Close

Choose a country

United KingdomEnglish
South AfricaEnglish
IndiaEnglish
InternationalEnglish

Digital transformation is changing banking from the ground up

Blog
1st March 2017

groupon-case-study-inpage

Think of any industry and then think for a moment about how digital transformation is changing the marketplace. It’s easy to see that digital platforms, apps, and social networks are reforming almost every industry you choose to name. For some industries, like the media and news gathering, the change seems so profound that nobody yet understands how it may profitably function in future.

But retail banking is where almost everyone can see some of the most dramatic changes, not least because almost all of us interact with our own bank regularly. It is impossible to avoid seeing how our own banks are changing, and how new competitors are regularly launching and attempting to redefine what we think of as a retail banking service.

The challengers are all around. Clearbank is a new electronic banking service designed by the people behind payments giant Worldpay. They just received a banking license and will be launching soon. Atom Bank offers a full retail banking experience just using an app as the customer interface and for those who want the full branch experience, Metro Bank has been rewriting the rules of high street banking for the past few years.

All these new rivals have one thing in common. They are shifting their focus to the customer. They are new banking services with customer-centricity baked in right from the start. They don’t have the legacy of vast branch networks or ancient computer systems and therefore every service can be designed around what a customer expects in 2017.

This is a major challenge for the existing retail banks. They cannot immediately rise to the challenge because they have rules, processes, and procedures built up over decades. They have a history in the industry and this cannot change overnight.

But although the new “Fintech” challengers are customer-centric and offer better services that are usually cheaper than traditional banks, many customers still want access to branches. Customers are exploring the newer options, but are not flooding to fintech alternatives yet.

New research from Salesforce explored why this is happening in the UK and USA. The existing banks have their history, their brand and reputation. Customers still want to feel that they can trust their bank and many are not inclined to put their faith in an app when it comes to financial transactions, such as investments or a loan.

The banks also have millions of customers. Many have never changed their current account provider for years or decades, so there is a strong inertia that keeps people attached to the financial brands they know and feel comfortable with.

But some retail bankers and financial analysts predict that disaster may be inevitable in some key areas – usually the most profitable services. Just over a year ago, McKinsey said that services like loans and credit cards would reduce by around 60% in traditional banks inside the next decade. That’s almost two thirds of their most profitable services migrating to apps and challenger banks as the services are being designed to be customer-centric.

Retail banking is just one example of an industry where customer experience and customer expectations are redefining the industry. It may not be happening overnight, but a 60% shift in business inside a decade would be seismic, considering that brands like Barclays have been around for over 300 years.

What do you think about the Fintech challenge faced by traditional retail banks? Leave a comment below, or get in touch on LinkedIn, and let me know.


Leave a Reply

Your email address will not be published.Required fields are marked *


Helen Murray
Article by: Helen Murray

News & Insights

Recommended for you
Solution Designer
Service Provider
Technology Enabler
Blog
How smoother customer journeys make more rewarding travel experiences

Author: Nora Boros, Global Director, Webhelp Webhelp's Global Director Nora Boros looks forward to presenting at the 2019 Digital Travel Summit next week, where she will join more than 300 travel innovators from Europe's most progressive travel retailers. Here she takes a look at the complexities of the sector as a whole and how smooth customer journeys can drive positive emotional responses...

Whitepaper
The Hybrid Model

As an international healthcare services organization, Direct Medica develops and implements innovative solutions to reshape the relationships between healthcare professionals, patients, industry players, hospitals and payers. For the past two years, the company has been developing a very...

News
Making the switch to recycled paper!

It’s World Environment Day! The perfect time to announce that Webhelp is switching to 100% recycled paper across all its sites across the United Kingdom. World Environment Day is a United Nations spotlight designed to drive worldwide awareness and action to protect the environment.  Webhelp...

Case Studies
[Fashion] Fifty Jeans – Launch your brand without cashflow problems!

...

News
Pedalling hard for CF Warriors

Webhelp's Director of IT services, Stephen Dickson, joined record breaking Cystic Fibrosis warrior, Josh Llewellyn-Jones, this week, as he attempted his latest endurance feat by cycling from Edinburgh to Cardiff in just five days. Stephen cycled with Josh and his team for the final three days of...

Load more
×

Webhelp Cookies Preference Centre

Strictly Necessary Cookies
The website requires the use of cookies for essential functional requirements and these are outlined in the cookies policy.

Enhanced Functional Cookies
Some features of this website use services provided by third parties websites. These features use cookies to implement their services on this website and may collect data about your visit to help them optimize their functionality. The Webhelp cookies policy outlines the cookies used by these services.

We have links to social networking such as Twitter, Facebook and LinkedIn.
These websites are third party sites. We do not place cookies on their behalf, and do not have control over the way they collect or use your data.
We encourage you to read more about their policies:
Twitter
LinkedIn
Facebook