Ahead of Sibos 2016, which takes place later this month in Geneva, we look at some of the key issues on the agenda at the event beginning with this review of the digital banking landscape and the changes impacting on those in the sector.
You probably don’t know Chris. He’s been with your bank for about five years and works in the bowels of the office building for the IT department, so you never bump in to him when you’re waiting for the elevator. Nonetheless, you need to get to know Chris because he is about to become one of the most important people within the business
The technology trends of the digital banking era do not boil down to any one code: they hinge around enabling the re-imagination of the human experience, aligning ‘value added’ with ‘value extracted’ and what you pay for with what you actually value. The digital banking world is connected and orchestrated around the client. It needs to be secure, personal and ruthlessly efficient. Latency challenges are unacceptable; mobility and interruption are expected while friction is intolerable.
To deliver in this demanding environment, banks must invest in new skillsets: designers, information architects and engineers who can re-imagine, build and price the emergent value chain. That is where Chris comes in because he will be fundamental in orchestrating that change; building application program interfaces (APIs) to enable seamless client-centric experience. These APIs will fundamentally shift the price point you as a bank have traditionally charged for your services.
Grasping the nettle
To understand why Chris’s role is going to be so important, banks must first realise some uncomfortable truths.
‘Digital’ is not technology, nor is it an app. Digital disruption fundamentally challenges banks that were set up in an analogue world to maximise efficiency around a value chain that is increasingly challenged and based on technology that is increasingly obsolete.
So the hardest question posed by the advent of the digital era is ‘how much of your organisation can you afford to take into the future’? Not an easy issue to stomach, nor an easy question to answer when personal, emotional and material investment blends with the immediate pressures of work being carried out, by people working hard today to keep up with clients’ current requirements while keeping half an eye on a rather alarming ‘tomorrow’.
So what does responding to that challenge entail? The answer can vary substantially, depending on your starting point. User-centric design can produce radically re-imagined services offering seamless, non-participatory, smooth exchanges. Yet in doing so, it may well be cutting you and your business out of the picture. By extension, in trying to design for the digital era from the vantage point of an existing organisation desperately trying to write itself into the future, what is produced is often a slight improvement – but a pale approximation of a digitally native experience.
Consider the Yellow Pages as an example. The idea that in order to make a restaurant reservation, we would leaf through a book delivered periodically through the post and kept under a designated telephone spot in the household has become a quaint anachronism. The point was to go for dinner – digitisation of the experience didn’t recreate the process, it solved the need for relevance.
If this value assessment grid is applied to banking we soon realise that it is a ‘so-that’ business. It is what we do in order to be able to do something else. You don’t do it for fun, for the experience or as a hobby. You do it because you need credit, because you have investable assets, or because you need to hedge risk. It is a bridge to something else, rather than the endgame.
Envisaging the future
From a brand awareness perspective, it first involves a very uncomfortable sequence of thoughts before a bank can assert: “I will become the rails along which your life will travel.” However, if you translate that relationship of trust you have with your financial services to a trusted set of parameters that you agree and entrust them to, it creates new possibilities. If I drive my car across international borders, pre-bought micro-insurance can kick in because my car’s global positioning system (GPS) has alerted my insurer that I’ve left the country. Should I return in 12 hours, my insurance coverage can extend as needed for just those 12 hours.
None of this is science fiction. The technology exists, but what we don’t quite have is the organisational alignment to allow for people to wrap jobs and institutional awareness around ‘the art of the recently possible’.
However, in this version of the future the organisations are smaller, and leaner, and much more digitised. It also means that many departments that will probably look very different from their current set-up. So as we imagine what seamless looks like, we are faced with the elimination of much of what makes banks money today, as well as much of what they spend long and busy days doing.
Solving the question of ‘who owns the customer?’ is less important than who the customer is and why they are a customer. ‘User journeys’ and ‘customer-centric design’ are not simply concepts: the business needs to understand their usefulness, not just the mechanics.
As the organisation digitises to provide seamless and relevant service to customers of all shapes and sizes, each of its departments needs to understand what their part in this shifting world is. The change won’t happen overnight and it will require new partnerships, new relationships and new ways of thinking. It will require you working with Chris, understanding how his work will change the bank.
Revisiting one’s commercial relevance is uncomfortable by any measure and any definition. Yet in the midst of regulation, squeezed margins and disintermediation, it is the only question worth spending time on. Otherwise the bank runs the real risk of not being a ‘so that’ business but becoming a ‘so what’? business as those around them realise the opportunities afforded by a seamless digital experience.