The Race to Transform

It has been almost a year since I first reflected in a blog how the tectonic shifts in banking were accelerating. Changing customer behaviours, agile fintechs and massive hyperscale tech giants and technology itself were all creating a perfect storm for incumbent banks. COVID brought long-term issues into sharp focus. Over the course of the last 12 months, I’ve outlined what I see as the essential elements of survival against this backdrop. Not only a comprehensive and detailed data strategy that drives real return from data as an asset, but also the cultural and organisational changes that are required. Learning the new language of data, adopting, trusting and integrating data into every aspect of management has become essential to every role, from CEO, to Marketing, Finance, Risk, Compliance and Operations.

Although the intervening months have been unprecedented in many ways, I have seen little to suggest that these requirements will change. A number of far-reaching behaviour shifts, highlighted by the initial impact of the pandemic, have become normalised and are unlikely to change back. Commercial pressures have only intensified, banks must still brace for uncertain economic times as society re-opens and government support is withdrawn from business sectors around the world. Over the coming weeks I will examine how the intensification of existing and new pressures continues to drive the race to transform financial services across EMEA.

From Regulation-First to transformation-First

Following the 2008 financial crisis regulation became the biggest driver of change in banks. Rebuilding trust at the same time as bolstering balance sheets and creating more resilient and transparent processes was the essential work that had to be done. Now, I believe, we are entering a new phase when responding to rapidly changing customer behaviours will be the key challenge for the industry. COVID has accelerated the shift to digital and from now on it will no longer be just another channel, but the primary channel for most financial transactions and services. The ‘digital everything’ ‘digital first’ era is here now. Increasing effectiveness, speed and flexibility, whilst reducing costs to serve across all channels is the new imperative. What many are now beginning to realise is that this is not just a tech transformation. We also cannot overlook the needs of late adopters and those for whom digital is not a convenient or suitable channel. It requires the invention and investment in new analytics, processes and operational structures to support digital-first but customer-need driven approaches.

Cloud Catalyst

Underpinning this transformation is the move to the cloud. Financial services organisations have now been using cloud infrastructures for some parts of their businesses for several years – now it is becoming the catalyst for change itself. Banks are waking up to the realisation that the cloud is not just a place where you put data and computing to save money. It is a blueprint for a new structure that supports the agile ways of working needed to survive. It is not the destination, but rather the first step on a journey. Cloud-based infrastructures can support the new operating models that help meet the demands of customers and the changing nature of the market. Moving to the cloud and adopting cloud-centric technology approaches will also help save money and get closer to matching the cost-income ratios of agile, digital-native, neo-banks.

Intelligent conversations

Fundamentally, the next wave of digital transformations must deliver better, more intelligent conversations with customers. To survive, any organisation must listen closely to its customers. Financial Services firms of the future will conduct authentic, detailed and increasingly automated dialogues with customers helping to understand specific needs at every moment. This hyper-personalisation goes far beyond pushing event-based marketing messages. Instead, financial services businesses need to leverage all the data they have on customers to curate and present a range of suitable products and interactions to individuals at exactly the time they need them. The analytical and automation engines needed to win in this space already exist, the challenge is to implement them and feed them with the quality data to make excellent decisions whilst still optimising cost to serve.

Over the coming weeks I will explore these issues and try to share insights, examples and practical steps that banks and financial service businesses across EMEA can adopt as they shift to become cloud-first organisations. Teradata works with the biggest banks in the world as a partner for transformation. As a trusted advisor we are often involved in discussions concerning cost effective deployments of analytics at scale in the bank of the future. In every case, it’s all about the customer. Capturing, integrating and using data that unlocks customer behaviour is at the heart of strategy, operations and commercial success for our customers. The only place to start this next series on the Bank of the Future is with the customer, and my next blog will look at the evolution of the customer journey.