It was a busy week for the Bridgeforce team at
CBA LIVE 2018 in Orlando. We always look forward to this event as it is one of the few
places where you can hear from experts in marketing, compliance, analytics,
technology and every key line of business (deposits, credit card, home
lending, etc.).
This year’s theme, "Beyond the Bank" focused on the transformation
happening across our industry. There were lots of mentions of self-driving
cars, AI, cybersecurity challenges and, of course, blockchain. That said,
two major themes jumped out.
First: how technology is fostering real innovation in banking – they
are no longer the latest FinTech startup fad or wishful thinking from
the IT department. The second major theme is the need to
just get started. This was best captured by futurist Scott Klososky who quipped that waiting
for the first six banks to prove a technology and then jumping in quickly
to be the seventh is no longer an option. If it ever was.
Cynics might argue they've heard this before...remember back in 2000
when we were all going to be using our phones to pay for everything by
2005? Or back in 2014 when Big Data was going to enable the automation
and optimization of every customer interaction by 2017?
We believe it will be different this time. In fact, we KNOW it will be
different this time. Why are we so confident that technology will transform
the financial services industry? Bridgeforce points to the following four
key reasons/trends:
- Millennials - the largest generation in US history at roughly 85MM are
all adults and entering their prime earning years. This matters because
virtually every millennial is a digital native. They simply don't
relate to banking in the same way as baby boomers do and therefore have
fundamentally different expectations of their financial providers.
- Personalization - Consumers now expect their preferred brands to provide
personalized experiences in their preferred channel, whenever they want,
whenever they want resulting in a disconnect between the experience banks
are delivering and what customers want/expect. Not all customers, of course,
but enough of a majority that banks need to transform the service model.
- Data/analytics - Not too long ago, collecting and analyzing large volumes
of data was extremely expensive as it required investments in on-prem
databases, purchasing 3rd party data and hiring teams of data scientists.
With cloud technology and partner networks, the cost has declined to the
point where even the smallest banks can be data-driven–the democratization
of data analytics. The implication is that any bank can now afford to
do the number crunching that drives personalization.
- Technology - With the proliferation of smartphones and tablets, consumers
finally have a technology form factor and associated bandwidth that enables
an experience as good or better than in-person interactions. Moreover,
the super-computer is always within reach, probably the first thing you
reach for in the morning and the last you put away at night.
The combination of these factors has critical implications for banks. One
of these is the realization that core systems are antiquated and, for
many reasons, cannot provide the customer experience we need to deliver.
Similarly, the marketing technology stacks and strategy of old can’t
meet the current always-on, real-time, 24/7 communications that customers
expect. Finally, even new data environments struggle to incorporate unstructured
data such as social media feeds or voice-to-text.
While this seems monumental, there are concrete measures to take now to
help move down the technology path. Bridgeforce will explore these in
more depth in the future. In the meantime, three good first steps are: (1)
customer journey mapping; (2) a cloud-first procurement strategy; and, (3) a technology gap analysis
that leads to a two- to three-year technology roadmap.
No doubt this will be an exciting time. Unlike previous periods of innovation,
there is no final destination for this journey. But we need to get started.
We need to be flexible, learn from missteps, recover quickly and keep
moving forward. These will become the core principles of banking going forward.