There has never been a time of greater change in the banking industry. Customer demands are changing rapidly and banks are under huge pressure to adapt their services in line with these expectations. Here we talk to Dr. Marc Torrens CIO, Luis Rodriguez VP Product Strategy and Albert Morales Product Manager at Strands about the state of the banking industry today.
How are banks responding to quickly changing customer demands?
In our experience, banks are actually very aware of changing customer demands, and are finally making efforts to start implementing solutions that meet these needs. This is a very good sign, and we see a lot of restructuring going on to adapt to new (read: lower) revenue scenarios, such as branch closures, as well as a big push for customers to embrace digital channels (which is also happening of its own accord).
Unfortunately, where banks often struggle is making these adaptations happen quickly enough on their own - actually, this reactive rather than proactive approach is a problem to begin with.
The reasons behind this can range from agile-unfriendly corporate culture to huge prior investments in legacy IT systems or the all-too-likely combination of the two.
What are the main challenges for banks in leveraging data to build new products?
The main challenges for banks in leveraging data to build new products are of a technological or operational nature. Technologically speaking, banks lack streamlined, homogenised IT systems to prepare the data into a comprehensive, modern data “lake” that is clear and clean enough to be useful.
Operationally, different data needs for different internal business units within the bank cannot be met by the tiny, unskilled data teams banks are only starting to hire. Both of these takes us back to the “traditional” corporate culture and technology that may not be so attractive to the most promising data engineers and data scientists they so badly need.
Where are the biggest opportunities for banks in leveraging data to build new products?
- Transactional data generates unique information which leads to higher margins.
- Embracing fintech technology and philosophy to increase internal operational efficiency, i.e. the lean approach
- Increase user adoption by improving UX & brand friendliness to focus on long-term customer value
- Shift from product catalog to solution provider - link services within other services provided by other sectors such as merchant marketplaces to build new sources of revenue
What are the top 5 ways financial institutions can transform great ideas into reality in banking?
- Start with a clear mandate to understand and meet target market needs that comes from, or is at least supported by, top management.
- Create a small, high-performance multi-functional team, spearheaded by someone with a strong technical background on the business side who understands the implications of digitisation
- Partner with fast-moving companies on the outside that can help banks assimilate the lean/agile approach
- The IT team servicing the business cannot be a barrier - anything should be possible, and data should be easily accessible and clean.
- Continuously test and co-create with real users, or anyone within the organisation - good ideas can come from anyone (open innovation).
What are the main hurdles impeding innovation in banking?
Firstly there’s extremely complex core banking infrastructure that makes any innovation project very difficult, especially when it comes to accessing useable data. Then there are the organisational silos based on selling products rather than customer-centric problem-solving. Another factor is the lack of standard and open APIs to exchange data and services among different financial players
What does the future of banking look like?
The bank of the future will be seen as a diffuse and distributed problem-solving service focused on the customer rather than just a catalog of financial products to be sold by the bank.
Using leading-edge technology and flawless UX, banks will identify the financial needs and life goals of their customers and offer personalised, relevant solutions to meet these objectives. Cost transparency and control will be also key factors in the future of banking, as well as a sense of ubiquity in customers’ “life moments” made possible by stronger datasets and credit decisioning skills.
How does Strands approach designing personalised banking services?
The Strands approach involves providing banks with a deep and granular understanding of their customers’ financial situation and offering support and guidance to their customers by way of a data-driven, context-aware, anticipatory UI.