Retail banking BEWARE! Winter is coming...

​Let me start by sharing a story that we may all be familiar with about two backpacking friends who were on a camping adventure. One of them ran into the tent and shouted to his friend that there was a bear running towards them. The other guy quickly started to put on his running shoes. As his friend was lacing his shoes, the first guy was incredulous and asked how on earth he thought he would be able to outrun the bear.

”I do not have to outrun the bear,” he answered, “I only have to outrun you.”

Winter is coming

For retail banks, today’s markets are fraught with challenges - new digital competitors and digitally empowered customers prominent among them. Yet, most still pursue business as usual, striving to be all things to all customers.

Despite their best efforts to focus on the customer, many still don’t offer what their customers actually want. These banks also tend to manage each of their extensive channels — including digital — separately, not as a holistic network impacting all aspects of their retail operation. In addition, most mainstream banks are fighting just to keep up with the unprecedented pace of technological change — and too many are falling behind. 

Banks everywhere are grappling with slower growth, tightening regulations and economic volatility, even as many of them face a high and inflexible cost base.

Technology is reshaping customer offerings

Today, new technologies are changing the way customers and financial service providers interact, and introducing new demands for how banking services are delivered. In particular, Millennials — under 30 years of age — have distinct preferences regarding financial services and digital technology.

More than just an enabler, technology is cresting the curves of ubiquity, connectivity, adoption, and cost to a degree in which it is effecting huge changes in industry and business models. Mobile platforms, social media and robust analytics are bridging the entry briars that once prevented small-to-medium-size companies from entering different banking domains.

How should banks fight back?

Banks will have to develop new capabilities and strengthen existing ones.

  • Digitally aware: Offer digital personalized financial advice and counseling to customers to help them better manage their financial needs. 
  • Truly omni-channel: Seamlessly integrate the customer experience across in-branch, assisted, and digital interactions. 
  • Internal efficiency: Dramatically improve efficiency and business processes to match those of new entrants (to stay relevant in price wars). 
  • Customer-centricity: Build the organization around customer needs, instead of products, allowing increased flexibility and a coherent banking experience. 
  • Culture of innovation: Create an open innovation infrastructure, taking into account the ecosystem of customers, employees, and partners.
  • Redefined business boundaries and models: Collaborate to provide superior service and meet customer demand; make the bank a hub of capabilities and services - part of larger value networks. 
  • Agile: Make agility a key focus, as it is replacing scalability as a factor of success – driving players to quickly reorganize around customer needs, rather than products. 
  • Specialized: Become best-of-breed by relying on partnered ecosystems and collaborations, instead of on proprietary investments. 

By truly focusing on customer needs, as well as integrating data, analytics and insight with product development and delivery, banks can transform not only the service proposition they offer their customers, but also the perception of their brand. That, in turn, will help drive overall loyalty. The adoption of digitally enabled services presents a unique opportunity for banks to deepen the relationship with their customers — going beyond everyday banking to helping customers better manage their financial lives every day.

To learn more, download our white paper, “Retail Bank Disruptors and Their Effect on Customer Service​”.