Change as a result of technology is inevitable. Within banking sectors, new and improved technology could help businesses manage risk whilst simultaneously streamlining services to a larger extent.
Technology-driven processes have already enabled banks to serve previously unbanked or underbanked customers by opening bank accounts and facilitating mobile payments. These are just some of the ways that digital ecosystems are helping businesses meet changing customer needs and ultimately driving greater opportunities.
With this in mind, we spoke with Amit Dua, President of SunTec Business Solutions, as he explains how industry leaders can adjust their mindsets when considering how technology will shape the future of banking.
How should leaders in banking adjust their perspectives for the future of the industry?
“The bank of the future necessitates leaders to not only adapt to new technologies or systems but have a profound mindset change.
“Leaders must pivot from traditional product or geography-centred viewpoints to making customers the core of their strategy and operations. This calls for adjustments in strategy, operating models, workflows, and technology deployment. Essentially, customer-centricity must be the strategic differentiator rather than just a superficial claim.”
How will the role and approach of banks evolve to ensure greater customer-centricity in the coming years?
“In the face of an ever-changing financial landscape, banks must pivot significantly in their approach to remain relevant. Central to this evolution is a profound shift towards a customer-centric model. Decision-making will move away from short-term gains and instead emphasise the long-term value and satisfaction of the customer.
“Banks will evolve from financial transaction facilitators to integrated ‘lifestyle partners’ offering customers relevant and personalised solutions. To achieve this, organisational structures within banks will undergo a revamp. Traditional models built around products or regions will make way for structures that prioritise customer journeys, ensuring fluidity and cohesion in the banking experience. Hyper-personalisation will become the norm, where each client's experience is uniquely tailored to their preferences, needs, and behaviours.
“This is where the adoption of technologies like AI and data analytics plays a pivotal role as tools to drive customer-centric outcomes.
“However, one of the most challenging transitions for banks will be modernising their legacy systems. Instead of complete overhauls, banks will strategically target components, ensuring agility and capability without causing operational disruptions. Another significant cultural shift will be the move towards insight-driven decision-making.
“The bank of the future will not just offer services but curate experiences, ensuring they remain an indispensable part of their customers' lives.”
How should banks approach technology and legacy system constraints?
“Banks must adopt ‘componentisation’ or a ‘composable banking’ strategy. This involves using modular architectural principles, where discrete building blocks of functionality are assembled to support banking needs. These components, often third-party solutions, can be quickly combined to create ‘layers’ on top of legacy cores without altering them.
“This approach allows banks to integrate modern functionalities faster, facilitating easier collaboration with third parties and faster modification of product features.”
What's the significance of focusing on the people aspect in banking transformation?
“While technology advancements like digitisation and automation enhance operational efficiency, the people element remains paramount. Customer trust is crucial in banking. Strengthening customer-centricity is not just about deploying the right technology but also fostering a culture that rewards customer-centric behaviours.
“Banking professionals must view actions through the lens of customer experience and demonstrate empathy. The human touch is irreplaceable, emphasising that genuine relationships exist between humans, not just between customers and a digital platform.”
How crucial is governance in the transformation towards customer-centricity?
“Governance is essential. The transformation to customer-centricity demands a unique approach given its urgency and significance. Traditional committees might not be effective.
“Instead, a cross-functional steering committee consisting of experienced tech and business stakeholders must be established. This committee must be empowered to make challenging decisions and manage resistance to change. Engaging a wide range of perspectives, including from partners, new hires, or even customers, can provide invaluable insights.
“Proper budgeting and the use of both soft and hard metrics are also necessary to ensure the success of the initiative.”
How should banks position themselves for the future?
“Banks need to break free from legacy constraints in their technology, thinking, and organisational structures. The journey to a modern banking landscape won't be instantaneous but will demand consistent leadership engagement and modular transformations.
“Banks must prioritise customer-centric capabilities, focusing on a clear vision that surpasses traditional product-centric views. This means collaborating with fintechs, shaking off outdated mindsets, and placing customers at the forefront.
“Three main elements stand out for this transformation: adopting componentisation, ensuring a human-centric approach, and enforcing proactive governance and change management.”
Please also take a look at our upcoming virtual event, FinTech LIVE London, coming on 8-9 November 2023.
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