The year ahead will see a renewed focus on the customer by retail banks in the UK, US and elsewhere in the world, predicts Graham Smith, director of the Certeco consultancy. His top five picks of the key technology trends for 2014 resulting from this customer-centric approach, including investment in mobile channels, big data analytical tools and reshored staff, are below.
Reshoring is likely to be a key strategy for retail banks next year as they bring back jobs from outsourced call centres in India and elsewhere to the UK, US and other developed countries next year. The trend is underway due to the increased costs of outsourcing to far flung countries, driven by rising wages in emerging markets and the stricter post-crash regulatory environment, as well as increasing demand for better customer-facing service. Banks can still outsource automated online and phone banking transactions to low-cost countries but where customer discussions are necessary these jobs will return to western countries as they are now deemed to have a high strategic value to the organisation.
IT offshoring will continue to become industrialised to deliver cost efficient transactional and automated services, as banks need to find efficiencies in the new more expensive operating environment brought about the post-crash regulatory regime, but customer-facing roles will be spared the axe. Reshoring for non-commodity services will also become more of a focus as European Union (EU) governments increase their efforts to protect trade and jobs.
New technologies are a key part of this agenda, with supporting call centre, automation and 24×7 service facilities blended with human staff to try to improve bank offerings. Mobile services and transactional devices and the use of big data analytical tools to predict and serve the needs of customers will be particularly prevalent during 2014 in my opinion and we may see a continuing diminution in the importance of cash. My top five trend picks for 2014 are below:
1. Cash will decline in importance: People will have less money physically in their pockets next year and will become more reliant on their smartphones and other handheld devices in 2014 as the importance of mobile money and mobile wallets grows.
2. The rise of the ‘Internet of Things’: As mobile connectivity burgeons and more and more mobile devices become connected to the ‘internet of things’, more and more useful consumer data will be produced that banks, retailers and others can use. Analysing this ‘big data’ will begin to play a very important part in the lives of consumers and banks in 2014. According to ABI Research it is estimated that more than 30bn devices will be connected to the net by 2020 unleashing a deluge of unstructured data that can informs banks, insurers or others about customer sentiment, intentions and so forth.
3. The pace of digital transformation will accelerate: Digitalisation will accelerate even further in 2014, according to Certeco’s analysis. As one example, competition between the big four UK banks comprising of Barclays, RBS, HSBC and Lloyds Bank, will reach fever pitch in 2014 as the new UK Account Switch Service gains more notice, driving customer-centricity to the top of the agenda and 24×7 service requirements with real people available to talk to when needed during the day. Consumers all now demand banking and insurance services that fit with our increasingly technology-enabled lives fast-paced lives; banks need to tweak their existing infrastructure arrangements to fit this reality.
4. Wearable tech and the variety of available devices will multiply: Mobile devices are set to get even more varied and more intelligent in 2014. Wearable devices – such as the Pebble, Apple’s anticipated iWatch and Samsung’s Galaxy Gear – will take consumers and ultimately the banking marketplace to a different level of mobile connectivity. This will continue to present a challenge for IT professionals employed at banks in terms of rolling out these services and integrating their into their core banking systems, but it is also an opportunity for financial services (FS) companies.
5. Reshoring for FS will take off in 2014: As mentioned in my introduction I think reshoring will be one of the key strategic trends in 2014. Banks and insurers will start to bring more and more customer-facing services back to UK, US or ‘home’ countries in order to improve service levels, additionally providing much needed jobs for the young unemployed and others in recession-hit developed economies as economic growth at last beckons.
Last year was a good year to consolidate following the banking scandals, spiralling regulatory demands and big legislative demands that are now impacting the sector post-crash. 2014 will be about making this ‘new normal’ regulatory and demanding customer operational environment work. Efficiency will have to continue to be a key focus for banks to improve stressed margins, but above all the focus must be on providing a consistent and unbeatable service for customers. Marrying these demands will be the crucial challenge facing financial technology (fintech) professionals throughout this year.