Everyday Bank Blog

Close the digital banking gap between aspiration and reality

When Spanish Conquistador Hernando Cortez burnt his boats on a Veracruz beach, it was an extreme act of commitment; a signal that there was no going back regardless of whether they found Aztec gold or not.

There are now a lot of traditional banks who are faced with the question of whether to “burn the boats” and fully commit to a digital future. Some continue to cling to the hope that rising interest rates, stronger economic growth and a regulatory backlash against new entrants will save them, and that change can be incremental. These are the Traditional+ banks for whom digital is still a peripheral add on.

However, increasingly banks are realizing that they should be lighting the torches and packing for the digital jungle if they are going to find gold. These are the Digital+ banks who see their future primarily in the online and mobile world, but recognize that—at least for a while—face-to-face interaction or live contact center support still has an important role to play in the business model. They recognize that relaxing on the boats offshore is no longer an option, as digital competitors are drilling holes in the bottom of those boats and siphoning off customers with compelling digital-only offerings.

Our research shows that most banks now recognize the threat. Eighty-four percent of banks say they see a need to reinvent themselves and evolve their business before they are disrupted from the outside. However, the research also suggests that they fall short in their readiness and ability to truly embrace a digital future.

Accenture recently assessed the Digital Readiness of European banks across four distinct dimensions: strategy (plan), production and delivery (make), customer experience (sell) and operations (manage). The result was that the banks performed best in the areas of strategy and sales, and were lagging in product development and operations when compared to leading digital innovators.

Source: Accenture European Financial Services Digital Readiness Report, 2016

For example, while almost all European financial services firms have digital as part of their corporate strategy, only 37 percent have a dedicated budget for digital transformation. Nearly 90 percent are focused on developing digital products, but only 60 percent are also developing products digitally. While 91 percent of firms provide marketing content to customers via digital channels, only 62 percent target that content based on browsing history.

To close the gap and move from being Traditional+ to Digital+ organizations, European banking needs more Cortez-like boat burning. Operating and investment budgets need to be completely rethought, and customers and employees need to hear, see and feel an institutional-level commitment to a digital future. It will be scary and challenging, but if management doesn’t put a torch to the traditional business model, the thought of being able to just get back on the boat if digital doesn’t work will undermine the transformation they need to go through.

For more on digital readiness in financial services, read our full report: Accenture European Financial Services Digital Readiness Report—European Banks and Insurers and the Quest to Stay Relevant.

Big rewards are open to Banks by building a different relationship with their SME customers

Read the report.

Read the report.

Small and medium-sized enterprises (SMEs) play a major role in the UK economy, collectively generating close to half of the UK’s private sector turnover. But banks are missing out on the chance to provide this key economic segment with a broad range of services that add up to a substantial amount of revenue. In fact, the findings of Accenture’s recent report “SME Banking 2020 – Changing the conversation (and capturing the rewards)”, show that banks could be missing out on a total revenue opportunity of £8.5 billion[1] between now and 2020.

Our report surveyed 1,000 UK SMEs about their perceptions of their bank. This included SMEs’ assessments of the relevance of the products and services their banks offer them today. What this revealed was a clear call for banks to develop propositions tailored to SMEs’ needs, not necessarily just focusing on the traditional banking products and services. Doing so could position them as ‘go –to’ service providers and be rewarded accordingly.

Today, 58% of UK SMEs choose their bank according to cost and 56% make their choice based on consideration of overall service quality. But only 4% chose their bank for the value-added services it offers to help improve business performance, customer service and sales. That’s not to say that SMEs are dissatisfied with their current banking arrangements – 63% of them are happy with their main bank and one in five said that there was nothing that their bank could do to enhance their satisfaction.

However, we also identified a clear – and as yet largely unsatisfied – appetite from SMEs for value added services to help them manage and run their businesses more effectively and take advantage of new opportunities.  More than 60% of SMEs said that they would use new services from their bank – such as Bitcoin and peer-to-peer lending – if they were on offer. That reveals a mismatch between what banks currently offer SMEs and the services those SMEs would truly value – and that unmet demand also extends to SMEs’ desire for a more engaged and active relationship with their bank. SMEs want their banks to engage with them and make suggestions for new ideas more proactively. That includes being able to offer services to meet what are for many fairly complex needs which banks may currently tend to not fully satisfy.

Making greater use of digital channels should be a priority for banks to give SMEs the same capabilities that they have extended to retail customers. SMEs currently tend to choose dealing directly with relationship managers as their preferred channel for advice, applications, complaints and non-banking services. However, with services designed in the right way to meet SMEs’ needs, there are significant opportunities to migrate them to greater use of digital channels.

Our survey highlights some clear opportunities that banks need to recognise and seize. If they don’t, SMEs may take their business elsewhere. To prevent that happening requires banks to change their mindset from a focus on financial services provision, to a more holistic approach as an SME service provider.  By harnessing new technologies and new thinking, banks can capitalise on a potential revenue opportunity of £8.5 billion.  With SMEs clearly expressing their desire for new services and support, the door is open, Banks need to make sure they enter before others get there first.

[1] Five year forecast based on £1.7bn of potential new revenues over five years: 2016-2020

A Guide to Real-Time Payments Terminology

Payments continues to be a hot topic in banking. Technology, consumer and business expectations—driven by innovations, such as smartphones, social media and internet platforms—have been forcing payments change for at least five years. The change is accelerating, and is likely to endure for many more years, significantly transforming the payments landscape. It is attracting involvement from banks’ senior executives and newcomers (often FinTechs) to shape the new terrain. For example, they are leading investment and transformation programmes, launching new products and services, or to consolidating/restructuring their operations.

The payments industry is surprisingly complicated. Even experienced bankers and newcomers can find some of the terminology and concepts confusing. Many have built their careers in other areas of banking, such as credit or branch banking, and are new to the arcane world of payments. One new development that is challenging everyone, including veterans of the payment industry, is distributed ledger technology (or blockchain)—an innovation that is even questioning our understanding of money itself.

To help executives new to payments get a better handle on industry change, Accenture and ACI Worldwide developed a report that clarifies some key terms. Specifically, the Executive Guide to Immediate/Real-Time Payments explores the significance of real-time payments, which are at the heart of industry’s transformation, and simplifies nuances of various payments transactions.

For example, what is the difference between clearing and settlement? What is real-time gross settlement? What is the difference between a real-time card authorisation and a real-time payment?

Read the report.

Read the report.

Briefly, clearing is the deduction of funds from the sending account and the crediting of funds to the receiving account. Settlement is the actual payment of funds by the sending bank, which owes the funds, to the receiving bank, which is owed the funds.

Real-time gross settlement (RTGS) is the real-time exchange, or settlement of funds between two banks specific to an individual payment (without netting, or combining funds from multiple payments flowing in both directions between the two banks). However, the clearing of these funds into the beneficiary account at the receiving bank is a separate, usually asynchronous process, which is why RTGS payments are typically same-day for the end-user, not real-time.

A card authorisation is a real-time guarantee to the merchant (typically based on the cardholder’s available funds) that the merchant will be paid in due course (for example, next day). A real-time payment is where the receiver receives and can use the funds immediately.

For fuller answers and a wider discussion on real-time payments concepts and initiatives around the world, read our full report – Executive Guide to Immediate/Real-Time Payments, or watch the video on Finextra.

Banking innovation: Everyday banks disrupt the status quo with living services

How many articles have you read about a start-up from out of nowhere with a new business model that is winning over retail bank customers? If you’re like me, more than you can remember.

The story is always the same. The emerging players are the banking innovation “disrupters,” and traditional players are “the disrupted.” But can retail banks rewrite this story?

The reality is that they have to if banks want to avoid losing relevance and becoming back-office utilities. Consider that by 2020, different business models could deliver up to 80 percent of existing banking revenues, according to Accenture research.

Beat them at their own game

My colleagues published a point of view that details how banks can “flip the script” here. They explore how retail banks can evolve into Everyday Banks. These are banks that interact daily with customers and take innovative approaches to digital banking transformation.

These Everyday Bank approaches are inspired by companies like Google, Apple, Facebook, Amazon (GAFA). These companies are pioneers in both their use of digital technologies and in their ability to become indispensable to their customers. Steve Jobs described it perfectly when he said, “A lot of times, people don’t know what they want until you show it to them.”

The new banking disrupters

To build deeper connections to customers’ financial and non-financial lives—and increase revenues and lower the cost to serve—Everyday Banks must act more like GAFA.

Instead of watching outsiders take the lead with disruptive business models and banking innovation, Everyday Banks find ways to disrupt themselves—sometimes radically so. It’s about going on the offensive against disruptors while defensively managing the risk of losing revenues to them.

Taking on a whole new life

Read the report.

Read the report.

To do this, Everyday Banks must evolve their business models by assessing their own portfolio of businesses as well as pursuing next-generation business opportunities. Living services is one of these opportunity areas.

Living services are highly fluid, personalized and experiential services. They are possible thanks to deep customer data insight and a world where so many objects are digitized. They answer customer expectations for services that have individual resonance, not mass appeal.

Living services position the Everyday Bank in the role of dynamic (and digital) financial manager, not pure transaction processor. Living services include intuitive, digital services such as:

  • Self-checking statements
  • Proactive financial check-ups
  • Ecosystem-based services (housing, travel, healthcare and more)

As banks create their digital agendas, they should explore the possibilities that living services can offer them to develop services that align with customers’ lives.

6 key success factors for Credit Innovation

Understanding your customers is the foundation to a sustainable competitive advantage in banking. Organizations can no longer wait to embrace the power of analytics to gain data insights that, if effectively actioned, can bring revenue uplifts through the maximization of cross-selling opportunities and redesign of up-selling strategies.

I think digital banking can no longer be associated to ad-hoc initiatives that, most commonly, foster online or mobile usage from customers or even with building a new app for commercial campaigns – it is a way to run an entire organization. This new model will touch product development, distribution, front and back office operations, marketing communication, thus influencing the entire customer experience.

As we move forward into 2016 and beyond, organizations can improve profitability through innovative loan origination processes and strategies, mobile solutions extended to the SME segment, increased fee-based services and M&A activity to handle increased costs and, ultimately but not less relevant, divestiture of non-core activities. Each of these areas can benefit from analytics: when analytics is properly used to derive relevant insights, organizations can better make decisions.

Despite an increasing number of marketing channels at our disposal, customers are becoming not only financially wiser, but also more and more technologically sophisticated as well as free to choose a competitor bank. They expect a consistent and unified experience as they proceed with their buying and transactional processes, both at traditional channels or while navigating online. Institutions with the most seamless engagement will win the battle for customers, leveraging one-to-one targeted messaging based on the individual or, ideally, household needs.

Accenture has developed a framework that includes six key factors that allow banks to achieve break-through Credit Innovation in the years ahead: improve Data Quality, reshape Customer Experience, streamline Instant Loan processes, boost Digital Mortgages, focus on Self-Serve mode, and become aware about their Ecosystem. Each of these factors can be intelligently supported by deploying analytics.

Fig - 6 key success factors for Credit Innovation

Stay tuned.  In my coming blogs I will bring you through each of the key successful factors.

Payments transformation: Should invisible digital payments be more visible?

In the digital era, payments providers are getting close to frictionless payments. But are frictionless payment transactions always a win for consumers?

The evolution to invisibility

While traditional payments will not disappear any time soon, respondents to our Accenture 2015 North America Digital Payments Survey expect to use them less and digital payments more in 2020. Consumers want digital payments solutions that are simple, personal and seamless—the less friction, the better.

Payments transactions are becoming less visible. Compare the physical act of exchanging cash, writing a check or swiping a card to automatic drafts, stored payments and device-initiated payments where the transaction happens out of sight, and for many consumers, out of mind too.

The downside of frictionless payments

Invisible payments transactions introduce convenience that consumers tell us they want. Yet there are also risks to consider.

First, invisible payments can make it difficult for consumers to spend responsibly or have a accurate sense of their true financial picture. Small purchases can add up fast when spending is unseen and silent.

There is also the issue of payments security. When transactions occur out of sight or without explicit authorization, fraud could become as invisible as the payments themselves are.

Striking the right balance

These issues have me wondering if payments providers should add some friction back in the process. Doing this well will depend on consumer data insight—and how banks use it.

As my colleagues at Fjord—the design and innovation unit within Accenture Interactive—remind us, earning consumers’ digital trust is critical. As organizations leverage invisible payments data, they must be mindful of handling it with care, offering services with manners.

Fjord Trends 2016: Services with Manners from Fjord.

Consider how payments players can design more “visible” invisible payments, and create better customer experiences in the process:

  • Spend tracking

Automated alerts pushed to mobile phones before purchases are made can help consumers stay in control of spending. However, if alerts are unwelcome or occur too often, they could become annoying. Aligning alerts with spending thresholds, as some providers are already doing, can provide useful insight without being overbearing.

  • Built-in security

Invisible payments can benefit from the same kind of fraud protections that consumers expect when they use their credit cards. This could be the requirement for quick, tap-and-go authorization for large payments. Or freezing payments until consumers verify that anomalies in spending habits come from their actions, not those of a fraudster.

  • Next-level personalization

By analyzing consumer data, payments players can offer personalized services. Insight into recurring payments, categories of spending and other trends could generate special offers from partners. Providers could also offer tools for consumers to drill into their own invisible payments data in the model of online personal money management services.

Learn more

There is no denying that we’ve entered the exciting but complex age of payments invisibility, and I’ll be watching how the evolution unfolds. For more insight, take a look at the following:

Fjord Trends 2016

Accenture 2015 North America Digital Payments Survey

Where and how banks can tap the Distributed Consensus Ledgers opportunity for Payments

Read the report.

Read the report.

Bitcoin was designed as a peer-to-peer payment system for the internet. Its key breakthrough was to solve the double-spend problem, thus allowing a system to develop with no central authority, but still with immutable trust, security and integrity.

The banking industry was caught off-guard by Bitcoin. Many aspects of Bitcoin—including a finite supply of currency, permission-less innovation, open access/participation, borderless peer-to-peer transactions and no central control—run counter to many of the industry’s norms. Luckily, the industry found a way to respond – banks separate the distributed consensus ledger (DCL) technology from the Bitcoin currency to focus on the merits of the DCL technology, and ignore Bitcoin as a payment system.

However, can the industry be successful with this approach? Some have likened separating Bitcoin from the underlying DCL technology to separating the internet from its underlying packet-switching technology; clearly, an absurd approach.

So, in focusing on DCL technology in payments (rather that broader uses in other financial services markets) what benefits are possible and what should banks do—and are doing—to achieve them?

For payments, DCL technology may have benefits over other more established technologies in a number of areas. These include where it is not possible to have a central authority (for example, cross-border payments); where there are intermediaries who could be bypassed, such as in correspondent banking; where multiple parties access and update shared information, such as reference data; where counterparties transact with each other at risk, such as in international payments; and where new business models can be supported (for example, micropayments for microcommerce). Banks are interested in DCLs because they recognise such potential benefits, seeing the opportunity to make internal and interbank processes more efficient, saving substantial costs and improving the robustness of their services. Yet, they have shown very little interest so far in using DCLs to enable new business models; perhaps, that will come later.

Unfortunately, this interest in DCLs has generated a lot of hype with over-optimistic expectations, some wild claims on the benefits and a general belief that banks can widely exploit the amazing DCL technology. In this hype, DCLs have become known as “blockchains”, a somewhat inaccurate and lazy description, as it refers to a specific feature that is used by many, but not all DCLs. However, the word “blockchain” captures the imagination of something new, clever and exciting; and it fits neatly with the imperative to be innovative and at the forefront of technological change in the digital economy – its use is likely to persist.

This hype obviously carries risks that expectations won’t be met and that resources will be misallocated. For example, a clearing and settlement system built with DCL technology is still a clearing and settlement system. In payments, these are usually very efficient at scale with existing technology. As hype fades and reality catches up, a ”valley of despair” is probably imminent. It is therefore important that banks look beyond the hype and work with DCL technology now, as many are doing, to learn from it and build evidence and experience to inform strategies and investment decisions.

Inside the banking sector, DCLs for payments are likely to develop mainly as private networks in areas such as intra-bank payments, cross-border payments, trade finance, interbank settlement, payments reference data, AML and identity management. If central banks start issuing fiat currency on DCLs, we could see account-to-account (wallet-to-wallet) settlement which would turn the retail banking model on its head, but this could take many years to develop.

The best innovation though is likely to come from outside the banking sector.  DCLs are ideally suited to machine-to-machine payments and as the Internet of Things grows, so will demand for these types of payments (for example, cars automatically paying fuel pumps). Many new business models will appear, particularly through using DCLs to initiate and manage micropayments (micro in terms of payment amount and time intervals between payments).

To address this opportunity, banks are taking five actions:

  • Organising for DCLs; for example, setting up innovation labs and participating in industry initiatives, such as R3 and Hyperledger.
  • Evolving DCL strategies and architectures.
  • Experimenting to develop know-how and experience.
  • Working with FinTechs, customers and regulators to inform and be informed, and to identify and develop business opportunities. Ripple, in particular, is one FinTech that is likely to make traction with banks in intra-bank payments, cross-border interbank payments and trade finance. Its technology is maturing fast and is designed to work with the existing banking system without disrupting it.

Still, the industry may have to keep an eye on Bitcoin. Despite the huge investments in DCLs in the industry and in FinTechs, Bitcoin is still the only successful DCL that is achieving its purpose and operating at scale. It is not without controversy and is undergoing growing pains, but it is getting stronger by the day. Either Bitcoin will fail, and in doing so, provide valuable insights to those using DCL technology, or it will continue to grow. If it does continue to grow, then at some point banks will have to take notice of Bitcoin and work with it. Many believe this will never happen and dismiss Bitcoin completely. The truth is, no-one knows, but keep watching those Bitcoin transaction volume graphs!

Why “robo-advice” will win the battle for a pivotal role in the future of financial services

In my first blog in this short series on robo-advice, I described the battle for “hearts and minds” that robo-advisory services must win to reach mainstream acceptance by the FS industry and its customers. In this second instalment, I’ll explain why robo-advice is well equipped to win this battle in the years ahead.

In my view, it’s already clear that the robo-advice model brings some major benefits that niche players are already capitalising on. Like the barriers that I described in my first blog, these advantages arise on both the consumer and bank side of the relationship.

First, the consumer benefits. It’s a fact of life that smaller investors are often uncomfortable discussing their own personal financial circumstances. In these situations the anonymity and impersonality of robo-advice can be a major advantage, by removing personal embarrassment and thereby encouraging more people to seek financial advice, rather than just keep their savings in virtually nil-return ISAs.

A further benefit for customers is that robo-advice is much cheaper than the traditional financial advisor (FA) service, and potentially opens up responsible investing to a much wider audience with vastly varying levels of financial capacity. Not all investors need to be able to commit tens of thousands of pounds – a fact evidenced by the large number of younger investors that Nutmeg has attracted, often with relatively small amounts to invest.

A related factor is that simply investing money does not give the sense of instant gratification that financial planning can bring to customers. In other words, just buying “x” amount of shares and sitting on them is frankly not a very interesting thing to do. But being walked through various scenarios by a robo-advisor, which can instantaneously plot the potential gains from committing even small amounts over a long period of time, may pique the interest even of people with no previous experience of personal financial planning.

Of course, sitting down with an FA to do the same thing remains an option – but then the customer would probably be charged an hourly rate. A robo-advisor using an artificial intelligence (AI)-based analytics application and data lake, and enabling customers able to switch their scenarios at their leisure to view differing potential outcomes, would be both cheaper and much more accessible for the vast amount of potential investors.

And the advantages for banks? One is that robo-advice would provide a verifiable electronic audit trail of contact and advised services between the consumer and the firm, thus ensuring a much more clear-cut position in any litigation arising from “insistent investors” going against the robo-advisor’s recommendations and losing capital as a result. There’s also scope for utilising distributed ledger FinTech solutions in this area, to provide an additional layer of potential redress and safety for banks.

What’s more, robo-advice is scalable at much lower costs than traditional FA services. And while some providers may be concerned that these services would demand large-scale architecture implementations, the increasing use of APIs could open up new ways for banks to collaborate with third-party FinTech robo-advisory services.

Overall, robo-advice may be a concept whose era has not yet quite arrived – but in my view there are sound reasons for believing that it soon will. And when it does, both consumers and banks stand to benefit.

Banks Should Emulate—Not Fear—GAFA

Machiavelli was of the opinion that if you were a Prince it was “better to be feared than loved if you cannot be both”. As the Princes (if not Kings) of the digital world, Google, Apple, Facebook and Amazon (GAFA) don’t seem interested in wooing the banks and are instead doing a good job of generating a fair amount of fear and anxiety. For GAFA, banking services are an extension and enhancement of broader customer relationships anchored in connections, community and commerce, and they are starting to get traction. Google’s Android Pay now has millions of users[1], and Apple Pay is now accepted in over a million merchants.[2] Facebook is working on a way for consumers to use Messenger to pay for goods in person,[3] and Amazon’s Pay Monthly lets customers pay for big ticket items on an installment credit plan.[4]

In North America and Europe, these innovations still account for only a tiny fraction of banking revenue, but if you want a glimpse into a possible future, add another A to GAFA and look at China.  Alipay the payments arm of ecommerce giant Alibaba processed nearly $1 trillion of payments in 2015; well over 3 times the volume running through US e-payments leader PayPal. More broadly, Alibaba, Baidu and Tencent together dominate the e-commerce and P2P payments markets in China, and are increasingly squeezing the banks out of the transactional credit market as well.

Despite the twin threats of Fintech piranhas and GAFA juggernauts, it isn’t inevitable that traditional banks will be marginalized in the digital world. Rather than fear GAFA, banks need to try and emulate them by playing a trio of competitive aces that they still hold in their hands: customer relationships, transactional trust and customer data. By exploiting these advantages, banks can control their own destiny, but the clock is running to play these cards effectively:

  • Master real-time data analytics to deliver advice and compelling offers within a customer’s digital journeys. In the past, ‘advice’ meant a sit down with a banker to discuss a mortgage or retirement plan, but increasingly ‘advice’ in banking means the type of nudges, prompts and offers delivered by GAFA during every interaction.
  • Become more relevant by using customer data to expand the perimeter of the banking business. Banks have the data to understand both customers’ aspirations and their day-to-day problems. By collaborating with ecosystem partners to help address health, work, and family issues, banks can move beyond transactional trust into the type of advisory relationship that many aspire to, but few achieve.
Read the report.

Read the report.

  • Master multi-channel and emulate the seamless flow of data and connectivity across channels and devices that is foundational for GAFA. In-person connections and face-to-face advisory will continue to have a role in banking, but customers will never feel ‘known’ by their banks if fragmented systems put the onus on the customer to join the dots. If banks can master the digital world, then integrated physical distribution can be a competitive advantage; but if customers see silos and fragmentation, then branches will become an anachronism for the millennial generation.

In a world where GAFA is looking to cherry pick elements of the traditional banking business, the incumbents need to decide which roles to play, which businesses to prioritize and transform, which new businesses to launch, and how to develop and deploy relevant digital enablers. GAFA players are used to dominating the markets they compete in, so if the banks are not careful, they could find themselves disappearing behind the curtain of the digital world and becoming no more than utility providers.  But it’s not too late to stop that from happening if the banks play their hand well.

My colleague Piercarlo Gera shares more about the GAFA imperative and how banks can take a GAFA approach to transform their business in his Beyond the Everyday Bank blog series. You can also read the full report: Beyond the Everyday Bank.

[1] “Android Pay signs up “millions” of users, readies loyalty programs, NFC World, October 27, 2015. http://www.nfcworld.com/2015/10/27/339037/android-pay-signs-up-millions-of-users-readies-loyalty-programs/

[2] http://www.apple.com/apple-pay/where-to-use-apple-pay/

[3] “Facebook Preps In-store Purchases for Messenger,” engadget, March 28, 2016. http://www.engadget.com/2016/03/28/facebook-messenger-payments-secret-conversations/

[4] “Amazon Wants U.K. Shoppers to Pay in Installments,” Fortune, January 4, 2016. http://fortune.com/2016/01/04/amazon-lending/

Beyond the Everyday Bank: The GAFA Banking Approach

Read the report.

Read the report.

In the first blog of this series, we discussed the rapidly changing banking environment and how the combination of empowered consumers and aggressive competition from digital players outside the industry are pushing banks to transform themselves.

The top C2B players – including Google, Apple, Facebook and Amazon (GAFA) are expanding the range of their offerings beyond shopping, entertainment and travel into products and services that affect consumers’ health, their homes, and their money. The GAFA approach generates tremendous amounts of data that can be analyzed in real time to obtain customer insights. These insights, in turn, can serve as the basis for opportunities to cross- and/or up-sell new or complementary products.

Companies need to confront key strategic questions including: What is the total investment for the digital agenda? How should that budget be allocated to “GO Digital” initiatives (businesses chosen for focus) and “BE Digital” initiatives (enabling and optimizing the overall enterprise)? For both GO Digital and BE Digital initiatives, what are the priority items? Should the bank go it alone or partner up with financial technology (FinTech) providers?

Within the GAFA banking portfolio, there are three major GO Digital sets of platforms and/or businesses to consider:

  1. Provide digitally powered financial platforms. Banks can offer physical and digital choices, both in terms of access (allowing the customer to decide when and how to engage with the bank) and in terms of an easy and simple experience. For example, depending on the business strategy, a digital advisory platform could be developed for affluent consumers, evolving each step in the advisory value chain, from prospect collection and onboarding to client engagement, investment portfolio proposal, and illustration of various offerings and products.
  1. Tap into experiential living services. Banks could consider partnering with others to develop platforms that deliver “living services” – that is, services that can adapt in real time to fulfill the needs arising in customers’ everyday lives. This means increasing the level of interaction with customers, having access to extensive data on their behaviors, and embedding customized financial services propositions in various areas including housing, health care, and traveling.
  1. Develop new businesses. In order to multiply customer interactions and/or generate new revenue streams, banks should explore new businesses. Potential opportunities include becoming digital attackers to enter new geographies; monetizing branch space (by teaming with players like Amazon) and data monetization (by providing merchant-funded discounts and offers to merchant market intelligence and business insight. 

Developing experiential living services and new businesses will not only generate new revenue streams but will also act as a multiplier for customer interactions and touchpoints, helping the bank remain at the center of customers’ lives and needs.

Read the full report – Beyond the Everyday Bank: How a GAFA approach to digital banking transformation will change everything.

In our next blog, we will look at some of the digital enablers that banks need to provide different products and services while performing the roles they have chosen.