As part of our season of financial services content, we sat down with digital transformation consultant Chris Williams to discuss where banks will be investing in 2021 and whether they should be looking at product and service development or process refinement and operational change.
Chris hosts the Digital disruption podcast, which can be found here.
With the full implications of 2020 not having been realised yet, do you think UK banks will be cautious with digital investment in 2021?
I would say they will be more focused on ensuring investment is made in the right areas. This will come down to prioritising properly and falls into two key areas, front end (customer facing web and apps) and the backend (operational environments).
The recovery will be a digital one, without doubt. Therefore banks, all businesses in fact, will need to focus on digital investment, but in the right places. Which is why I make the comment of prioritising well. Those who get this right will be looking at user behaviours in the front end and assessing what in the back office needs to be changed to support this. The two are very tightly coupled.
Banks need to successfully transform their ways of working so that they can be responsive to change and therefore changing prioritise.
For some the focus will need to be on operational efficiency, digitising the back office to enable the customer facing assets, such as mobile apps to be enhanced. I know one financial institution who simply can’t take on more customers because the processes in the backend are manual and slow. So their priority will be digitising operations and then bringing front end assets online as a fast follow.
If your banking operations had felt the operational strain in March – June, where would you be actively investing right now?
In identifying how we can be more responsive through improved ways of working, investing in data services to ensure we are making data driven decisions and assessing every area of our value streams and accelerating digital initiatives.
What happened was unprecedented, make no mistake about it. But let’s be clear, many had the wake up call they needed to change their ways of working, remove the silos and truly introduce lean and agile operations across their business to enable them to invest properly in digital services bringing about significant changes that positively impact customers lives.
The pandemic bought about a seismic shift in mind sets and brought teams together in the common goal of getting things done. It also highlighted that many businesses had old antiquated ways of working that simply needed to change. Technology was never the problem. People were!
Notwithstanding this, Banks have actually done pretty well. Let’s be fair to them. They moved pretty much overnight to remote working and introduced loan capabilities in the form of CBILs and BBL rapidly, supporting UK plc. This was a huge success in my opinion, and it gave the banks the realisation that they can move quickly whilst still maintaining a robust, secure and safe environment.
If you had to prioritise service development or process refinement knowing what we know about 2020, where would you focus your investment?
The answer is in the data. I would look at the data and that would inform me on where I would need to focus and how to refine and prioritise. In truth, I suspect for many it will be in both areas. 2020 accelerated the adoption of better ways of working that facilitate better collaboration and a much more iterative approach to digital, hopefully we will see these practices continue to help guide the prioritise when looking at service development versus process refinement.
Where do you see mobile technologies having the biggest impact across the UK banking sector in 2021?
The sector is broad. If we look at the big 4 or 5, for them, mobile is key. They have it much harder than your challenger banks for many different reasons, including legacy infrastructure, but also, and this is key, a large proportion of their customer base was a demographic that liked, wanted and demanded more traditional banking services, such as in branch. This is expensive to service and its not easy and so they had to balance all of this.
Covid-19 changed all that, and so they now have customers from this older demographic who are happy to bank online and with mobile. So building experiences for this group, supporting them and serving them with great digital experiences is key because this group were not always profitable customers. Now they potentially can be. Notwithstanding that, the question banks will be asking is, ‘are these customers going to be profitable ones going forward?’
Right now using a branch is highly costly for a bank, so it’s good that this demographic is moving to digital. However, are they buying products and services or are they just using current accounts and savings! I believe this is where a great opportunity lies for the investments divisions. I believe the investment areas of banks should really now push to deliver digital products to this demographic who are now more tech savvy AND willing to use tech, such as apps to make investment decisions.
This is one of many areas of opportunity for banks where mobile technologies are concerned.
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