For Banks, Platformification and Customer Service are Key to Survival


This week, we’re proud to be sponsoring the BBA Annual Retail Banking Conference in London when Avoka’s Cliff Van Tonder will be speaking on one of the biggest trends in banking: “platformification.”

Bank platformification is gaining traction due primarily to the encroachment of Fintech Disruptors on the traditional banking space – these disruptors are:

  • Small and nimble (ala David in “David and Goliath”)
  • They’re unencumbered by legacy technology & thinking
  • They’re designing from the customer-in, not from the bank’s processes-out

A recent E&Y Survey found that the single biggest reason consumers opened new fintech-offered accounts was that they were “Easy to set up” – this scored almost scored three times higher than any of the traditional financial drivers like attractive rates and quality of service.

In our 2017 State of Digital Sales in Banking report, we found that only 28% of accounts and loans offered by banks were able to be opened or applied for on a mobile device. Additionally, we found that only 1 in 3 banks met the minimum level of digital sales readiness.

Translated, this means that banks need to think about the customer and focus on convenience and ease of opening accounts (loans, credit cards, mortgages etc.) and they need to do it quickly.  This also means that trying to build their way out of this hole with developers and multi-year projects won’t cut it.

Consumers are looking for alternative approaches

In certain financial products, banks have already been disintermediated. Most consumers get car finance where they buy/lease their car. Over 60% of UK mortgages (Bonds) are obtained through a broker (Guardian article 2014). The primary reason for this is convenience.

  • Given the primary function of a bank account is to give me access to the money I earn and to protect the money I earn – why wouldn’t I get a bank account in the future through my employer?
  • If I’m saving for something like education – why wouldn’t I get a savings account through the school when I enroll my kids?

We’re already seeing disintermediation of banks through Personal Financial Management solutions/apps like OnTrees, Money Hub, Money Dashboard, where I can aggregate information about my banking products from multiple banks through a single user interface. And PSD2 just makes this easier.

Facebook has filed a patent for social personal financial management – so I can aggregate banking information in Facebook and have my spending patterns confidentially compared to those of my friends.

 Banks must embrace Platformification or improve customer experience—or both

  1. Embrace open banking and API’s and be prepared to no longer be the Customer Experience – that may be Experian, Apple, Facebook, Google, Samsung, Amazon; and/or
  2. If banks want to avoid being disintermediated…focus; focus; focus on the customer experience. Understand what people want and give it to them – otherwise, they’ll get it from somewhere else that makes it more convenient (like a car dealer or a mortgage broker)”

Join Cliff Van Tonder where he’ll discuss this and much more during the Digital Disruptors Technology Panel at 14:20!

Derek Corcoran
Derek Corcoran

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