Mobile first: the intersection of business and technology
Today's banks are facing up to a radically new landscape. Customers are demanding innovative digital services and nimbler firms are entering the market. Future Banking talks to Edwin Van der Ouderaa, managing director FS EALA Digital at Accenture, about the implications.
It was the fresh start the banking industry so desperately needed; a chance to redefine how it connects with its customers, to move away from the cold, transactional climate of previous years and towards something personal, intimate and relevant.
Today, almost every key trend in the banking space - from the importance of the omnichannel strategy to the need for socially engaged banking - involves digital in some profound sense.
"There is a tendency across the economy for everything to become digitised," says Edwin Van der Ouderaa, managing director FS EALA Digital at Accenture.
"But, in banking and the financial services, it has become absolutely crucial. When I joined Accenture in 1995, there were about 27,000 people working in the whole business. Today, the digital practice alone has 23,000 people, and we're still, in a sense, only just responding to the initial client demand. That puts things into perspective."
If not for the achievements of a few key retailers like Amazon, eBay and Apple, the so called "digital disrupters", this may not have happened quite so quickly. But, with the customer experience transformed for good, the "digital first" mentality is moving to the centre of everything banks do.
Strategy that's not just informed by technology, but also powered by it
It's not easy, of course. Many banks have systems that are stuck in the last century. Repositioning them onto new platforms with total reliability, security and resilience is hard, particularly with newer, nimbler firms entering the space and looking to steal market share. Not only are they better at exploiting new technologies like the mobile internet, they are unencumbered by legacy systems.
"If a new bank starts from scratch, they can very easily buy a back-end system," Van der Ouderaa says, "There's a new generation of core banking systems that offer excellent opportunities. If you can start from a greenfield, it's really not that difficult to install all the processes and systems."
Nor is that the only advantage, according to Van der Ouderaa.
"The new entrants coming in have advantages in a number of areas," he says. "They have a very good digital relationship with the customer and understand customer behaviour much better because they started out digitally. On the one hand, large technology and social-web companies have very deep pockets compared to traditional banks, so it is relatively easy for them to enter the field of banking as they can front the huge sums of Basel III capital required from their surplus cash. Oh the other hand, there are many greenfield start-ups that are able to raise capital and that are very nimble as they start with a fresh balance sheet and light, pure digital technology."
About five years ago, Accenture launched three new practices to improve its digital presence. The first, Analytics, was set up as a way of understanding the various things companies can do with data that may not have been available in the past. Extracting information about people, means one can offer the right information services and products - better customisation, more personalisation, more accurate offerings and pricing, and better risk management.
"Analytics has moved rapidly from an offline activity to real-time predictive work," Van der Ouderaa says. "When I open an app, I expect my bank to know who I am, where I am, what time of day it is and what my context is. You need to be able to offer things that are relevant to consumers at a particular point in time. Thankfully, we have built analytical engines that can analyse all that stuff, using big data from inside and outside the bank so that it can understand what is going on and can offer the right thing."
The second part of the practice, Mobility, was designed to emphasise the importance of mobile applications to the banking industry. Only five years ago, it was the web and computer browsers that banks and other organisations used to communicate with their customers. Now, mobiles and tablets have become central.
"There was a realisation that these needed to be optimised a lot more than before," Van der Ouderaa says. "The proliferation of smartphones and tablets happened quickly, and has since become dominant in the way people experience buying things and interacting with their banks."
The third part is Accenture Interactive, a series of products that covers a wide range of digital services around web optimisation, content production, usability and media management. These areas may seem disparate, but according to Van der Ouderaa, they all converge.
"These three fields all overlap," he says. "That's why we say the real story that is happening in the transformation of the industry is not an analytic story or mobile story, but a digital story. The new practices we have set up are just components of a digital story that we decided to bring together and invest in, so we can give a full digital experience to clients. It's already been a big success, with very high growth rates driven by demand from banks and insurers."
The multiplier affect
The pace of technological change may seem daunting. Faced with new competition, new consumers and new ways of conducting business, the danger of falling behind is palpable.
"Many banks feel like they don't have the speed or nimbleness to do these things," Van der Ouderaa says. "A lot of banks are asking us to help build their digital services and then run them as well. We build their new infrastructure and run it 24/7/365 or, more and more, we plug them into shared services."
Marketing strategies can be equally difficult for established banks. Many have a hundred different websites and other related digital media that need to be brought together, and managed at a lower cost.
"This is something Accenture is now able to offer. We work with the bank's marketing people, finding out what they want to communicate and what their branding should be. We can then translate this into digital content as well as managing those devices and services that the bank is offering through them. We offer the bank a full end-to-end service starting from assisting on marketing strategy, over implementation and personalisation to operating their marketing channels," Van der Ouderaa explains.
At a time when the banking industry is facing a monumental crisis of trust, support and consumer loyalty, the digital age is not just an option, it's a necessity. As traditional banks and newer entrants wonder how to evolve their business to this new model of servicing and processing, the right expertise, advice and energy is absolutely crucial.