Other parts of this series:
In our last post, we talked about how Australian banks are beginning to face competition from outside the industry alongside other challenges. We believe it is time to reimagine banking in order to convert threats into opportunities.
The evolving regulatory landscape and the advent of cross-industry players have accelerated the pace of change for banks. Today, let’s take a closer look at these catalysts driving the transformation and what banks can learn from non-industry players.
Regulatory landscape
Australian regulators have renewed financial services and credit licence requirements for innovative fintech start-ups and have allowed fintech companies to test products and services with an enhanced regulatory sandbox.
The National Payments Platform program delivers real-time, data-rich payments. This has given several non-traditional players the opportunity to disrupt the market with payment solutions and platforms that address friction points and changing customer behaviour.
Consumer Data Right legislation has gone live for banking in phases beginning from July 2020, which will allow consumers to compare services and products.
Opening up the market and allowing data to be easily and securely accessed by third-party providers means that banks may no longer be the only institutions with access to the broader view of their customers. This could potentially enable the creation of ecosystems—and the most integrated partners within those ecosystems, who are most relevant to the customer, are the ones who could win.
Based on Accenture’s Global Banking Consumer Study 2020, banks will need to focus on customer trust for an effective data play, especially considering that 16% fewer Australian respondents trust their banks to look after their data in 2020 compared to 57% in 2018.
Cross-industry enablers
Social media platforms, media content providers and service aggregators have revolutionised different aspects of our lives with the ease of access and convenience they provide.
Off-the-shelf assets such as plug-and-play access, voice recognition, cognitive computing modules, proprietary robots, cloud services and messaging platforms, offer futuristic capabilities across industries.
Banks and fintechs are leveraging these assets primarily as aggregators or technology providers to potentially improve their services and extend their reach to consumers.
Lessons from external competitors to reimagine banking
There are many lessons banks can learn from non-industry players that have shaped customer expectations in the last several years:
- Movement away from legacy. In the previous post in this series we spoke about the importance of an outside-in approach: one that takes an external view of the catalysts driving change and uses them to reimagine banking. Many outside-in stories show a rejection of legacy business models in favour of a new, innovative model that relies on technology and data at the core of the business. Banks could benefit from the many advantages of technology-driven services, such as cost reduction, convenience, faster processes and enhanced user experiences.
- Revolutionised accessibility, range and quality: Banks should question traditional means of providing access in favour of maximising the experience and convenience of customers. As a world-class digital experience becomes a cross-industry customer expectation, banks need to invest heavily in digital design and user experiences.
- Affordable access: Banks that move away from a legacy business model and adopt new ways of operating will have the ability to offer previously unimaginable prices to customers.
- Hyper-personalisation: Successful banks of the future will be the ones leveraging data to provide hyper-personalised services with unique and tailored recommendations across a range of services for their customers.
- Continual improvement powered by data: Banks need to ensure that data, insights and scientists are prominent throughout all areas of the business and at every step of the decision-making process. Accessing the broadest capture of data possible will help banks maximise the accuracy of their insights.
In our next post, we will outline the four key principles of an outside-in approach to banking.
