Mobile banking has become the norm for Asian banks today. For instance, all three major Singapore banks (DBS, UOB & OCBC) have mobile banking applications. If we want to keep up with trends, the big question should be: ‘What’s next?’
The Next Big Change – Advisory Services
According to studies done by AT Kearney, the next major digital innovation that banks are undertaking would be in the advisory function. In the wake of the digital disruptions, banks are reducing their physical branch location, especially in European countries.
While mobile apps are good at providing essential services such as the checking of balances, payments, and transfer, it is not catered towards the advisory needs. If you are looking at which financial product to purchase for their retirement or which credit card suits your needs best, you would require professional advice to make the right decision.
Source: AT Kearney
With the advent of technology, the actual branch visit would become increasingly rare. The primary source of information for banking clients would increasingly come from their digital assets from research tools to video advisory.
This represents the paradigm shifts that consumers are facing today. They conduct their own research online before they purchase any banking products. Banks have to meet their clients on their own ground. A quality website and good marketing will go a long way towards building up the banks’ advisory delivery capability and consumer awareness.
The IT vendors of banks are often saddled with legacy baggage like support for systems over decades old. Thus it is vital for bank managers to maintain an open mind about engaging web developers in tune with emerging tech like Ruby on Rails, and digital marketers who are savvy about evolving consumer tech usage.
Different Approaches Towards General & Personalized Advice
Banks differentiate between general and personalized advice. For general advice, they cater to the wider market through professional research tools, comparison websites, recommendation engines and social networks.
Professional research tools provide them with reading materials to understand the background of the product. Comparison websites can help them filter and narrow down the vast array of products in the market. Recommendation engines suggest products due to their client’s profile and online behavior patterns from the wisdom of the crowd. Banks also have to make their products’ presence felt on social media.
For consumers that require personalized advice, the banks would connect with them through live chats and video. While the general advice can be automated, personalized advice would be given via a qualified banking consultant. This allows advisory services to be given around the clock.
For a provocative example, if you are looking to buy affordable bubbly then you can just browse the Internet for it. However, if you are looking for a specific diamond worth $1 million for your wedding, then you will want to look at the US expert in the eye when you are talking to him.
Removing The Road Blocks
The first stumbling block is that each branch is responsible for their own profitability. They are unlikely to support digital advisory as the profits would not accrue to them. In order to solve this problem, a small yet increasing number of banks are taking away this responsibility from their branches.
The second stumbling block would be the legacy and siloed IT processes and system. The cultural residue and actual system would take years to transform. Therefore, some traditional banks are creating new digital banks to provide quick and agile digital processes to provide the right digital products.
For instance, BNP Paribas created Hello and Bancorp created Simple. New players such as Movenbank are also entering the market. They are redefining the face of banking through their nimble initiatives to embrace new digital realities such as social networking and chats.
Changes in our online behaviour preceded the change in the banking environment. Today, we are more likely to search and even apply for the best credit card through portals instead of going through the bank’s salesperson on the street.
Banks are just following our footsteps to chase after our business because we are their clients. The bank’s partners such as loan consultancies which provide advisory services about business loans to SMEs have to follow in their footsteps.
While it is common sense for banks to evolve along with times, this is hard to do in practice. While such practices had taken root in Europe and the United States, it would be years before it is being introduced gradually in Asia. Nonetheless, it is clear that they are coming. Sooner or later.