Here’s how banks need to master disruption

Advertisement
Here’s how banks need to master disruption
Advertisement
As we move towards a more digitalised and connected world, banks are facing aggressive competition within financial services as well as non-traditional banking sectors to deliver the convenience and personalisation that consumers expect. Once considered an expensive proposition, technology is becoming an integral part of banking to deliver customer satisfaction and drive business optimization. According to a PWC survey on future of banking, 61% bankers consider customer-centric business model to be very important but less than 20% banks are prepared to provide services in this manner.

In order to survive in this competitive and dynamic environment, banks must adopt new business models integrated with technology or they might run into the risk of losing customers and revenues. On the other hand, banking customers express similar disappointments. They strongly believe the value received from the banks is directly proportional to the pace of adoption of technology.

A personalised approach while delivering a service or a product is an essential element as banks need to deal with a varied set of customers, ranging from the tech-savvy new generation with ready information at their disposal, and also traditional customers. With innovation becoming the key driver to create a competitive edge, banks foresee increasing dependence on technology.

Technology Is A Great Enabler

Banks today need to stay at the forefront of innovation, and not be too cautious and risk averse. Executives understand that they need to do things a different way. Developments in technology, maturity of digital channels, big data and analytics and focus on customer experience means that banks are under tremendous pressure to adapt to this dynamic environment without affecting the bottom line. Banks, which are working with legacy IT infrastructure, need to adopt disruptive technologies that can transform the way banks interact with customers and drive revenue growth.
Advertisement


Banks need to invest in a technology solution that is agile and flexible; a strong strategy and advanced technology solution can help banks grow well in this increasingly-competitive and technologically-cultured market. Banks need to innovate to transform the current business model and drive performance. Also, technology can enable banks to transform digitally and compete with the new entrants. By leveraging cloud technology, banks can become more efficient in their way of issuing loans. And the ideal way to do this is by developing a strategy that fosters a robust innovation capability lined up and connected to the overall business objectives. The most successful institutions have measured their capabilities, keeping the best parts of their current model while leveraging emerging technologies and models to innovate and grow.

Four Ways Banks Can Adapt To Disruption

Banks and its customers share a long standing relationship. The banks need to respond by adopting an approach that has innovation and quick to respond digital experience at the soul of its strategy. Banks have immeasurable possibilities outside their current technology constrictions to drive innovation and develop new models of lending. Here are four potential innovations that banks can adopt today:

1. Partner with existing online lenders - Banks and alternative lenders can work together to influence an existing platform to gain more clients. Millennials, especially, are cynical about banks and are beginning to consider alternative lenders for their financial needs. For the kind of consumers today, banks need to be more socially responsible. They are also apprehensive about privacy and security of their data as more of their personal and financial information is going online.

2. Create your own online lending platform - Banks, today, are realising the need of creating their own lending platforms to deliver a quick access to existing customers and to credit and attract new borrowers and businesses. On the other hand, they need to partner with the right technology vendors to develop a lending platform, which is responsive and can compete with existing alternative lenders.
Advertisement

3. Hybrid lending - Hybrid lending is an unusual approach in which banks can create their own marketplace platforms, and sponsor a part of the loan through marketplace for funding. Banks should take alternative lending seriously; and especially this new form of hybrid lending, where at the end of the day it has a lot of winners. This will enable banks to improve customer experience, expand their credit and manage their risk.

4. Digital transformation - Driven by the imperative to increase customer satisfaction and grow revenue, banks can capitalise in firming up their digital capabilities. An enthralling digital experience will give banks the chance to deliver timely and relevant services. Banks such as BBVA have taken some concrete steps in this direction using digital innovation to meet their customers’ financial needs in an improved and efficient manner.

The coming together of novel technologies, rise of alternate entrants and changing consumer behaviour will provide seamless opportunities for growth and sustenance. There is a need for banks to streamline and reconstruct their organisation around the customer, delivering compelling digital experience.
(About the author: Darpan Saini is the Chief Technology officer at Cloud Lending Solutions.)