- Branches suffer from lack of talent availability. The best person for the job is not always going to be in the right location at right time. Yet mobile is driving “right time, right place, instant” contextual interactions, and consumers are increasingly expecting this level of service.
- Many of the frontline staff are underpaid and undertrained, yet are the face of the institution. They often aren´t trained properly or paid enough to care about delivering the kind of customer service banks are trying to deliver through digital.
- It’s difficult to distribute foot traffic across locations. Some branches suffer from massive queues, while employees at other locations are killing time on Facebook. This adds cost, lowers efficiency, and is incompatible with demand for instant service from consumers as well as modern IT delivery.
- “The basic financial functions […] will not change, although how we perform these functions will change.”
- “By 2020, a true global marketplace will be established, with everyone – individuals, companies, investors, organizations and governments – linked through telephone lines, cables and radio-wave technology. With the touch of a button, people will have access to other individuals and vast databases around the world. Such access will be readily available through phones, interactive television, workstations or hand-held “personal digital assistants” that combine all these functions. […] There will be no special need for retail financial branches because everyone will have direct access to his or her financial suppliers through interactive TV and personal digital assistants. […] True “global banking” will have arrived, as every household will be a ‘branch.'”
- “A key feature of 2020 is that nearly everything could be tailored to a client’s needs or wishes at a reasonable price, including highly personalized service from financial companies. Firms will be selling to market segments of one.”
- “Supplying financial assistance will be a free-for-all. It will not be limited to those calling themselves “financial institutions” […] That means an organization that specializes in financial matters may at times find itself competing directly with its clients.”
- “The progress is geometric because each element – computation, availability of data, communications and algorithms – feeds on the others.”
- “Human nature will not change. […] A very basic element of that nature is a hunger for security – law and order, job security, retirement security, decent and affordable health care and financial security.”
- “Dishonesty will be around in 2020 as it is today. Voice recognition, DNA fingerprinting and secure data encryption will instantly verify transactions, preventing today’s scams. But new forms of “information crime” will appear.”
- “Technology will never replace the subtlety of the human mind. People will be the most important factor in 2020, just as they are now. We must learn how to grow wise leaders from the ranks of specialists, a difficult task.”
- Between 2011 and 2014, mobile banking usage has grown strongly across all age groups. Among 60+ consumers, usage has nearly tripled.
- Hispanics reported the highest incidence of P12M mobile banking usage (53% of those having bank accounts, compared to 39% in the overall sample).
- While mobile banking users are using the platform frequently and consistently, they also interact with their banks through more traditional branch and ATM channels. 72% of mobile banking users frequented a branch in the past month.
- Omnichannel is a legitimate pursuit. All channels need to be optimized.
- Banks neglect the branch channel at their peril.
- Legacy and Ecosystem Transformation
- Innovation and Emerging Technologies
- Banks have a harder time reconciling digital with their legacy platform and infrastructure, and how they have been doing business for many years. Fin-tech start-ups instead are born digital, without any legacy, but they need to be careful not to build one for themselves as they grow.
- Technology doesn’t seem to be the constraint for becoming digital, neither is budget. Banks have much more resources and still we are seeing some interesting start-ups in different aspects of banking disrupting with much better digital propositions. Banks instead need to push the digital concept across the organization, and very tied to the concept of innovation, they need to make fundamental changes in the culture of the organization. This is what banks such as BBVA are trying to do though their Innovation Centers, open API’s, Hackatons and fostering an ecosystem of fin-tech startups in Americas and Europe, and why they partner with Next Bank to propel those.
- Digital also needs to reach to those customers that are still analog. This requires banks to re-imagine their branches and provide solutions that leverage the digital components but understanding the customer engagement required. Banks are quite better positioned than fin-tech start-ups in terms of physical presence, though it is no longer acceptable for banks to continue to open (or update) branches under the old branch paradigm.
- Banks need to better understand what customers really want, and that is not necessarily other financial product, but maybe help with administering their finances, banks helping them to save money, helping SMEs make more business, even expand globally. These are the type of issues fin-tech start-ups are tackling today. Banks have tons of information but they need to become smarter in how they use it and what new services can they offer to their customers. It is also important to look at how customers use technology in their everyday life to find ways of making banking more convenient.
- You just don’t claim that you are going to be more digital and then magically wait for that to happen. There is a lot of effort involved. In cases such as BBVA, acquiring Simple is part of such effort. Understanding the bank limitation in terms of its culture is also important to define what is feasible and what not. Reaching out to understand what the ecosystem is doing, actively engaging and participating to come up with a better digital vision has become an imperative today.
We usually talk about how hard it is for the financial industry to innovate at the right pace, and doing the right bets. In my opinion Latin America lags a little bit behind, in part for not having anything similar to the US’ Silicon Valley. We see though, increasing efforts to generate the environment and providing places for the ecosystem to mingle.
Adding to Dan’s post about Celent attending the several industry conferences around the world as part of our job, and keeping our finger on the pulse of the industry, I wanted to share a relatively new conference that is gaining a lot of traction in Latin America as a result of its effort to bring together traditional players with fintech start-ups: Next Bank.
I will be moderating a panel on Digital transformation in financial services next October 16th, 2014 at Next Bank Americas. The idea is to create an environment where innovators from within and outside financial services institutions come together to explore the digital transformation of the industry.
It is a collaborative conference that covers innovation, transformation and startup-driven disruption in financial services in Latin America. The theme is re-think and connect – addressing the reality that the industry is undergoing momentous change and it’s time for a new collaborative approach.
You will more likely encounter traditional players like banks, consultancies and technology vendors sharing the stage with alternative players like startups, digital ecosystems and players from other industries. All of these players, the old and the new, coming together to create a new community of innovators in financial services exploring the real future of the financial services industry and the big ideas that will forever change the industry in the region
As part of the conference, it will host the final of BBVA Open Talent for the US, Mexico and Canada, a startup competition in search of today’s most disruptive tech startups in these countries in two categories, New Banking and Digital Life. Celent will be writing a report of those more promising start-ups, so expect it coming soon after the conference.
Celent is also a conference partner, so feel free to use our discount code (C3L3NTNB4M3) to get a deal on tickets.
More information @ www.nextbankamericas.com/en
Hope to see you there!
Late last year, NCR announced the acquisition of Digital Insight (DI). It’s been quite the ride for DI as they are on their third owner in a very short period of time. Apparently the ride hasn’t been very smooth for DI bank customers – we have heard from a number of them regarding digital banking outages. The press has gotten wind of this as well – Fairwinds Credit Union customers cope with online-banking outages.
Take a peek at the list of disruptions notices posted on the Fairwinds CU Facebook page.
Kudos to the CU and its President for being transparent and communicating with their customers.