Being the Best Digital Bank is Not Enough
By Simon Axon, EMEA consulting director at Teradata
Banks across EMEA have worked hard to digitalise operations to meet the demands of open banking, the challenge of fast-moving new entrants and the enforced behaviour changes brough about by COVID. In the UK (and across most of Western Europe) over 90 per cent of the population has used online banking in the last three months. More than half have used a smartphone to accomplish banking tasks in the same timeframe. But this may give a false sense of security. For many, banking is now a digital activity. But the financial services industry still trails many others in leveraging cloud technologies to build deeper, emotional attachments to their customers.
CUSTOMERS ARE DIGITAL – WHY AREN’T BANKS?
Many financial services businesses have already migrated significant proportions of their IT infrastructure to the cloud, and industry analysts IDC predict that this will continue, suggesting 16% year on year growth in cloud spending until 2024 -almost four-time the growth rate of IT spending overall. But this rapid cloudification focuses largely on cost savings and is driven primarily by CIOs focused on delivering more with less. Whilst there are important (and much needed) benefits to be gained from shifting to lower-cost and more flexible architectures, transformation driven solely by cost reduction misses the opportunity for reimagining what a bank does and how it can do it.
Businesses in other industries use cloud to completely reimagine what customer-centricity means. From ordering takeaways and almost instant home delivery of groceries to personally curated entertainment and social selling – innovators are using granular real-time data to precisely tailor specific offers to individuals. Not only are they revolutionising entire categories, but they raise the bar and expectations of customer service for all. Modern, digital businesses know that the competition is only one click away and that poor service can be terminal.
Banks need to quickly wake up to this new environment and investigate how they too can leverage the flexibility of cloud-based analytics and delivery to meet this new, and ever-changing competitive threat. Having slicker, frictionless, products and services is crucial, but alone this is not enough. Winning in this digital world is not about having a shiny app to speed up mortgage application; it’s being the partner customers’ trust to help them buy a house. To succeed and remain relevant, banks must find ways to transform entire customer journeys to add value at every step and iteratively build an authentic, emotional connection between brand and consumer.
BUSINESS NEEDS TO DRIVE
The leaders in this world, whether it’s Amazon Fresh, Deliveroo, or Shein, know that continual, high-speed reinvention is the only way to win and retain this emotional connection. And that requires constant acquisition, integration and analysis of data from a wide range of sources both within and from outside the enterprise, plus the agility to move from opportunity through development to execution in weeks if not days rather than months.
Business leaders must get comfortable with this process of continual reinvention. Striving to simply deliver more of what’s worked in the past will no longer be enough. Staying relevant demands the ability to rapidly trial, prove, expand and deliver new services to meet new needs. Despite recent advances, banks are still stymied by silos of data marooned on-premise in different departments and hard to activate to support reinvention at pace.
This is the big shift required. Adopting cloud not for efficiency, but as the platform to create brand experiences that put the bank at the heart of customers’ lives. Leveraging what you really understand about an individual, not just a history of transactions, but collecting data from across and beyond the enterprise to foster insights that predict behaviour, anticipate need and identify intent. Then using this information in real-time to deliver bespoke products and services targeted at a segment of one. This can only be achieved with the flexibility and scalability of cloud-based architectures.
We understand business’s reticence. Letting go of data that your team has ‘owned’ and used for specific tasks for years is hard. Accessing and trusting data from others, including finding relevant and valuable data from outside the business, can be hard. But the technical barriers are eroding. Hybrid-multi-cloud environments are secure, resilient and effective and offer new agility to business leaders looking to reorientate and truly put customers front and centre. With Teradata industry models, integration of data from across the enterprise and inclusion of new, diverse, external data is easier and will unleash new solutions, options and opportunities.
STEP-BY-STEP TOWARDS CLOUD-FIRST, CUSTOMER-LED BUSINESS
Much of the low-hanging fruit of cost savings in the cloud has already been harvested. To continue to grow, and to transform into customer-led organisations, it is the business leaders in financial services that must now take up the baton of cloud migration. Our approach is to leverage the capabilities and the consistency of Teradata, whether it runs on premise, in private or public cloud, or on a combination of all three. The flexibility to experiment with novel proofs of concept to explore a specific business case without necessitating wholesale movement of copying of valued data should provide specific lines of business with the confidence to move forward.
Teradata’s track record in safely managing billions of sensitive transaction and customer records provides the solid foundations upon which cloud-based analytics can be based. Starting with discrete projects and then expanding to wider use cases and adoption represents a safe and secure path to the cloud for even the most risk averse manager.
Simon Axon leads the Financial Services Industry Consulting practice in EMEA. His role is to help our customers drive more commercial value from their data by understanding the impact of integrated data and advanced analytics. Prior to taking up his current role, Simon led the Data Science, Business Analysis & Industry Consultancy practices in the UK & Ireland, utilising his diverse experience across multiple industries to understand our customer’s business and identify opportunities to leverage data and analytics to achieve high-impact business outcomes. Before joining Teradata in 2015, Simon worked for the Sainsbury’s Group and CACI Limited.