JOHANNESBURG - There is much talk around catering to the millennial generation, and using technology to answer the needs of today’s customer, however, financial institutions – like other industries – find themselves confronting the predicament of providing services to a vast and varied group of customers.
From Millennials, to Generations X and Y, to Baby Boomers, banks are having to strike the balance between delivering new, disruptive services, while maintaining traditional business models for the older generations, as well as rural customers who may not have connectivity or be au fait with technological developments.
Convergence
No matter how a customer interacts with the bank, they need to walk away with the same sense of satisfaction. Older generational customers tend to be more comfortable conducting their banking in much the same way that they have done for years, be it via a teller within a branch, or through an ATM. While some of these customers have made the move to Internet banking, most are reluctant to turn to more modern banking concepts such as mobile banking and many lack the technology – and know how – to do so.
For this reason, banks are still heavily reliant on their legacy systems to cater to the needs of this pre-existing clientele, even as they embrace the digital technologies and platforms which will enable them to cater to the emerging market across multiple channels. There is a strong need for effective balance and convergence of their physical infrastructure with digital enablers such as the cloud, so as to retain a foothold legacy customers while accelerating their digital transformation strategies.
Hybrid solutions will address the needs of all customers across the board, yet the process needs to be managed seamlessly. Starting with understanding the demographics of their customers, banks can ascertain at what level they need to still retain traditional systems and processes and where they need to evolve. There is no reason why digitalisation cannot co-exist with legacy systems. Indeed, digitalisation can also ensure that these systems, and the staff that use them, offer the same experience to customers whether they interact with the bank on line or in person.
Adding to the complexity are the many legislations that banks need to take into consideration. As the financial industry digitalises, they need to take into account the new legislations which affect not only their new digital adoptions, but which may also impact legacy systems and data. Most data is still very siloed and, with the onset of new legislations like the Protection of Personal Information (PoPI) Act, this is a challenge that needs to be carefully managed and properly addressed.
Maintain balance
When banks are considering moving to a new system, they must evaluate what they have and ensure they do not lose the functionality offered by legacy systems, while introducing the benefits and functionality of new technology. They should address the impact of the move on both staff and customers, and ensure that transition is done with minimal disruption to daily productivity. Innovation should not be what the banks does, but a part of what the bank does to ensure growth and continued success. Dedicated teams should be applied to innovate, while banks continue to provide the services that they must.
Innovate, grow and evolve
It’s a tough ask for banks to determine how to retain “legacy customers” while evolving and attracting new customers. They need to become far more agile and, yet, still retain their legacy processes and core service offerings. Add to this the fact that change is exponential today when compared to twenty years ago, and innovation becomes a tricky process. Technologies implemented today could well become obsolete in five years’ time, so banks need to bear costs in mind and ensure they adapt at a manageable pace and with the proper level of change management implemented.
Fintechs are pervasive, and banks, being transaction driven, are also facing the prospect of becoming redundant. It is vital that banks revisit their structure and balance people and technology to offer the best of both to their customer base. This requires a level of constant re-invention, while embracing a FinTech way of thinking (or partnering with them) and yet holding on to the way of banking that has been around for generations.
Banks need to attain the single customer view so as to best understand their customer, no matter which customer is it or how they interact with them. they will need to run their operations the way they have been and the way they want to in parallel for the foreseeable future.
Shiona Blundell is the Business Development Manager at Banking Wipro Limited.