Reinventing Banking – Outside-in Digital Transformation

Balázs Vinnai – GM Digital Channels, MisysJózsef Nyíri – Director of Innovation Misys Labs

The No.1 differentiator for banks: Customer Experience

Core banking is a centuries-old business…

… while digital banking is only 30 years old

Digital native generations are already adults!

• Generations Y and Z are already your customers and colleagues

• Even Facebook is 10 years old now

Global variations: Weibo = Twitter Alibaba = Amazon Renren = Facebook WeChat = WhatsApp

Digital banking is only 30 years old, but everyone has it

• Customer faith in the banking industry is at a low point

• To rectify this banks must look to move away from a multi-channel service and siloed channels

• Instead they should look to offer a more flexible, seamless and integrated approach via omni-channel banking

• An omni-channel strategy gives the option of person-to-person interactions at specific points where value to the customer and the bank can be optimized

• It is a fine line to tread - make person-to-person interactions too readily available and you add cost for little benefit; make them too hard to access and you risk losing sales opportunities.

No need to reinvent the wheel!

Actually, there is…

Simplicity – the new world religion

Customer experience driven online banking

Turn digital banking into a sales channel

How much time did the average bank customer spend in 2012…

Sales (by numbers and volume) compared

And what banks want…

Online and mobile sales with smart tips

Sales campaign analytics

Focus on customer context instead of channels

From ‘multi-channel’ to ‘omni-channel’

Omni-channel approach is where physical and virtual channels come together to enable a seamless experience embedded in people’s lives and businesses

• Complete offering across all channels • Consistent experience regardless of channel

And there is life after omni-channel too

Banking is lagging behind commerce. Non-banks are showing what an omni-channel experience should feel like. Originating in retailing and still being defined by its proponents, omni-channel is seamless, continuous, consistent and connected.

Commerce relevancy criteria:

1. Relevant product recommendations 2. Relevant locations 3. Relevant marketing 4. Relevant analytics

KYCC – Know your customer context

Mobile-only: the new battleground

Mobile-first banks

Other ‘outside-in’ thinkers – customer centric approaches

Telcos are coming

Common denominator?

21st century banking platforms

Core banking means everything that is central to the bank. Digital channels (internet banking, mobile banking) are quickly moving in this direction!

• 21st century challenges placing tough demands on old systems• Increasing pace of change in banks has altered the nature of ‘core’, and the consensus on what is

considered ‘core’ is evolving • Banks have hit a point where the complexity (because of the proliferation of products and increasing

customer demands) and cost of jury-rigging becomes prohibitive - the need for a core transformation is apparent

Change the perspective – there is only one: the customer’s

The new mantra of banking is customer

focus - a change from the product centric

focus of traditional banking

The big issue for channels:

• They’ve been developed to sit atop a core system that has historically been focused on the branch

• However, the branch is no longer centre of the banking universe • Digital is changing the branch-centric design and product-centric business model that has

been dominating banking • Banks now realize that if customers aren’t put at the centre of the equation, they may well

decamp to newly-established alternative financial services providers who are actually being customer-centric – through actions, not words

And what if the really big ‘outside-in’ thinkers step in?

• Second year in a row, Apple, Google, Facebook and Amazon keep promising a financial revolution — which we haven’t seen so far

• Apple’s tilt towards the development of BLE, which might be the final straw to break the NFC camel’s back. They are also considering using iBeacon devices for the development of financial start-ups

• Facebook and Amazon are actively building up their Register & Pay Via Profile technologies. The former is looking at gift cards market while the latter is more interested in online acquiring for e-commerce

Take away points

• Be an outside-in thinker!

• Defend your market from new entrants: banks or non-FS competitors

• Create and market more relevant products to your customers – think customer context