Top 7 Banking Forecasts for 2017 – Part 1 of 2
March 31, 2017
Similar to many other industries, disruptive forces have been chiseling the banking industry for the last couple of years. From the rise of new technologies to stronger demands from customers, banks see the need to adapt to assure business continuity and customer satisfaction.
Results from a survey by Options Group Inc. show that banks are more inclined to hire technology specialists than investment bankers to enhance business models, product offers, and systems upgrades.
Check out our 2017 banking forecasts on how banks can use digital technologies to better serve its customers.
Top 7. Mobile Banking
There has been a significant increase in the number of customers using digital banking in Asian markets. McKinsey and Company conducted a survey (PDF Report) where results show that the use of mobile channels for the developed and the emerging Asian banks has doubled.
In Europe, the British Banking Association reported that logins to mobile banking had risen to 11 million per day in 2016 compared to 7 million per day in 2014. Several European banks have made use of mobile apps to email, message, and offer social media services to better engage their consumers.
Most banks have mobile banking as an added channel, but there are some who use it as a platform to enhance customer engagement. The Bank of Ireland added mobile messaging and marketing capability to their application to further engage their customers and to cross-sell other services or products. They displayed tailor-fit advertisements of products and services and added a click-to-call function that allows a customer to immediately call a bank representative for more information.
Top 6. FinTech Partnership
In previous years, FinTech companies were considered to be banks’ competitors since their business models revolve around online lending or retail payment services. This took a chunk of revenue from a channel considered to be one of the revenue streams for banks.
Asian banks are beginning to see FinTech companies as allies instead of competitors. These FinTech companies are reconstructing their business models to strategically cooperate with banks rather than compete with them. Banks can work with these companies to provide enhanced solutions and, in turn, lead to higher-value efficiency values, organizational agility, and better customer experience.
In Q3 2016, Asian banks invested $9.62 billion in FinTech ventures. Commerce International Merchant Bankers (CIMB) in Kuala Lumpur worked with two FinTech firms to create an end-to-end cash management service that combines a point-of-sale-solution, payments gateway site, and accounting software. CIMB Managing Director of Cash Management and Transaction Lucas Chew mentioned that new technologies can help banks be more cost-efficient.
Top 5. Cyber Security
In the thrust to engage customers better, banks need to innovate into the digital economy, but such moves have risks — this makes financial information vulnerable to hackers and cyber attacks. It was stated in the Q3 2016 Cybercrime Report – APAC Deep Dive that there will be a 40% increase in cyber attacks.
Banks are now compelled to improve security measures due to an increase of data breaches brought by mobile and contactless transactions. To prepare for cyber attacks, it is important that they invest in cyber security and biometrics.
Citibank’s Global Head of Cybersecurity Regulatory Strategy Tony Chew emphasizes that biometrics on smartphones and banking apps will be the future of authentication. Asian banks must start switching from PINs and SMS-based One Time Passwords (OTPs) to biometrics such as facial and voice recognition since these make use of an individual’s physiological and behavioural traits.
Top 4. Analytics
According to industry analysts, Asian banks should prioritize using big data analytics to deliver unique value propositions through more individualized engagement and personalized services. Enhancing the customer experience through data-driven analytics will help ensure customer loyalty in an intensely competitive industry.
Banks can make use of diagnostic and predictive analytics to speed up processes, to better detect fraud, and to be able to provide offers to customers before they know that they need them. A top 5 bank analyzed unstructured data from customer emails, call center transcripts, survey responses, banker notes, and other sources to discover customer pain points and identify more than 200 emerging issues. The analyzed data was used to create a customer experience strategy that aims to provide better email and print communications, online and mobile banking services, and other customer touch points.
Banks need to find ways to makes use of the treasure chest of data and information such as customer demographics, transaction and product usage, and credit behavior they have access to.
To share an example, an Asian bank was able to increase revenue with advanced analytics. The bank was lagging behind competitors in cross-selling new products so they built a next-product-to-buy propensity model that makes use of advanced analytics. They redesigned the customer decision journey in product selection to increase sales across all the bank’s channels. The new model was able to increase product take-up rates by threefold.
Check out for Part 2 of our Banking Forecasts for 2017, which will go into the need to enhance Customer Experience, which is evident in other industries, along with technologies that are important in the goal to #FutureProofBanks.
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