Today you can use your smartphone to take a photo of a cheque you have received, and pay it in by email or via your mobile banking app. While this system should dramatically reduce cheque processing times by allowing a digital image of a cheque to be cleared electronically, the question is, who uses cheques anymore?
I don’t think I have ever used a cheque and I rarely go into my bank branch preferring to transact online. It did make me wonder whether banks really understand what their customers want and how as consumers we want to interact. Right now the banking landscape is becoming increasingly competitive. There is little room for error and this means banks have to be able to give consumers what they want, when they want it. Enabling customers to pay and transact online, using mobile devices is fundamental to the future of banking. Banks need to be thinking about how payments will be made in the forthcoming years. For example, today there is new digital currency technologies such as Bitcoin, and many new and advanced ways to pay.
I believe that consumers now view banking in the same way that they view retail. Responsiveness, ease of use, a totally integrated and fast experience is key. Take Nat West as an example, I now have the ability to take out money even if I lose my card. Or if you look at Metro Bank earlier in the year it raised almost £400m to fund its expansion plans as it promised to shake up the country's banking industry. Metro Bank’s approach is completely customer centric. For example the bank will quickly and simply open accounts for you while you wait. They also know that if consumers do want to go into a branch they prefer to do this before or after work, or at the weekend. So they have now opened their stores from 8.00 am to 7.00 pm and at weekends when other banks are closed. The Metro ethos is based around the customer needs. Every bank is child friendly with baby changing facilities. You can even bring your dog into the store.
Retail banks are also starting to realise that they are coming under threat from large internet companies including Google, Facebook and Twitter, which could become significant competition. According to several UK publications, Ireland’s central bank is about to approve Facebook as an e-money institution, allowing it to offer consumers the ability to store money and pay others. Facebook is also said to be considering partnerships with start-ups that offer international money transfer services online and via smartphones. At a time when traditional banks are struggling to cope, there is the opportunity for smaller more nimble internet companies to take on certain service lines that the larger traditional banks have previously provided but are now finding hard to keep pace with.
Banks therefore need to consider how they can quickly modernise their systems and how they are going to fight back against this unexpected competition. In order to do so they will need to think about how they can bring new innovative services to customers whilst balancing security and innovation. Today banks need to have a 360-degree view of a customers’ financials and an ability to react quickly and securely to requests. They must build an environment that has the ability to adapt to change quickly and can handle peak times and the whole banking ecosystem needs to be multi-channel.
What many organisations are now finding is that ‘hand’ coding is very slow for developing many customer facing applications. The short schedules and rapid change cycles required to develop these applications often bust development life cycles and platforms for coding and they are now seeking quicker alternatives to traditional programming platforms. As a result, many of our financial services customers are now switching to our high-productivity application platform or as analyst firm, Forrester recently described it as an alternative "low-code" platform to enable organisations to develop and change customer facing applications more quickly and easily.
Here is an example of how one financial services company used a ‘low-code’ platform to achieve ongoing constant change. Cofidis, a leading company in the indirect consumer credit market delivered a new transactional website in just five weeks which allowed the organisation to make ever-changing requirements, that needed to be dealt with quickly at low cost. As a result, Cofidis can now deliver aggressive time-to-market in both creating new web business applications and adapting existing ones. This not only makes its IT organisation highly effective, but also ensures that the company stays ahead of the competition.
Going forward banks with outdated technology and an out-of-date view of their customer needs, may face extinction unless they can replace their legacy systems and respond to consumer requests. New players using the latest technologies to disrupt the market will put pressure on traditional banks to find ways to sort this out – and quick.
By Zahid Jiwa, Vice President of UK & Ireland, OutSystems Ltd