How is technology changing the banking industry?
Customers now expect convenience, security and personalisation – and that demands a far more agile, personal bank
Agile banking and the technology underpinning it are reshaping the finance industry and posing a challenge about how it markets to customers. At a recent roundtable hosted by The Telegraph, Richard Davies, vice-president of digital business at DXC Technology, put the issue to two chief marketing officers at what could be viewed as opposing ends of the banking spectrum: David Wheldon, chief marketing officer at RBS, and Lisa Wood, chief marketing officer of Atom Bank.
The digital-only Atom Bank, with 350 staff, was founded in 2014 with the modest aim of becoming the world’s most customer-centric bank, offering a full service for retail and business customers. Ms Wood said: “More and more people these days are only interacting with their banks through the internet or through apps.” While this might not currently work for everyone, she added: “Atom is designed for customers who want to manage their banking in a highly convenient and personalised way.”
The rise of “challenger” banks is evidence that the bank-consumer relationship is changing, with the battle for continued relevance a priority for brands. “Banking is a functional thing,” said Ms Wood. “It’s a low-interest category.” As such, ensuring you have a service attuned to the way people want to manage their money is essential.
Smaller banks may be inherently easier to change course, but agility is a challenge for any business. DXC provides technology services to some of the world’s largest institutions – and one of the biggest issues is, of course, security. RBS is no exception, said Mr Wheldon. “There’s no bank that knows better how important it is to keep everything safe and secure,” he said, referring to its near-collapse 10 years ago. “The bank is now secure from a capital and data perspective.
In an era when people should be more worried about data privacy than they are, it’s great to see banks are trusted again.” Nevertheless, security is constantly changing, something both panellists and the chair agreed on. Atom has partnered with a biometrics provider for its app, in response to consumer need for more personalised security measures. Ms Wood said: “People don’t like passcodes and passwords and two-factor devices can be a blocker. These things make it difficult to get into the bank.” But with iris scanning, fingerprints or otherwise, “you always have ‘you’ with you”.
How people behave regarding security issues is also transforming, Ms Wood said, and brands need to adjust accordingly – so Atom is looking at the tiers of security it offers. She said: “There will always be a minimum standard, of course, but you can choose to put down all the locks within our app [or not].” How banks manage personal data is a security challenge but is also a huge opportunity for them to add value to the customer – something that many digital banks are experimenting with.
Ms Wood said: “Banks have a huge amount of data but they haven’t used it well [and] in a useful and relevant way that helps them manage their money.” While a more informed bank will be able to direct customers to the most relevant products or services that could help them earn and save more effectively, mismanaging data or misdirecting customers can be equally unhelpful.
Mr Wheldon added: “Customers are only just waking up to the idea that data is a valued commodity.” He noted that wise management of commodities is exactly what banks are judged on.
On a positive note, he believes that recent innovations in data management mean banks have an array of new techniques to help their service stand out from the crowd – if used effectively. “We are now obsessing about customers in a way we couldn’t before,” he said.
Indeed, though the open banking revolution remains in its infancy, both panellists agreed that its developments will be great for consumers, even if conceptually they pose a challenge in a sector so entrenched in security.
“There are bits of open banking at odds with what we have been telling customers,” said Mr Wheldon. “We have to educate people about scams and educate them about their keeping data secure on the one hand, but also sell them the advantages of giving away their data. We have to tread carefully through this.”
Security concerns are not going to disappear soon but Mr Wheldon thinks it is unlikely that innovation would be held back by them. “Organising around data is the thing that unlocks innovation,” he said – and that is likely to drive greater efforts for banks of all sizes to tap into whatever relevant customer data they can. “That’s what makes what we do exciting,” Mr Wheldon said – but clearly “a good open dialogue is key”.