With the launch of several new banks in South Africa and the disruption caused by digitalisation, the incumbents are re-aligning themselves to better support a digital environment.
Newcomers must work hard to attract a customer base and adopt different strategies for attracting the right audience, while existing banks must find more innovative ways of extracting value out of the customer data they have. This can include co-existing with non-banking services to attract customers. For example, they can work with retailers to see how best to use consumer interaction data to grow their customer base.
Consumers will have considerably more options to choose from. While cost is important, they will look at the types of experiences on offer from not only the newcomers but also the incumbents. However, the new banks would need to ask themselves what they can do different and better to entice customers to migrate from their existing service provider.
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Even though cost is an important differentiator, rewards, consumer experience, and value-adds are vital elements to consider. The key for a new digital bank is finding the right balance to target the market it is interested in.
This disruptive environment has seen existing banks approach customer-centricity in a new way. Previously, managing customers was very much silo-driven. Whether a customer has a home loan, credit card, personal loan, and other accounts at a bank, there has never been a single view of that person. Banks must therefore align their existing portfolios and integrate them more effectively to maximise the offerings they have.
Oracle’s customer ConnectOne bank’s CEO Sorrentino Frank sums up the biggest benefits of using cloud integration tools such as Oracle’s ERP cloud as “bankers ask me all the time how are you running that businesses, at that size, with that growth rate, with that reputation and with that level of service with as few people as you have? He goes on to explain that we are living in a cloud-based world. and as far as I am concerned, there is no better place to be”.
Already, investments in technology are increasing. Banks are looking at bringing products to market faster and offer better packaged services to customers. The data is there, but the approach in getting to it must be more agile if value is to be extracted to configure solutions.
The challenge presented to existing banks by the new digital banks is not only limited to keeping customers, but also encompasses ensuring skilled employees are retained. Further developing employee’s skills to fully embrace this digital era. With Artificial Intelligence, Machine Learning, Robotics and IOT, organisations will need to upskill their existing workforce to embrace this new way of working.
The incumbents are facing the threat of a brain drain with a lot of intellectual property potentially lost to the new players. Because digital banks are already investing in new technologies, they are attracting talent quicker. Existing banks need to rethink how they create innovative opportunities for technology to co-exist with their talent pool within the organisation.
Marketing (both internally and externally) will play a big role in targeting the different customer segments. This includes from an employee as well as a customer perspective. The gamification of solutions will also increase as people expect a more intuitive experience from their banks and rewards based on behaviour.
Fundamental to all the technology and the digital transformation taking place is to look at the customer journey and understand it in the wake of this change. There is a common misconception that a digital bank does not require a branch. Yet, these will never become obsolete. Instead, they will evolve to be more reflective of the digital environment….for lack of a better description “branch-in-box” to describe the branch of the future, with the increasing use of robotics and artificial intelligence. All these elements will combine to provide people across generational segments with an experience relevant to them.
The evolution towards digital banking has begun. Significant investments are being made to leverage new and existing offerings to provide customers with solutions for a connected future.
By Nathen Pillay, Sales Director for Applications at Oracle South Africa