Sun-set hour for traditional banks?

|May 24, 2016 0
Currently banks have the potential to revolutionize banking for our booming digital era but they continue to struggle mightily with application of new technology, relying on old IT infrastructure that is unable to withstand the modern challenges facing banking today

Jonathan Kaftzan

INDIA: I don’t know about you, but as time progresses, I find myself going less and less to the bank and doing more of my banking online. Once upon a time, banks required a customer’s physical presence to perform transactions, and placed a heavy emphasis on its capital adequacy, branch network and products and rates. Today’s fast-evolving digital landscape has brought about a change in customer habits and as a result, many no longer require the features a physical bank offers. Currently banks have the potential to revolutionize banking for our booming digital era and with it, the opportunity to plug into untapped markets and change the lives of millions for the better.

Banking is no longer a place you go to but something you do. Though expensive to maintain, traditional banks have built themselves on face-to-face customer transactions, as these were perceived to be the hallmark and foundation of trust and continued patronage. But today’s consumer has different priorities and expects a completely different experience. A simple-yet-sophisticated virtual interface is highly desirable and technological expertise is a necessity.

The new financial model is one of customized experiences, the ability to access and execute transactions anytime, anywhere and the ability to receive 24/7 support as required. According to Brett King, an Australian technology futurist, “the marketplace has changed significantly around how consumers are engaging with their financial institutions.” The bank of the future, Bank 3.0, is mobile, paperless and easy to use and it will provide users with the high security they require to perform sensitive transactions.

The Financial Technology Solution

Traditional banks are taking the steps required to move into the digital space, but their heavy legacy-oriented processes are still forcing customers to yield to transactions dominated by the physical branch. In addition, banks continue to struggle mightily with application of new technology, relying on old IT infrastructure that is unable to withstand the modern challenges facing banking today. Should banks fail to meet the needs of their clients and instead force customers to yield to their out-dated ways of doing business, banks will find themselves in a losing position.

Once banks embrace new mobile finance technologies and set them in place, they’ll be in a much better position to understand and leverage their customer data on a holistic level and move forward to provide customers with the services they require and want without having to set foot in a physical bank.

The Fruits of Change

According to a joint survey conducted by Amdocs and Ovum, banks hold the highest level of consumer trust among mobile payment and banking service providers. Understanding the needs of different markets, such as the emerging and mature markets, will help banks tailor products to their customers’ needs. When it comes to mobile banking products, for example, emerging markets highly value accessibility and ease-of-use, while mature markets (in addition to ubiquity) are drawn to rewards. The common denominator between these two markets is security, and this is a key feature traditional banks need to command in the digital sphere in order to gain and maintain credibility with their customers.

When banks decide to be proactive in the banking revolution process, they will thrive. Financial Technology is crucial to the ability of banks to provide ubiquity and accessibility, the paramount traits of a truly customer-centric perspective.

However, beyond that, lay even more exciting opportunities. Different markets have different needs. Banks must further their understanding of the differences between emerging and mature markets, the requirements of specific regions around the world and once again adapt in order to reap the fruits of change.

The end of traditional banking means the beginning of a new and exciting digital banking that has untapped possibilities and markets. Embracing our new world is perhaps a big step for the banking industry but if done wisely, the benefits will far exceed the inconvenience of change.

(Jonathan Kaftzan is Head of Product Marketing for Mobile Financial Services at Amdocs. Views expressed here are of the author and CyberMedia does not necessarily endorse them.)

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