Incumbent retail banks balancing consumer need and tech

Pandemic drives biggest digital transformation among retail banks – but physical branches still needed

By Leanna Reeves | 21 August 2020

“If our CEO came to us and said ‘right, we want to rapidly digitalise this bank so that we do everything that we do today only through digital channels,’ we would have sized that and said we're going to have to stand up multiple programs, it's going to take us 12 to 18 months because that's what everything takes in a big bank,” said Jamie Broadbent, head of digital and innovation at RBS International, at an industry event this week.

“What this unique situation has done is it has flipped to switch for banks where we've had to think very differently and so even within my organisation, we saw a rapid dispensing with traditional hierarchies, structures, and got the right people around the right problem and made decisions at the right level.”

However, he stressed that traditional banks need to engage with the new tech to drive change within their organisation.

“What will come next is starting to think about the organisation as digital end-to-end and reimagining what the customer experience should be. Not just taking the process and making them virtual but building entirely new processes as experiences based on the digital technology that we now have available.”

“It’s been about developing a strong cultural curiosity. But technology, without understanding what customers and clients want and need, isn’t going to make a sustainable organisation,” added Andrea Melville, managing director of commercialisation and propositions at Lloyds Banking Group.

Organisational changes will remain post-coronavirus as customers take advantage of the benefits of digital tools, according to Broadbent.

“The customers that hadn’t embraced digital channels before that have been forced to embrace them now, they’re never going back. Some things have become permanent changes. What I hope becomes a permanent change is a cultural shift that we’ve seen the banks incorporate. It’s vital that bank leadership at all levels must maintains the good that has come out of this.”

Challenger banks were expected to flourish during the pandemic as consumers switched to digital banking, but the coronavirus highlighted the flaws and weaknesses of their business model. Monzo, for instance, reported an annual loss before tax of £115m last year.

“The couple of times that we've seen Monzo go down as a service or Revolut that lost connectivity for a period – customers have nowhere to go. So that safety net, that kind of billboard that says I'm a physical bank and I'm still here even though you might not visit me often, it gives that assurance to customers that the bank is there, that there's something tangible where they can go and get assistance,” said Broadbent.

According to Melville, challenger banks have revolutionised customer expectations on their banking services.

“They change the landscape completely because what they end up doing, both the challenger banks but also big tech and small tech is that they change customer expectations in the market,” she said.
 

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