Charlie Platt – Head of FS and banking, SAP UKI
Making major financial decisions is often emotive. Empowering users to make the right choices is possible if the best information is provided to them through a clear and effective user interface. Bringing together elements of data to underpin the decision, and user experience to manage the process, is the heart of experience management (XM).
Banks are facing strong competition from financial technology (fintech) start-ups and challenger banks who are very focused on customer and user experiences (C/UX). They need to capture market share quickly, so ease of use, personalisation and smart systems can drive migration of users onto their platforms.
Control over customers – once in the hands of traditional banks – has been blown apart by Open Banking. Launched at the beginning of 2018 in Europe and the UK, this regulatory initiative has created a new level of competition in finance. It gave new tech firms access to opted-in client bank accounts and transaction data. If their service provides a better experience than a bank’s service, there is nothing to prevent a bank’s customer using it.
However, Open Banking has not radically transformed the finance industry in the past year. Some commentators are asking why that is. The answer is that banks have been more responsive to the new regulation than might outwardly appear. Myriad small changes cumulatively transforming the business.
Firstly, one can see that banks have sought to foster innovation and learn lessons from new innovators. They are mining the talent pool that exists in the challenger bank and fintech space. While Open Banking sets fintechs as potential rivals to banks, it has also created the chance for them to work together more easily with banks, by enforcing the creation of open application programming interfaces (APIs) bridging their technology.
Secondly, it is clear that banks are embracing experience management. In their recent ‘World Fintech Report 2019’, EFMA and Cap Gemini observed that Open Banking represented the unbundling of banks’ services; the next stage of business maturity will be the re-bundling of services into new ways of working, which they term ‘Open X’. The key elements of this are a focus on customer experience, the designation of data as an asset, partnering for new capabilities and open ways of working which will allow key strengths to drive business, over a universal service offering with varied levels of quality. This is a new model of banking.
Banks are already rethinking how they run their businesses. CEOs are building strategies that will support more automated, flexible operations in order to optimise the experience for their clients and employees. Data is the fuel for these enterprises, and technology will be key to making these visions reality.
For the chief financial and chief operations officers, charged with building the processes and cashflows that will deliver this new model, it will be necessary to have clear control over costs and revenue streams which will change with the business.
As banks rebuild themselves to function in this new environment, they will need to reinvent the way they source, acquire and receive capital and services. Internally resource planning, accounting and even general ledger structures and models for billing and cost allocation will have to be rethought.
The executives who own customer and product relationships must intertwine user and customer experience (UX/CX) with the data and analytics, thus empowering a client or an employee to both engage with a process and get access to the insights they need.
Chief human resource officers (CHROs) must balance their process and interpersonal relationship skills to win the fight for talent, in order to build a future bank in partnership with today’s skilled financiers.
Automation will increase but so will responsibility, creating greater pressure on the leaders of tomorrow. Consequently they will need the support of the CHRO role that will become as front and centre as the chief financial officer is today.
This is a gradual evolution, not a disruptive revolution; each department in each bank will make changes that collectively bring customers a new model of banking. The opportunity is enormous, and as customers move banks will be under pressure to lead the charge. Today, chief executives are engaging with their senior management to set the groundwork in place for the banks of tomorrow.