Digital Disruption Part 13 of 13

Banking goes beyond money

This article is an excerpt from a white paper co-authored by Peter Alkema and Dr Jeff Yu-Chen from Gibs University.

Successful banks have managed to create ecosystems around their customers that touch many more aspects of their lives than just financial.

These banks aim to become partners for people and businesses throughout their life stages.

Banking has gone much further than transactional payments, deposits, credit and investments, touching the essence of almost every area of customer’s lives FNB’s eBucks programme created a rewards ecosystem that provides significant value for its partners, participating businesses and customers, who were rewarded for specific behaviours.

Not only did this have financial benefit, but a variety of value-adding services made the lives of the bank’s customers easier.

FNB’s business customers also benefit from highly innovative Software as a Service (SaaS) products such as Instant Accounting, Cashflow and Invoicing, all tools that are available free of charge within the bank’s secure digital platforms.

In the race to digitise their customer base, banks must ensure their digital platforms evolve beyond the core money transactional requirements.

Technologies like cognitive computing mean that digitisation includes the automation of financial advice in a trusted ecosystem.

This could easily extend to business, marketing, operational, and industry insights.

IBM’s Watson is pioneering the way in which AI is being delivered, and it is becoming increasingly more human like.

Financial services across the globe are racing to adopt the concept of robo-advisers, automated systems that can dispense the best financial advice to customers faster and more conveniently than their human counterpart, the financial adviser.

If we really are in the second half of the chessboard and technologies will get exponentially more disruptive, then businesses must act quickly and experimentally to understand how they can extract value from these concepts, many of which are still hype but might become mainstream.

With the explosion of the Internet of Things (IoT) Bluetooth sensors called iBeacons could, for example, be picked up by the customer’s banking app on their mobile device when they enter a store.

This enables highly customised push messaging, personalised product offers, welcome messages, wait time information and more.

On-the- spot credit approval linked to time- and location-based special offers, coupled with loyalty programmes, starts to create a real shop-better value proposition with significant “braai marketing equity” – as Afrihost CEO Gian Visser calls “giving our clients an experience they will want to talk about around a braai”.

Businesses and entrepreneurs can benefit as well from this extended ecosystem of connected and intelligent devices.

Payment innovations like SnapScan, Zapper and Payment Pebble already offer new mobile POS solutions for businesses and their customers.

The question now is, will the IoT open up the concept of Device as a Service and go beyond payments in the front office and through to supply chain and operations innovations in the back office?

New entrants, new tech, new thinking – what does this mean for the finance industry and how well are banks responding?

How do large organisations ensure execution of such ideas?

There is no magic bullet: Strong executive leadership that creates space for agile teams and enables capable people to deliver in trusted environments is key.

Successfully out-innovating market rivals usually also requires partnerships; focused organic or inorganic skills acquisition; and the willingness to ruthlessly de-prioritise non value-adding projects.

Startups appear to be threatening traditional banking models – is this being taken as seriously as it should be, and where do big bank’s start to respond to potential threats?

What is the right model?

Inside-out thinking (think Larry Ellison / Oracle) drives scalable, enterprise-engineered architectures; outside-in thinking (think Steve Jobs / Apple) drives customer centric channels and intuitive user experience.

The right culture in a large organisation will integrate the best of both of these paradigms while a healthy boardroom debate will achieve the right balance between them.

It is no secret that a major concern for the big banks is having their lunch eaten by the likes of Apple, Google, Facebook and Amazon – and we can expect these internet behemoths to build on their consumer relationships and make further inroads into the payments arena next year.

Apple launched its Apple Pay mobile payments service this year, and others such as Samsung are set to bring to market similar offerings.

While Barclays has its own wallet, Pingit, it will be interesting to see if other banks attempt to stake their claim in this market – or leave it to the big tech firms.

As Tom Goodwin, Senior VP of Havas Media rightfully pointed out,

“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening”

Digital disruption in the banking sector is about to become a lot more exciting.

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