The bank of tomorrow – the story unfolds


This is the second part of three discussion forums into this important subject. You can read part one here.

Putting the insanity of repeating the same mistakes over and over again to one side, I think we are all agreed that there is a place for the ‘Bank of Tomorrow’ in all of our futures. Globalisation; increasing regulation; the onslaught of digitalisation and massive demographical change notwithstanding, the true impact of these disruptive drivers is still ultimately unclear and continues to unfold. So the dilemma for the banking leaders of today is what must they do now, in order to create a fully compliant, customer-centric business with a well-defined and relevant end-to-end value chain?

Much more than a front end customer experience

With the all-powerful consumer now calling the shots, providing anywhere / anytime access, to the entire spectrum of retail banking services via digital channels has to be the number one priority, particularly within an increasingly crowded marketplace. To achieve this, business leaders must first rethink their existing strategy and focus their energies on getting the fundamentals right. This requires a fully engaged workforce at all times; encouraging team collaboration to devise intelligent cost reduction strategies that enable BAU and innovation to coexist, without compromising the firm’s overall risk and reporting obligations; and moving beyond open banking compliance to adopt a robust open banking strategy that delivers an improved customer experience.

In addition, banks need to develop new partner ecosystems that inject highly personalised, added-value services into the mix, and at the same time, avoid the trap of believing a cool looking front-end customer experience is the answer to everything – it is most certainly not! Expecting positive outcomes from beautifully designed user interfaces, whilst ignoring the potentially dire consequences of continually delivering unsatisfactory and / or costly underlying services, is a well-trodden road to nowhere.

Seamless experiences

Giving the customer what they want means reengineering the existing business to create seamless, efficient and highly automated experiences. This begins with the onboarding process and cascades throughout every aspect of the entire customer journey for services and products. If not, firms risk alienating the unforgiving modern mobile customer who will simply choose to go elsewhere, never to return, to take up a free or competitive rate for basic banking services, SME loans, a mortgage, health or life insurance product.

Inevitably many of the revamped offerings will be self-service oriented and / or will be heavily dependent on new partner ecosystems. This, in turn, will enable the more digitally savvy firms to differentiate themselves through their ability to supply a comprehensive blend of flexible non-banking and lifestyle services alongside a slimmed down range of banking-only offerings.

Seven steps to success

I think it is agreed that modern technology and cultural change are the enablers of tomorrow. As such, I believe the following seven essential components should be the foundation of all new business and technology transformation blueprints.

  1. An API platform providing an ‘API first strategy’ enabling the firm to prioritise, customise and deliver its service offerings.
  2. A highly secure cloud adoption programme to deliver optimal operational performance and reduced costs, together with the ability to adopt a microservices strategy, as and when required.
  3. The implementation of robust, fully compliant data driven policies which can be used to appropriately harness and exploit the power of customer data.
  4. The creation of intelligent insights via customised management dashboards and by using AI and machine learning techniques.
  5. Transforming the culture via an agile, collaborative DevOps environment, enabling ‘fast-fail’ projects underpinned by tight feedback loops.
  6. Empowering innovation through ‘canary releases’ and API aggragation etc.
  7. And finally, embracing a modern channels architecture, which amongst other things, can deliver mobile based omni-channel apps and micro-targeted products and services etc.

Monetising assets

Imagine the possibilities of having the ability to significantly reduce the cost of manufacturing services simply by embracing a software as a service (SaaS) model. This would enable firms to very quickly enter new markets or remove the cost base altogether by say, using a third party payments provider – an area where we have already seen upwards of 50% in overall cost reductions.

Imagine achieving improved customer retention rates; a foundational principle if exponential growth is to be realised,  just by being able to identify or anticipate customers’ needs before they even begin a search.

If the seven steps to success are not recognised as ‘must do game changers’ and implemented as a matter of urgency, it will be virtually impossible to maintain one’s existing position in the market, let alone develop and grow within an increasingly challenging social and economic environment. Laggards take note!

 Forever fit for purpose

Although often left unsaid, one must never forget that banking is a business that needs to survive and make money. Yet despite the many challenges of adapting to the new world order, the future is within your grasp. By combining a well-defined vision with careful planning, banks will be able to smartly and systematically dismantle the status quo, enabling them to re-establish an appropriate, profitable banking entity that always remains fit for purpose. Creating efficiencies that reduce costs and empower innovation has already helped some banks to revitalise traditional ways of working.

So why stop there? We are all on a journey of continual change and the need to constantly review and revamp business models and working practises has to become second nature. Only then will a bank have any chance of retaining those all-important existing customer relationships and at the same time deliver lucrative and sustainable new revenue streams, both of which will go a long way in ensuring the bank of tomorrow has a future. It would be insane not to give it a try!

The final installment in this three part series will discuss practical ways of delivering against the seven steps to success outlined above.