BANKS OF THE FUTURE: THE TOP CHALLENGES

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BANKS OF THE FUTURE: THE TOP CHALLENGES

Embracing and integrating technological innovation, welcoming partnerships and collaborations, providing clients with customised services and interaction – are a few of the criteria that some banks are already adopting and others should adopt to continue growing. 

These are among the findings  of the Ambrosetti Club’s “The Banks of the Future” research [1], curated by The European House  Ambrosetti [2] and Openjobmetis [3] and presented at the recent “The Outlook for Economy and Finance” workshop [4]. 

The analysis, which MyBank also contributed to, reveals interesting factors currently shaping industry trends in Italy.   

What are the new dynamics generated by digital transformation in the banking system How to respond to the need for renewal in such a highly complex scenario? 

Top challenges in banking 

Here are the main challenges that the banking sector must face and the competitive advantages of the traditional bank to focus on: 

The evolution of customer behaviour 

Digitalization and the advent of social media have profoundly changed the relationship between bank and customer. With digital-first consumersservices as multi-channel,  real-time interaction, mobile and customised user experience have become essential elements to offer

Interaction with the bank becomes less frequent, as well as increasingly digital. Between 2012 and 2016 in Italy, monthly visits to physical  branches went from 1.5 to 1.05. A decrease that does not come as a surprisein light of customers increasingly using home bankinginternet and mobile banking have risen from 43% in 2012 to 62% in 2017. Smartphone use is booming: it counts about 9 million people, one customer out of 3. [5] 

Digital transformation   

Digital transformation will bring further changes to the way financial services are provided by focusing on simplicity, ubiquity and security. Staying competitive in the new scenario requires banks to offer a frictionless experience on the front end, and be able to satisfy increasingly demanding customers.

The innovation of processes and the use of solutions that exploit the connection and investments made on SEPA instruments also offers an opportunity to reduce costs in the back-office and allow banks to be in line with the requirements related to AML/CFT. 

Once the processes have been established, the enabling technology can be chosen: Open API, Artificial Intelligence, Instant payments, Blockchain, smart objects, Cloud Computing are just a few of the new technologies that can contribute to the implementation of innovative processes. 

PSD2 and new market players  

The implementation of the PSD2 regulation (Payment Services Directive 2) of 13 January 2018 has created good opportunities for banks in the field of New Digital Payments.   

At the same time, by opening the door to new non-traditional players, FinTech and BigTech, the banking industry scenario has become increasingly complex and competitive. 

And yet, the interviews conducted by The European House – Ambrosetti bring to light that new players do not perceive direct competition with traditional banks.

In fact, many solutions, such as MyBank, are not a substitute for the banking core systemsthey rather digitize and speed up the processes to the benefit of the entire ecosystem.

Banks can therefore exploit the open banking paradigm to their advantage to innovate and develop ad hoc services that meet the needs of customers and contribute to the evolution of the market. 

How to face the new challenges  

Embracing new technologiesstaying open to partnership, being customer-centric seem to be the keys to continue to grow in an increasingly complex bank sector: 

  • Carefully following the evolution of customer behaviourfocusing on clients’ needs to propose new customised solutions;  
  • Integrating new technologies to streamline, speed up and secure operations;  
  • Looking at PSD2 as an opportunity to work with strategic partners and play a  leading role  in the new scenario. 

 

MyBank is a perfect fit in this context: it relies on the online banking environment already in place and allows banks to offer a high value-added solution.

With MyBank safe digital payments and identity authentication through the client’s own online banking portal or mobile application are enabled. [6] 

MyBank supports banks with its customer-centric solution, it improves their user experience and helps increasing customer loyalty. 

The strengths of the traditional banking system 

Ambrosetti Club’s analysis shows that, although customer retention rates need to be improved, traditional banks still have their ace in the hole. In fact, incumbent banks still appear to be competitive with the new players, particularly in terms of trust. [7] 

Traditional branches preserves their core assets and can still count on customer trustwidely accepted tools, ease of access to funds as well as the set of available data. 

 

Conclusions   

The future industry model requires banks to embrace process transformation, which is not limited to technological innovation. It also requires digital transformation that can meet customers’ daily needs.   

MyBank is there to address these issues and supports banks in the implementation of the changes required in this rapidly evolving scenario. With its easy-to-integrate customer-centric solutions, MyBank helps banks to keep up with the sector evolution and to distinguish themselves from the competitors.

17 Apr 2019

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