CX & Design February 06, 2015
The digital imperative of the Finance Sector
The finance industry is in a state of flux. The demands of digital are having an unprecedented impact on the sector, and adapting to the changing needs of digital consumers has become a business imperative.
‘Digitise or die’
The head of financial services at KPMG, Bill Michael, is quoted as saying, “The mantra at a lot of banks is ‘digitise or die’.”
This may sound dramatic, but one look at the evolving digital trends of the sector shows that it is, perhaps, justified.
In the UK, the British Bankers Association calculated that £1bn of transactions a day are now done via mobile and internet banking, and more than 15,000 people download a banking app each a day. In the USA, it is predicted that by 2016, 110 million people will use mobile banking services.
Over the past fourteen years, 2,359 high-street branches have closed in the UK. There are now 10,000 physical bank branches, with more closures on the horizon. In October 2014, both Lloyds and RBS announced the planned closure of 150 branches, representing 5% and 6% of their respective branch portfolio.
The branch closures are an indication of the shift in customer behaviour, which has changed exponentially in the past decade, as demonstrated by Brett King, author of Bank 2.0,
“The average mobile banking customer uses his app 20-30 times a month. The average internet banking user logs in 7-10 times per month. That’s around 400 times a year I’m interacting with a bank digitally, compared with twice or thrice via a branch.”
It is clear that in order to remain competitive, having a digital offering that enhances your customer experience is no longer a ‘nice to have’, but is business critical.
Transformation hindered by legacy systems
And it’s not just the customer experience which is leaning towards digital. There is also the need for financial institutions to improve internal systems (what Michael refers to as the ‘dinosaur’ infrastructure), to help improve cost ratios.
Traditional banks are also facing a rise in competition from non-bank credit sources, who have mastered the online offering faster than the traditional channels to attract the new breed of digital consumers.
If finance organisations want to compete and flourish in a competitive market place, digital transformation is an imperative.
Over the coming weeks, we’ll be publishing inisght on how to achieve digital transformation in your financial organisation, including an exclusive, online presentation by John McGuire, former chairman of Corporate Banking at RBS, and current board member of Cambridge & Counties Bank.