Reinventing retail banking in a post-pandemic world
Digitizing and personalizing the retail banking process for customers will attract more customers and ensure incremental growth
Md Kafi Khan. Illustration: TBS
Md Kafi Khan. Illustration: TBS
Modernization and scale of technology is not enough
Investment in new technology, by itself, did not improve conditions at most financial institutions in 2021. Clearly, the biggest challenge for most financial institutions was not legacy technology, but leadership and regulations inherited geographically.
There will be further crunch in the number of existing banks in 2022 and beyond due to the costs of doing business and behavioral changes that have accelerated as a result of the pandemic.
The greatest need will be leadership, vision, and a culture that embraces change, is willing to take risks, and is ready to transform their organizations into something completely different than they have been since their formation.
Embrace the cloud to stay competitive
The majority of financial services organizations have yet to deploy core systems in the cloud. Reasons include the perceived amount of complexity and concerns about security, risk, governance and control.
Most financial institutions were already actively using cloud services or planning to do so in 2022 and beyond. In other words, while banks of all sizes recognize the need to move to the cloud, the majority have not started this process.
Although there have been reservations in the past regarding cloud security and regulation, cloud computing solutions will become mainstream in the market for traditional and non-traditional financial institutions in 2022.
Organizations of all sizes will migrate to the cloud to stay competitive. Traditional banking systems will become outdated and inflexible, making it costly to deploy new solutions or protect against advanced security risks.
Re-training, retraining and new hires
The need to shift to digital engagement has accelerated in 2021 and expectations for speed, simplicity and empathy have replaced physical convenience as the key differentiator. This shift disrupted back-office processes, increased the need for real-time data and applied analytics, and put pressure on ill-prepared leaders and employees for this pivot.
The emergence of new jobs created explicitly to support the digital transformation of a financial institution is underway. In addition to new jobs, many existing jobs have been drastically changed as institutions begin to introduce new technologies.
While some hiring was required to support digital banking transformation, employee retention and retraining also needed to be prioritized. To prepare, financial institutions need to assess the skills needed in critical organizational roles not only for 2022, but also for the next three to five years.
Embracing the change that will occur will be the responsibility of each individual, at all levels. In the future, lifelong learning will become a priority. While the commitment to learning is a personal responsibility, every bank must step up its efforts to make it possible at a speed previously thought unproductive.
Outsourced solutions provide a gateway to innovation
A strong ecosystem of partnerships helps banks experiment, learn, and ultimately import the capabilities needed to adapt to acute and chronic disruptions. Ecosystems allow organizations to operate more flexibly, providing access to more collaborators and a greater range of potential innovations, thereby increasing the volume, quality and risk tolerance of experimentation and innovation. learning.
When hoping to create an improved process, add a new solution, or completely change existing business models, consider working with organizations that have already created a viable solution for other institutions. This allows focus on other initiatives that may require greater internal resources while allowing solutions to be built at scale and quickly.
Veiled attrition has shaken customer loyalty
It’s hidden by attrition that most customers don’t close accounts when they switch relationships. Instead, they divert their loyalty to alternative providers that offer more value. Sophisticated features such as applying predictive analytics to manage churn should be integrated with other marketing initiatives to stem the flow of customers using alternative providers. Focusing on improving the customer experience will also result in more engagement, increased relationship expansion, and less gender diversity.
Warning: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.