Everyday Bank Blog

What happens after banks switch to digital?

Since their introduction, digital channels have significantly increased the number of overall interactions that banks have with their customers.

In our recent Global Consumer Pulse Research, we found that when they are prospecting for new products or services, consumers rely on multiple channels (three or more on average), including digital channels. They mostly rely on corporate websites and online expert or comparison sites, followed by word-of-mouth, online reviews and branches.

When it comes to using mobile devices, 58 percent of bank customers use their tablets or phones often when prospecting or seeking support. Out of the average 17 interactions per month made by a customer with its main bank, seven are through on-line banking and three are through mobile phones or tablets. In emerging markets, where the average of total monthly interactions is higher, at 21, customers display an even higher propensity to use digital channels.

Customers also report that they prefer different channels for different activities. For example, they tend to use internet banking when they are looking for research and advice (48 percent at least once a month, 20 percent at least once a year) or accessing services (64 percent once a month, 14 percent once a year), whereas they prefer to talk to someone at a branch when they need to fix an issue (21 percent once a month, 32 percent once a year). In emerging markets, the use of social media for prospecting is considerably higher than in mature markets (48 percent compared to 19 percent).

Read the report.

Read the report.

After switching to digital, banks discover that customers are looking for more digital services. Customers report being satisfied with online customer service channels compared with traditional channels, but that they’d like to use digital channels for other services as well. This is evidenced by the fact that across both mature and emerging markets, online subscriptions grew 6 percentage points to 60 percent in the last year, while purchases in branches declined by 6 percent. Even of consumers who seek advice in the branch, half of them use an online channel to purchase or subscribe to a new product or service.

Globally, 61 percent of banking customers expect to have access to more online interactions across their lifecycle. However, there is some variation across mature and emerging markets. Banking customers in emerging markets are much more likely to expect additional online interactions. In India, Poland and Russia, 86 to 88 percent are in favor of doing more online, and in Mexico a huge 91 percent favor more digital interactions. This contrasts with some countries in the mature markets such as Sweden at 24 percent and Finland whose customers only occasionally or rarely expect more online interactions.

Digital channels have shown their worth, but banks will need to address several challenges to encourage their customers to take more advantage of digital channels. Banks need to make sure they provide the right information across all the channels, gain customers’ trust in digital channels and improve customers’ knowledge of how to access and use the channels.

Learn more about how banks can drive customer engagement and seize digital’s opportunity.

Is Your Core Banking Platform Inhibiting Growth?

Digital banking is here—from online banking and mobile payments to direct mortgages and payments—but it comes with fast-paced customer demands, unconventional foes, disruptive technology, tighter regulations and a host of other challenges for financial institutions. Banks that want to meet the digital age head-on and perhaps even become an Everyday Bank need a modern core banking system that is a highly-efficient, high-transaction volume, just-in-time engine.

Before committing to a core banking transformation, I recommend banks ask themselves a series of questions:

  • Is your existing core banking platform an enabler or inhibitor to growth?
  • Can your core platform support integrated, omni-channel sales and service processes, an extended customer ecosystem-centric model and analytics-based actionable insights?
  • Can you achieve or maintain target efficiency ratios without renewing, replacing or transforming your current core platform?
  • Can you become a digitally dominant omni-channel bank without renewing, replacing or transforming your current core platform?

At Accenture we’ve seen that a properly executed core banking transformation can drive a 10 percent improvement in efficiency ratios, or more. But a transformation doesn’t always mean implementing a radical change. For your bank, it could mean taking one or both of the following approaches:

  • Gradual evolution through selective changes in current architectures, both technical and functional, moving gradually existing capabilities or developing new ones, taking to the extreme the concept of “hollowing out the core.”
  • Transformative approach affecting not only IT and functions, but also the operating model—infusing across all the organization the agility required to compete in the digital era.

For established players, there are five different starting points from which to evolve to next-generation core banking:

Read the report.

Read the report.

  • Data as the core. Adding new technologies and capabilities to be used across informational, operational and commercial layers, with predictive models and real-time analytics that enable better storage and analysis of massive data with simpler Business Intelligence stacks.
  • Omni-channel platform. An end-to-end process-led orchestration, providing capabilities hollowed out from the core and designed to deliver a differentiated customer experience.
  • Customer digital ecosystem. Extending the customer database to embrace the new digital customer concept, helping to complement and enhance existing capabilities to collect, analyze and use data on customer experiences and share information internally and externally.
  • Gradual core banking transformation. An intermediate approach, focusing on gradually building new digital functions and capabilities that enable core banking to improve on-line real-time capabilities, provide the next level of automation and digitization, be more granular to reinforce service reusability and flexibility, and provide a new distributed transaction model.
  • Modernization to cloud. A more disruptive approach, building a just-in-time transactional factory on top of a fully automated platform as a service software and hardware stack.

Whichever of these approaches your bank takes and wherever your starting point is, you can be assured that core banking will play a pivotal role as either an enabler or inhibiter of digital adoption and growth. Banks that want to become an Everyday Bank with a complete renewal of their cost structure and the potential to realize 18 to 25 percent Return on Equity (ROE) by 2020 must push forward in their legacy system evolution to embrace the digital revolution with a strong and flexible core.

To learn more, read The Role of Core in Digital Adoption.

Shifting gears: Executing digital strategy at two speeds

Digital disruption has opened up the competitive playing field in banking. Fintech start-ups are influencing customer expectations and affecting specialized revenue streams. Other players include large digital leaders who are extending banking services into non-banking digital ecosystems where they are already dominant.

So what should your Everyday Bank do to respond to this market disruption and rising competitive pressure? We believe it’s critical to execute at two speeds to sustain market momentum while also strengthening the core underpinning of your bank. Let’s explore these two speeds:

Speed 1. Disruptive growth options outside the core

Moving at disruptive speed means moving just as fast, if not faster, than your competitors are adapting. But, with this approach comes uncertainty, and it demands banks to take on the bold, entrepreneurial characteristics required to develop new capabilities.

Key to moving at speed is seizing new opportunities to grow beyond your core business. This might include:

  • Becoming a digital attacker that targets specific market segments.
  • Sharing the digital wallet through app commerce and digital ecosystems built on value-added services.
  • Penetrating vertical platforms by providing integrated financial or nonfinancial solutions to serve life needs.
  • Using the crowd for everything from community-based scoring or lending to enabling payments.
  • Monetizing data.

Speed 2. Transformation of the core

While pursuing disruptive growth, the Everyday Bank must transform its core by addressing fundamental elements that include:

  • Digital customer strategies – By establishing a true omnichannel customer experience, you can give your customer choices for how to engage with your bank anytime via any device, depending on their needs and expectations.
  • Digital enterprise strategies – To fully evolve end to end digitally, build a capability architecture, digitize processes and encourage digital collaboration.
  • Digital operational strategies – Flexible technology platforms and open architecture will allow your bank to evolve business models through new digital ecosystems.

Core transformation also calls for making shifts across resources, people, technology and operating models; proactively shaping and participating in new ecosystems; and addressing customer, shareholder and regulatory outcomes. These are not simple tasks, but they are essential to digital transformation.

Executing at these two speeds will allow your Everyday Bank to be digital, protect your territory and appeal to customers by delivering integrated services. Read more in Digital strategy execution drives a new era of banking.

What’s the key to customer retention?

For the last decade, the Accenture Global Consumer Pulse Research study has annually tracked the intentions and actions of consumers around the world. This year’s study included a sampling of more than 23,000 customers in 33 countries, including 16,000 banking customers.

One of the key trends we noticed this year is that customers are buying more products and services, but not necessarily from their current providers. Globally, 27 percent of bank customers purchased or subscribed to a new financial product or service over the last six months. When we compare mature and emerging markets, we see that the number is not as high for mature markets (just 20 percent) but is even higher than the average in emerging markets (39 percent).

Despite this overall growth in purchasing, over the past six years, consumers have increasingly expressed an intention to buy less from their current providers. In fact, 21 percent of bank customers say they are not at all likely to buy more products from their current provider. Conversely, at the other end of the scale, 21 percent say they are extremely likely to buy more products and services from their current provider. Clearly it’s a polarizing question.

Additional results showed that 18 percent of bank customers are evaluating or considering other providers more often than they did two years ago, and 59 percent say they are more likely to switch to another provider compared to 10 years ago.

Read the report.

Read the report.

So why are customers more likely to switch providers and less likely to purchase additional products from their current provider? Competitive pricing (39 percent), high quality customer service (34 percent) and good value for money (32 percent) are the top three dominant factors leading customers to switch to another bank. And almost a third of customers (31 percent) believe it’s not too that much of a hassle to switch providers.

For banks considering the question of how to keep their customers from switching to other providers, we found that first-contact resolution is the key. Of the consumers who switched to another provider due to poor service, more than 80 percent said they could have been retained if their issue had been resolved on their first contact with the bank.

Yet first-contact resolution has consistently remained the top frustration for consumers in the past five years (generally cited by around eight in 10 respondents), and the percentage of consumers expressing satisfaction with how companies have handled it has increased only marginally since 2009 (from 41 percent to 45 percent).

I think there’s a real opportunity here for banks to improve customer retention by re-examining their methods for resolving customer issues—more so in the emerging markets, which all have high complete switching rates, but also in the mature markets of Poland, Spain, Ireland, Sweden and Belgium, which all have higher complete switching rates than the global average of 18 percent. For banks in these countries, customer retention has to be a priority.

Learn more about how banks can drive customer engagement and seize digital’s opportunity.

Think Your Loyalty Program Keeps Customers Loyal? Think Again.

The hard truth about retail banking loyalty programs is that they do not always keep customers coming back.

Loyalty programs in financial services are expensive and expansive, but not differentiated. In fact, the market is flooded with look-alike programs. And as leaders in other industries transform their loyalty focus from vanilla rewards to customer value, banks will find themselves chasing customer expectations. Some already are.

The Lagging Loyalty Landscape

Eye-opening results from Accenture’s 2015 North America Consumer Digital Banking Survey—our multi-year survey of over 4,000 consumers in the United States and Canada—reveal just how low customer participation and perception of loyalty programs are:

  • Poor participation. Only a third of customers participate in bank loyalty/programs—54 percent do not participate at all.
  • Information vacuum. Seven percent of customers are not sure if they participate—and 6 percent are uncertain if their bank even has a loyalty program.
  • Program stickiness. Only 9 percent of customers cite loyalty programs as the reason for staying with their primary bank.
  • Customer switching. Under-delivered loyalty programs are a key driver of switching.
View the image.

View the image.

What Customers Want

Our survey also shows that customer expectations for loyalty programs are high—and specific. Consider the loyalty landscape from the customer perspective:

  • Design for digital. The ability to redeem loyalty points from multiple channels is a key characteristic of loyalty programs in customers’ eyes.
  • Count on convenience. Over half of customers say that the most important characteristic of a loyalty program is offering cash or open loop prepaid cards.
  • Deliver the good life. Nearly one-third of customers think the most important loyalty program characteristic is the offer of points for quality of life experiences such as travel.
  • Make it personal. Over half of customers want their banks to locate and curate discounts on their behalf in purchase areas that are relevant to them.

Taking the Long View of Loyalty

It is clear that banks have work to do to transform this loyalty lag into loyalty that lasts. After all, leaders know that they can’t risk losing customers in such a disrupted banking landscape. There are too many other players eager to lure customers away by upping the ante in many areas, including loyalty.

Getting more from loyalty programs requires a mindset shift for banks. Loyalty initiatives can no longer be viewed as an isolated part of the business. Instead, loyalty programs must be addressed as part of the banks’ larger purpose to maximize customer value. It’s about giving the loyalty organization a wider mandate not only within the enterprise, but also within customer’s everyday lives.

Learn more about Accenture’s latest consumer digital banking survey.


Real time payments: how to align legacy systems?

As commerce around the world continues to evolve into a 24×7 real-time ecosystem, there is growing pressure for payments infrastructure to keep pace with today’s realities transferring funds in real time.

“Real time payments” can be defined as an interbank account to account payment that is posted and confirmed to the originating bank within one minute, so the payee can use this value instantly and the payer has confirmation of the status of the transaction. The instant confirmation of the transaction won’t be enough in the future, it is the real time availability of funds that matters.  The ‘real-time’ payment infrastructure may enable passing of greater data (ie, the use of ISO20022 messaging standard) and also addressing of payments to alternate addresses (ie mobile telephone numbers).

Customers expect payments to be fast as alternative payments networks (e.g., PayPal, Venmo and digital currencies) are already able to provide real time payments within their ecosystem.

Regulators are actively promoting real time payments in different ways. The revised Payments Services Directive (PSD2) will ease interbank account to account payments, allowing third party providers (TPPs) to initiate payments directly from the account of consumers and corporates. At the same time through EBA Clearing in Europe and the Federal Reserve in the US, they are kicking off industry task forces to support the creation of real time payments central infrastructure.  In Australia, the New Payments Platform (NPP) program has already embarked on the creation of real-time payments infrastructure.

Real time payments are not new: 31 systems have been built or have gone into development so far, of which 4 initiatives launched in 2014 (Fig. 1). However some of the systems have been in existence for over 10 years (eg: Switzerland, Brazil, Mexico); some, over 40 years (eg: Japan)

Fig 1 – Real time payments systems adoption worldwide

View the image.

View the image.

Real time payments infrastructures may have different origin: they can be launched as domestic infrastructure to modernize the national payment system (e.g.: UK, Denmark, Singapore and Australia) or as a market driven initiatives to face competition from non-banking players (e.g.: Poland and Sweden).

To become a real time payments institution, it is not enough to connect to a new infrastructure, it requires investments and a wide transformation program.  In the UK the cost of building and maintaining the immediate payments infrastructure – Faster Payments Services – amounted up to £70-£80 million for each participating bank, but the cost of execution to upgrade their infrastructure and change processes for some banks was up to ten times higher. Today banks can be better equipped with some real time capabilities already in place if compared to 2008 when the UK Faster Payments Services was launched, but the complexity of this change can’t be underestimated.   This is even more so if both the ISO20022 standard and non-account addressing are also included in the program.

As found out in a recent poll done by NACHA at Payments 2015 conference, execution and high investments will be the major challenge also for US banks: for 37% of payments executives execution difficulty is the major barrier followed by high investment required (30%)[1].

Once the plans at industry level are finalized for how real-time payments  will be implemented, banks – especially in Europe, US and Australia – are going to look internally and define strategy and investments to migrate their entire infrastructure, technology, operations, systems, processes, fraud, risk systems from batch processes to 24/7/365 operations.

Legacy systems will have to fit for real time and new capabilities will be required. Account keeping systems and transaction banking portals updates will need to be in real time across channels like the funds’ availability. Funding and settlement for nostro/vostro accounts will change since real-time payments systems will likely have predefined funding cycles which create positions that need to be settled at least twice daily. 24/7/365 operations means also that customer services and exceptions handling are always available.

Despite these challenges, if banks want to become Everyday Banks where they are integral to their customers’ digital lives, then they have to provide real-time payments. Some banks are discovering the benefits of their real time payments infrastructure offering a multitude of innovative overlay services – such as Paym and Zapp in the UK – enabling P2P, in store and online payments directly from their current account.  In Singapore, a number of services have already been launched by the participating banks.  Other banks are evaluating crypto-protocols, like Ripple, to infuse real time capabilities in selected services like cross-border payments (e.g.: Fidor Bank, Cross River Bank and CBW Bank) and inter-bank transfers (e.g.: Commonwealth Bank of Australia)

In our view, banks need to take this imperative on board—and change their mindset to view the real time payments opportunity from the perspective of an Everyday Bank.


3 Millennial Myths Debunked

According to the Pew Research Center, Millennials will overtake Baby Boomers this year as the largest living generation in the United States. This is an undeniable signal that 18 to 34 year olds are an increasingly influential customer segment for banks.

The results of Accenture’s 2015 North America Consumer Digital Banking Survey—our multi-year survey of over 4,000 consumers in the United States and Canada—offer insights into who Millennials are and how they like to bank. And they may not be the people that you expect.

Our survey findings debunk three common misperceptions about this unique generation:

1. Millennials are tomorrow’s customers.

Millennials today are already significant contributors to consumer spending. While some younger Millennials are in college or starting out in their career, older Millennials are more established. They have been working for years and have reached key life milestones that create a need for financial services and advice—from buying a home to saving for retirement.

The survey results reveal that, for now, Millennials manage fewer banking products and providers and tend to have basic banking products. But as this generation ages, we can likely expect their banking needs to expand. This is why it is so important for banks to start connecting with Millennials now.

2. Millennials are all digital all of the time.

Banks should avoid generalizing about just how technology savvy Millennials are. Certainly, their experiences are shaped by digital—they focus more on digital services than other age groups do. For example, more Millennials purchased/signed up for mobile banking software/apps in the past 12 months—22 percent compared to just 13 percent of 33 to 54 year olds and 6 percent of those 55 and over.

Even so, developing more digital products and services is not the only way to win Millennial customers. Consider this surprising survey finding: Although Millennials value digital channels for banking, more than a quarter also expect to use the branch more by 2020. Banks must focus on using digital as a catalyst to bring new value to Millennials’ financial and non-financial lives.

3. Millennials are not loyal.

Our survey results reveal that as a group, Millennials switch from their primary bank at a pace nearly double the average of other age groups. They report that high fees and poor loyalty programs are the top reasons why they are dissatisfied with banks.

Yet to automatically equate Millennial switching with a lack of loyalty is short sighted. In my view, this data suggests that Millennials are prepared to leave if they don’t get what they want from banks—they are not buying banking products/services, they are buying value. So, it’s up to banks to deliver against their expectations to keep them coming back. When we asked Millennials about the kinds of services that could improve their loyalty, their top six responses are non-traditional bank services:

View the image.

View the image.

Millennials are an important customer segment for banks to capture—now and in the future. Breaking down the myths to develop a rich understanding of the Millennial mindset is a good place to start developing strategies tailored to their unique needs.

Learn more about Accenture’s latest consumer digital banking survey.


Payment Predictions for 2015 (3 of 3)

Bank operating models and the infrastructure landscape will start seeing some major changes. Outsourcing of core back office payment processing will be on the agenda for banks, even large ones with scale in interbank payments, especially in Europe; and existing payment processors will develop new capabilities to meet this demand. Demand for real-time payments to support real-time customer experiences in digital commerce will drive banks in many countries to implement national real-time interbank payment infrastructures.

Finally, from a technology perspective, the payments industry will start exploiting tokenization, host card emulation, NFC, application programming interfaces (APIs), mPOS/POS integration and blockchain technologies (and the USA will embrace EMV for cards).

Operating Models

  1. Outsourcing of interbank payments processing, especially in Europe, will become a viable alternative for mainstream banks instead of replacing internal payment processing platforms.

Interbank Infrastructure

  1. Real-time payments will grow and attract investment from the banking industry as regulatory pressure and the urgent imperative for real-time mobile payment consumer experience overcome historic difficulties in building industry consensus for national infrastructure
  2. At least two countries in Europe will commission national real-time interbank payment infrastructures
  3. Cross-border interoperability of new real-time interbank payment infrastructures will become a major theme of debate, especially in Europe
  4. Open access to national payment systems by non-bank Payment Service Providers will become a major theme of debate in many countries – in the UK, changes are likely (catalysed by the Payment Systems Regulator)


  1. APIs (application programming interfaces), where Payment Service Providers (including banks) expose their payment systems to third parties, will become a key technology disruption in payments (alongside tokenisation, host card emulation, NFC, crypto-currency and blockchain technologies).
  2. Retailers deploying mPOS solutions inside and outside their stores will integrate them with existing POS and ecommerce infrastructure to create omni-channel payment capabilities.

Each of these predictions has important implications for our banking and payments clients, and focusses on the emerging trends and innovations we will see in the payments domain in the coming years. I will report back in 2016 on the actual outcomes!

To read the rest of the predictions, view post 1 and post 2 in this series.

Invest an Extra Billion. Here’s Why

Why should major Banks in Italy make additional investments of over one billion Euro in information and communications technology in the next three years, as suggested in a brand new report from Accenture? And why is this a golden opportunity – and not a provocation? The reason lies in the new internal and external context of the Banking industry which is pushing for strong change. As a direct consequence, there is a need to rapidly evolve the predominant business operations model which is no longer economically sustainable.

Technology and information systems can make a difference in this scenario by providing new models to defend Banks’ business and re-launch it in a more sustainable and profitable proposition. In addition to the lasting crisis during which the cost of credit for the Banks virtually exploded, there are two main factors accelerating change.

The first is digital disruption, driven by customers who have radically altered their behaviors and who have a whole series of new needs. They demand new and better levels of service and want to interact with their Bank easily, rapidly and safely, especially using digital channels. The volume of physical transactions in Branches is sliding by approximately 15% each year. Indeed, Branches are increasingly empty. As a result of these new customer behaviors, the traditional value chain is being stretched out to incorporate what happens both before and after the actual financial transition. This, in turn, is having an enormous effect on customer loyalty and the Banks’ capacity to create new sources of profit. All of this is giving rise to a new ecosystem in which the Banks will have to defend their central role and ward off encroachment from digital natives such as Google, Amazon, PayPal and others who are progressively invading service niches. Recent analyses by Accenture show that this phenomenon is putting at risk between 20% and 30% of the total revenues of Italy’s banking sector.

The second factor pushing Banks to invest more heavily in technology is the new environment introduced by the European Central Bank. The criteria by which capital requirements can be modified now impact business functions and the information systems they rely on as well as the quality of integrity of data, cybersecurity and operational continuity. To put this in context, Banks were fined over 180 million Euro between 2009 and 2013 from domestic authorities alone.

An information system that has been certified and approved and that responds rapidly to new regulatory norms can change capital requirements and generate enough value to marginalize the cost of the information system itself.

Post originally published in IlSole24Ore, Tuesday May 19th, 2015

Bleeding-Edge, not Bleeding: The Role of Technology in Branch Reinvention

There are so many industry articles proclaiming the death of the bank branch that I’m reminded of that Mark Twain quote that goes something like this: “Reports of my death are greatly exaggerated.”

It is true that the branch is not what it was. However, rather than being at the end of life, the branch is on the cusp of a new life—if banks make changes.

Through consumers’ eyes

Our latest consumer research study—the 2015 North America Consumer Digital Banking Survey—surveyed more than 4,000 consumers in the United States and Canada. Data revealed trends in consumer attitudes toward the branch, including the following:

  • The majority of consumers (86 percent) would not switch branches if their local bank branch closed.
  • For the first time, consumers rank good online banking services—not convenient branch location—as the leading reason for staying with the bank.
  • Some consumers over 55 (43 percent) prefer the online channel to branch locations.

These results suggest that customers are redefining banking convenience. It is increasingly about online access over proximity to the branch.

Even so, customers don’t want to totally abandon the branch. They simply have new expectations of what they want the branch experience to be.

A hunger for technology options

Banks have opportunities to meet these changing customer expectations—and technology has an important role to play. This is exciting news for banks looking for ways to bring customers to the branch beyond hiring a barista and investing in comfortable seating.

As part of the survey, we asked consumers to rank a number of in-branch services and technologies in the order of importance. This chart shows their preferences:

View the image.

View the image.

The data tells us that the top three technologies that consumers are most interested in having accessible to them at the branch are interactive screens, self-service remote advisors and biometric technologies.

The branch as a technology hub

The survey reveals a watershed moment for banks in developing their branch strategies. This moment involves changing the mindset about the relationship between technology and the branch.

Because online and mobile are inherently technology-driven banking channels and the branch is the prime physical channel, it is easy to think of the branch as the “non-technical” channel. But it does not have to be this way.

Banks can bring interactive technologies to the branch, and some are already doing this. The vision is to create a hub where customers can learn about and use technologies to complete financial transactions or improve their financial literacy. Customers can take what they learn into their activities outside of the branch. Technology becomes a bridge between channels rather than an either-or proposition.

When we talk about branch reinvention, it goes without saying that while technology is non-negotiable, it is only one element of a broader transformation. The end game for the new branch experience must be immersive and meaningful customer experiences.

Learn more about Accenture’s latest consumer digital banking survey.

On Thursday, June 12, join me and Wayne Busch, Robert Mullhall and Jodie Wallis of Accenture for a Twitter chat to discuss the Accenture North America Consumer Digital Banking Survey 

Chat questions will cover the customer digital experience, becoming more than a transactional bank and the #EverydayBank. Chat is 3pm-4pm Eastern and led by Accenture Banking Twitter account, @BankingInsights. Chat hashtag is #NABankStudy.

 If you do not have a Twitter account, you can still watch the conversation by following #NABankStudy on Twitter (account not required).

To participate in the chat, log in with your Twitter account and follow the #NABankStudy hashtag. Official chat questions will come from @BankingInsights.