The digital bank
In times gone by, a new bank branch would open in the high street or local village and people would come. The branch served as a portal into the banking world – providing one of the sole means for customers to interact with their bank and manage their finances. Over time, in the name of convenience, other channels have gradually been added to this portal – telephone banking, online banking, mobile banking – but the service model has remained the same. Banks provide the service and infrastructure for the customers to come and serve themselves.
But, according to Marcelo Marquez, director of business development, Worldwide Banking Industry at Microsoft, the world doesn’t support this approach any more. “In their busy everyday lives, customers are always connected. They have options and they won’t necessarily find your service – or choose it – if you aren’t making the effort to reach out to them,” he says. “Instead of waiting for the customers to come to them, banks now need to be much more proactive about anticipating their needs.”
Rather than seeing this change in dynamic as a threat to their existing model, Marquez believes that it poses a great opportunity for banks. Now, they have a chance to reconnect with their customers and regain their position as financial stewards that are relevant in their customers’ lives – a status that has been gradually eroded away in more recent times by the likes of startups, mobile payment service providers, supermarkets and payday lenders.
So how exactly can they do this? “Banks now have all the tools at their disposal to know exactly who their customers are and find out more about their needs and preferences; it’s a big disruptive development in our industry,” says Marquez. “Banks have been used to spending a lot of time focusing on the process – finding ways to cut costs, streamline their operations and be more efficient. Technology allowed them to grow by scaling. And while that’s all important, they can now use technology to explore new business models and drive customer engagement.”
To help banks manage this transition, Microsoft is working with them around three core competences: digital experience, digital workplace and digital business.
“The first area focuses on the customer experience itself,” Marquez explains. “Going digital doesn’t mean you can get away with being less personal. In fact, it’s quite the opposite. Today, banks must look to deliver more value to customers through useful insights and relevant offers by engaging them in natural, highly personal and innovative ways throughout the customer journey. Because not all customers are the same and have the same needs, banks are beginning to realize that a single service model won’t work anymore. Instead, they need to reimagine what the experience is for the digital world. They need to find out who their customers are and how they can best serve them. With the use of modern technology and data analytics tools, they need to evolve into digital advisors.”
Marquez cites developments such as machine learning as having huge potential to transform the way that banks have conversations with customers. “If banks find a way of taking all the information they hold about each customer and piecing it together, they can use it to pre-empt customer needs and drive the conversation,” he says.
Banks must also look to give their workers better tools to interact with customers in the most effective way. “This ultimately comes down to the ability for workers to collaborate as a team from anywhere and on any device, and have seamless access to data, says Marquez. “By having the information they need at their fingertips, advisors can have much more meaningful conversations with customers.”
Marquez adds that advisors don’t even need to be in the same room as the customer any more to have those interactions. “Customers can book appointments and through the likes of Skype have a face-to-face conversation with an expert based miles away in another branch.”
To enable all of this, banks must also look to digitize their operations and build open, connected infrastructures that give them the agility to roll out new services quickly, and securely link with other parties via application programming interfaces (API) to extend their value proposition. “When we look at what our data centres used to be ten years ago, it’s a complete transformation,” says Marquez. “Today, they’re able to create secure but open infrastructures that enable them to better connect with clients and customers. Through the API economy, banks can now look to combine their existing data with third parties and create new service levels.”
