2015 – Top Trends in Retail Banks
Consumer behavior, technology and regulation have been transforming the retail banking industry.
However, with so many different technologies available, it is important that retail banks separate hype from reality when deciding on their key investments for 2015 to ensure they can gain the best Return on Investment.
Product differentiation between banks is negligible today; instead, customer experience through service quality and personalisation of products would make all the difference. As a result of this new focus on having a customer centric ‘outside-in’ view, we believe the following trends will have a big impact on retail banks across globe in 2015.
- Tailored branches – In the age of digital banking, physical branches will still be needed for certain services. However, these physical branches will be ‘right sized’, with standard services re-routed to low-cost channels. Instead branch design, skill set of personnel, and performance management will differ across the network to meet specific customer needs. The focus will be on advice and sales of customised products and services, based on customer segment, with a personal touch. This will free-up costs by 30-50% and increase the sales per front-office employee by 20%.
- User experience – Customer experience is the highest priority for leading retail banks. To improve this, retail banks will offer a ‘single version of truth’ across all channels in a simple, consistent and secured way. Mobile banking will continue to grow, and increase its scope seamlessly. Digitalisation of banks with a human face will enhance the customer experience and improve the sales of products online. For example, video and audio enabled technology from call centers, or relationship-managers having access to CRM data, will not only resolve customer issues more quickly, but also increase cross-sell opportunity of relevant products. Therefore Data Analytics will play key role in terms of mining CRM and behavioural data for delivering targeted, personalised offerings to its customers when they need it urgently.
- Technology rationalisation – Retail banks are swamped with multiple technologies, from legacy to latest custom built ones. This leads to higher maintenance cost, operation in silos and poor operational efficiency. So consolidation of technology will be another key focus in 2015, helping banks to streamline the legacy systems. Greater adoption of BPM (Business Process Management) will help banks to integrate multiple technologies, while offsetting some existing technologies to gain cost efficiency. Cloud technology is another key area to improve cost and time-to-market for new products and services.
- Social media adoption – Social media acts a common platform for existing and potential customers, millennials in particular. It demonstrates real branding for banks that bank’s own marketing campaign cannot. 70% users believe recommendations through social media against only 20% who trust on conventional advertising. Social media strategy will therefore get serious attention from both CMOs and CIOs of Retail banks in 2015. Formulation and end-to-end implementation of social media strategy using high-end data analytics and prompt actions are fundamental to customer satisfaction.
- Innovation – Innovation in banking industry is limited, unlike the telecom, retail or technology industry. Unfortunately retail banks now face competition within industry and from non-banking world too. Moreover banks are going through a paradigm shift because tomorrow’s banks won’t be custodians of money, but that of information to give niche and customised services to customers in secured yet simple way. So innovation is essential for retail banks’ survival.
Banking rests on the foundation of trust that retail banks have already built over time and lost too post- Global Financial Crisis. 2015 is thus an opportune moment for retail banks to regain that trust when new players, both traditional and disruptive, have started to compete and own the same customer. What will make retail banks survive and thrive is having a better understanding of consumer behavior, investing in the above areas wisely, and executing them effectively to wow the customers so that switching cost becomes very high in future.