to him, people are used to purchasing different services from different parties. Bell: “That will not change in the future. In fact, that will only increase.”
Attracting the right talent is a future challenge
The panel also talked about future challenges for banks. Attracting the right talent was one of the most important ones, according to the audience. Especially in the current tight labor market. Venkatesh Saha, Head of International Expansion at TransferWise: “Experience in the banking world is not the most important for future employees. Important characteristics include passion, being agile and understanding the culture.” Buitenhek added that ING has managed to attract people who used to apply for jobs at Google or Apple, because exciting things are also happening at ING today. This is a great development for ING who positions itself as positive and cool and does so successfully.
I fully agree with the panelists’ line of thought that both employees and banks must be agile. It is important to be able to respond to the customer's expectations, especially in these times, when they are changing quicker than ever before. Because as mentioned before: customer experience is key.