Creating a digital bank in the 'age of the customer'
After the Federal Deposit Insurance Corporation (FDIC) was created in 1933, being a banker was a very nice gig. Your deposits were safe no matter what happened to the economy. You controlled the bank vault, which meant people had to come to you for their money, so you set hours at your own convenience. And over the decades, you offered an ever-evolving set of products—including credit cards, mortgages, consumer loans, CDs and money market funds—that all brought in easy profits.
But those days are over.
Today, banks have stiff competition from upstarts such as Alibaba and Apple Pay. Plus, online and mobile banking have reduced the need for local branches, which are quickly becoming unprofitable because fewer people go there. Finally, banks are still digging out from the PR nightmare they created in 2008, when Wall Street blew up the derivatives market and caused a global economic collapse.
So what is a bank to do?
The smart ones are moving quickly to create the digital bank. They are working hard to re-earn the trust and admiration of clients by streamlining processes so that opening a new account is quick and easy, and applying for a loan can be done online or even from home with a banker who sits with clients at a kitchen table and fills out the forms.
The leading banks are also learning to understand each customer personally and tailor customized banking experiences with banking analytics; some clients want to bank only with their mobile device, while others want to come to the branch and see and touch their money. Today’s digital bank has to be flexible enough to understand the “banking style” of each customer and shape services to fit that need.
Because banks had it so good for so long, many are still conducting business using 20th-century methods. A bank may have deployed a state-of-the-art mobile banking app for paying bills, while down the hall, the mortgage department is slogging through 300-page paper loan applications.
Paper remains a drag on competitiveness, especially in the branches. Union Bank estimated that having a courier service pick up documents once a day to drive to its central scanning center was costing $40 a day per branch. With 400 branches, the company saw huge savings by putting in a distributed scanning solution that let it scan and upload documents using its own copy machines.
Many banks are rethinking their branch strategy. Most are scaling them back, but some banks are understandably hesitant to abandon their established Main Street presence, where they may have been for generations. Look for the new, friendlier bank branch to open at a location near you—and I don’t mean they have a bowl of candy as you enter. Expect a complete redesign into a more comfortable lounge atmosphere, where you can feel comfortable sitting down with a banker and reviewing your investment strategy, your small business needs, your need for capital for a new property or business, or new products for your growing family.
Forrester Research announced a few years ago that this is the “Age of the Customer.” Banks have gotten the message and many of them are determined to become customer-centric, making investments in digital banking solutions that enable them to be more agile, responsive and personalized. Discover how Enterprise Content Management is enabling digital banking, and learn more about the comprehensive range of banking solutions from IBM Analytics in a customized workshop.