By Simon Axon, EMEA Industry Consulting Director, Teradata
ESG will continue to define banking in 2023
Governments and world leaders are under increasing pressure to implement stronger regulation and legislation that will demonstrate real change and commitment. Ultimately, governments see financial services as a vehicle to implement net zero policies, as well as to accelerate the path to Net 0. We will see the cost of money becoming much higher for carbon damaging activity in the coming year, with more favourable rates provided to those implementing sustainable activities. To do so, banks will need granular information on a host of factors that determine the level of environmental impacts over time and risk across all sectors and all kinds of assets and investments.
Disruption as the ‘New Normal’
The repeated disruptions felt as a result of COVID-19, Brexit, war and political turmoil have, unsurprisingly, had a detrimental impact on the financial industry – as we’re seeing now with the ongoing rise of inflation and the increased cost of living. While ad-hoc crises are nothing new, these back-to-back and sometimes simultaneous crises is not something the industry has ever had to contend with. In 2023, the banking industry will need to further adapt as the definition of who is categorised as a ‘vulnerable’ customer changes. Banks will need smarter analytics in order to identify these vulnerable customers, with new factors calculating these scores, centred around reliability of income, as opposed to income vs. expenditure. The data needed to understand your customer base, therefore will need to be more nuanced than it previously was.
Continual reinvention is imperative
Despite recent advances, banks are still stymied by silos of data marooned on-premise in different departments and hard to activate to support reinvention at pace. The leaders in this world, whether it’s Amazon Fresh, Deliveroo, or Shein, know that continual, high-speed reinvention is the only way to win and retain emotional connection with customers. And that requires constant acquisition, integration and analysis of data from a wide range of sources both within and from outside the enterprise, plus the agility to move from opportunity through development to execution in weeks if not days rather than months. Business leaders must get comfortable with this process of continual reinvention. Striving to simply deliver more of what’s worked in the past will no longer be enough. Staying relevant demands the ability to rapidly trial, prove, expand and deliver new services to meet new needs.
Business leaders should prioritise cloud migration
Much of the low-hanging fruit of cost savings in the cloud has already been harvested. To continue to grow, and to transform into customer-led organisations, it is the business leaders in financial services that must now take up the baton of cloud migration. Our approach is to leverage the capabilities and the consistency of Teradata, whether it runs on premise, in private or public cloud, or on a combination of all three. The flexibility to experiment with novel proofs of concept to explore a specific business case without necessitating wholesale movement of copying of valued data should provide specific lines of business with the confidence to move forward.
Customer-centricity and connection remains key
Businesses in other industries use cloud to completely reimagine what customer-centricity means. From ordering takeaways and almost instant home delivery of groceries to personally curated entertainment and social selling – innovators are using granular real-time data to precisely tailor specific offers to individuals. Not only are they revolutionising entire categories, but they raise the bar and expectations of customer service for all. Modern, digital businesses know that the competition is only one click away and that poor service can be terminal.
Banks need to quickly wake up to this new environment and investigate how they too can leverage the flexibility of cloud-based analytics and delivery to meet this new, and ever-changing competitive threat. Having slicker, frictionless, products and services is crucial, but alone this is not enough. Winning in this digital world is not about having a shiny app to speed up mortgage application; it’s being the partner customers’ trust to help them buy a house. To succeed and remain relevant, banks must find ways to transform entire customer journeys to add value at every step and iteratively build an authentic, emotional connection between brand and consumer.