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28. June 2017

Life after apps

Digitisation of banks requires far-reaching innovations

Every bank under the sun is now offering home banking apps for their customers. But this is only the beginning – the next step is digitising all of the banking business. It’s a big step, certainly, but the necessary software is already available.

Providing an app is not enough

Very convenient: just download a banking software, and everyone can conduct their bank transactions from the comfort of their home or via their smartphone. What customers don’t know is that most of the banks are way behind when it comes to digitisation. And even the banks themselves do not realise that providing an app is not the be-all and end-all of digital banking. The age of digitisation has just begun – and is long overdue.

Digital tools can ensure customer loyalty

One of the driving forces is a tougher set of rules laid down by the European banking regulator to prevent another financial crisis like 2008. To efficiently meet these new regulations, specific digital tools are needed.

Aside from regulations regarding the equity ratio, most of the new requirements involve improved risk management and better documentation of all matters concerning the customer. With a digital presentation and consultation, all necessary data is available in a manner conforming to the rules. It can also easily be adapted to changing markets – and to changing customer behaviour.

Using the internet and/or digital tools is becoming commonplace. Existing customers as well as new customers appreciate their bank offering effective tools. The suitable software enables the bank to create all the necessary documents and communications with a minimum of expense and a maximum of use. If a customer is looked after well – digitally and via personal contacts – he will be more inclined to stay with his bank.

The pressure is on

Other players are putting pressure on banks, too. FinTech start-ups are offering specific services in lucrative sectors formerly monopolized by banks. Many full-service banks are confronted with an erosion of market segments. It’s becoming more difficult – and expensive – to ensure a comprehensive customer support, especially when online-based competitors are penetrating profitable areas of business.

The question isn’t if a bank should be digitising its businesses, but when. And waiting too long to take the plunge will have serious repercussions – none of them positive.

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