Bank of the future
By Simon Blissett, Head of Financial Services Solutions & Innovation EMEAR at Cisco
Nothing speaks louder than numbers in finance, and our estimates suggest that digital capabilities will drive $400 billion in Digital Value for the industry between 2015 and 2017.
It is not just about value, either, it’s staying relevant and competitive. The financial services sector is one of the most disrupted by digital technologies already, causing it in turn to be one of the leading adopters of digital technologies – in part to keep pace with the rise in fintech startups and the expectations of increasingly digitally savvy customers. Yet there is a very stark difference between adopting and deploying digital solutions and doing so successfully.
For a start, the industry is a notoriously complex one to digitise, with the need to juggle complicated compliance demands and legacy-IT environments – all issues likely to keep banking bosses up at night. In this context, simply plugging in shiny new technology will not ensure a business is ready to ‘go digital’ and reap the associated benefits, but there are considerations that company leaders can bear in mind when undertaking the roll-out of a new digital service.
It starts with a look at the organisations’ digital culture. Our Digital Culture Clash research, conducted in partnership with the Institute of Cultural Capital (ICC) revealed that creating a positive digital culture at work and encouraging confidence in digital technologies in the workplace are the most significant variables to predict whether digital roll-outs will be a success.
The right technology provides a unique opportunity for the financial industry to differentiate with new offerings and control their own disruption – but as with all change, the approach to digitisation must begin within.
New age custom
Demanding the best in technological evolution, while satisfying customer experience,is a laudable triumph of great difficulty. Tech savvy customers want to be able to experience the most cutting-edge technology innovations without compromising on the quality of experience.
The ability to access financial services across multiple devices is a basic expectation of the modern customer. It is also critical to retaining their business.Consumers of all ages increasingly expect elegant and robust digital experiences from all companies, including banks.
Take mobile. The UK is the most active mobile commerce market in Europe, according to Facebook Head of Northern Europe, Steve Hatch. We spend on average 2.5 hours on smartphones per day and projections for our mobile spending are a whopping fifty billion pounds by 2020. Banks aren’t just sitting around waiting to be made irrelevant by this. In fact, a better customer experience and the additional 25%-30% effectiveness of mobile banking are just a couple of reasons they are finding ways to lead the charge.
One way they are achieving this, is to move towards an omni channel approach to meet customer demand. Connecting and coordinating interactions with customers across multiple channels enables an intelligent and personalised approach to customer services. Still, this is only the tip of the iceberg. Tools such as virtual reality, augmented reality, HD video and holograms will become the technology supporting a new definition of customer service, where collaboration and personalisation are at the forefront of the customer experience.
However, before we can truly digitise our business, we must first digitise our people.
Digitising starts with the workforce
As our research revealed, technology provides huge opportunities but for an organisation to digitise and realise growth the workforce need to be bought into using it and supporting the business to deliver against its digital goals.
New technologies are continuing to re-inventing what is possible in the workplace – yet they also drive change in working processes. These can bring benefits, such as allowing employees to better collaborate across departments or locations, enhancing productivity and reducing costs, as long as employees are open to adopting these new ways of working.
Key to this is ensuring workers feel confident in their use of digital tools. Even the seemingly tech-savvy millennials in a workforce cannot be relied upon to be savvy in workplace digital tools. Training, across the entire workforce, is essential to breed acceptance and confidence in new digital tools. Once you get employees on-board, the customer experience will vastly improve.
To do this, the leadership team needs to champion new digital ways of working, be prepared to spend the time to get the right foundations in place and importantly, lead by example. Staggeringly, our research revealed that 29 per cent of workers think their leadership team is struggling to push through new digital ways of working and the same number stated that their organisation is not ready to culturally embrace digital solutions. This is a huge potential barrier to success that needs to be overcome before an organisation can even think about getting its customers on-board with new digital ways of interacting with their business.
The good news is, more than two thirds (67 per cent) of the UK workers we polled stated that digital technology has had a positive impact on the way they work. For organisations that get it right, there ispotential to improve the experience for employees through digital technologies but they need to be taken on a journey and consulted through the process to ensure they understand what the impact will be for them and what benefits to expect.
Securing your assets
Today, no conversation about digital technology is complete without it touching on security and when we talk about security, concerns about financial assets are naturally top of the list. Customers have long trusted banks to protect their money. In an ever more digitised economy, effective cybersecurity will be critical to the architecture in these institutions and the news this week of another banking institution being hacked serves as a timely reminder.
Despite its importance, security is still at risk of being an afterthought and that has to change. The financial sector needs to readdress the notion that cybersecurity is the ‘bit’ you think about after the innovative stuff has happened.We need to start thinking about security as a competitive advantage.
The reality is the cybersecurity threat is not going anywhere, particularly for the financial services industry. After all, it is where the money is, literally – and not only for us, but for hackers too. Can you imagine how lucrative it is for these attackers if they get hold of our financial details? It’s the equivalent of cracking into a bank vault without leaving the house. It’s no wonder then that the financial services industry is investing in cybersecurity. But there is still more to be done.
Shiny new cybersecurity methods that our banks offer from security fobs, to mobile verification, touch ID, passphrases and fraud prevention are a good start but are they enough?
Banks significantly invest in fraud prevention and access control (and so they should). Even so, banks need to assume that the worst will happen and attackers will get in, because they probably will at some point. As a result, banks must be ready to detect intruders and contaminated files and quickly remove them from their systems, before they can do any lasting damage. A strong, robust and holistic cybersecurity plan needs to be in place to minimise the impact of system attacks.
But it is not all down to organisations. As users of these services, we need to take cybersecurity seriously and do our part in keeping our financial information secure. Practices like using strong passwords and keeping them safe, using secured Internet connections and being more careful about where we use our credit cards online all need to become second nature.
In this context, security needs to be seen as an essential enabler, helping financial organisations to be confident enough to digitally innovate. After all, transforming is not an option, particularly in the political landscape in which we find ourselves today. Financial services organisations still need to make money; save money and stay out of trouble and adopting rigorous cybersecurity is an essential part of that. Cybersecurity should not be seen as a hindrance to success, in fact, quite the opposite.
The future of successful banking
Back in 2014 McKinsey & Co called out that the more progressive incumbent banks and financial institutions were already investing heavily in innovation and testing in line with the habits and culture of digitally native companies, by opening up APIs, pursuing agile development and hackathons. We are not far from realising the outcomes of some of this innovation, be that voice authentication or conducting banking via video conference from home, for example.
While agile digital disruptors are changing “business as usual” forever, financial services can capture their share by implementing key digital use cases. To realise the $405 billion in industry-wide Digital Value at Stake by the end of 2017, financial services organisations need to become secure and innovative firms that thrive by driving their own disruption.
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