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The Next Competitive Edge in Banking: Standing Out in the Post Digital Era

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In 1885, John D. Rockefeller wrote one of his partners, “Let the good work go on. We must remember we are refining oil for the poor man and he must have it cheap and good.” Hence, the birth of the revolution which shaped the US oil industry forever.

Over 90 percent of the 784 business, bank and IT executives from about 30 countries polled in the global Technology Vision 2019 survey, said the pace of technology innovation in their organizations had significantly accelerated in recent years.

The main challenge for the financial sector is that innovation and new technologies are fast becoming common for all banks at an accelerated pace. Whether it is a mortgageScan to Pay on your phone or a cardless ATM withdrawal, the differentiation doesn’t last long these days, and the pack catches up with the innovators very quickly.

Basically, customers, employees and business partners expect banks to offer digital-enabled services and operations to meet their personalized needs and add value.

As banks evolve and get the most value from their digital transformations, the swift and widespread change is causing the differentiating advantage of digital to fade.

Here is a list of some of the cross-industry trends that will be important in the next few years and will give financial institutions the pivotal edge they need to set themselves apart.

  • Identify, Understand and Respond to Consumers Moments Real-Time:

Technology has paved the way for a world where banking efforts are increasing 24/7 and in real time. This always-on world creates momentary markets and if you fail to capture these opportunities quickly, it may disappear.

Banks that have the ability to identify, understand and respond to consumer moments in real-time will build greater loyalty in their customers.

Several organizations like Alibaba in the ecommerce sector has leveraged the real-time approach so well that vendors can access micro-loans within minutes to finance working capital for only a few hours.

Various Fin-techs have become power players in the lending space by offering initial mortgage loans or personal loan decisions in as little as 5 minutes. Nickel, the neo bank acquired by BNP Paribas in 2017 opens a new account every thirty seconds.

At this point, the bar for competitive benchmarks have been raised to a point where being competitive will mean not only having the right products and services but being able to recognize the exact point in time when they are needed as well as having the ability to present these proposition to the customer in the most engaging way possible.

The combination of customization and real-time delivery will underpin future competitive advantage.

  •         Use Digital Identities to Improve Customer Intimacy:

Leveraging digital demographics will expand the ways banks can deliver products and services. Rather than rely solely on traditional segmentation parameters like gender, income, age and location, the consumers’ digital demographics are a more powerful way to understand and meet customer needs.

An example; SlicePay in a bid to service unbanked students, runs its “Credit” checks by looking into applicant’s usage of technology and behaviour on digital platforms. Then use over 10,000 data points to build applicant profiles in place of financial history to provide access to credit facilities for these financially excluded segment.

Digital demographics provide organizations with new ways to identify unmet customer needs. The ability to observe, document, analyse and interpret the actions of customers allows the design of robust personalized experiences that will build consumer loyalty in the post-digital age.

The value added through consumer intimacy may be in form of security, such as the ability to flag credit card fraud in real time or the ability to automatically schedule a bill payment date. In other cases, banks can delight customers by helping them optimize spend, nudging their behaviours in ways that create better long-term financial health and giving them preferred access to better deals.

  •         Flexible Product Configuration Capabilities:

Offering product flexibility is one of the key ways to tailor products and services to individuals in real time.

Whether you are recommending the preferred way to pay at the tollgate to maximize reward points or flight tickets, the customers have to constantly feel that the bank is in their corner and helping them lead better financial lives.

Truly getting to know customers also increases the protection that banks can offer these customers. The ability to create flexible products will means meeting the customer where they are and adapting your services to how they want to interact.

Technology can help banks re-establish customer intimacy by allowing them fully understand their customer needs and behaviours and then deliver rich, seamless experiences that both delight and protect those customers.

These are some of the important factors needed for banks to find their next competitive edge. A number of organizations have plugged into the digital revolution and are aware of the importance of competitive strategies for the post digital era.

Banking is entering a post-digital age where transformation priorities of the last few years are fast becoming table stakes.

However, there is a gap between being aware of this revolution and actual execution.  

The question remains, are Nigerian banks ready to prioritize a customized approach to delivering products and on-demand delivery?

Written by:Mariam Barry

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