They say a lot can happen in a year, so imagine what can be done in a decade.
It’s been over ten years since the first contactless payment was made and since then payments over card have increased considerably. In fact, last year contactless payments amounted to 740 million transactions in November alone.
The rise in digital payments has seen a subsequent uptake in the number of digital-only challenger banks, that offer more agile services than traditional high street banks and a slicker user experience. New entrants into the market mean that customers are now spoiled for choice – but also face tougher decisions when it comes to deciding who to bank with.
This has led to a new key determinant for banks to survive in an ever-competitive marketplace: trust. Consumers will be looking to invest their money in organisations that they trust, and with more competition than ever, banks should look at ways they can prove their value to customers in more than just finance.
Rising to the challenge in the digital age
A lot has been said about challenger banks over the past few years, with the likes of Monzo and Starling seeing success in their crowdfunding ventures last year.
But those banks have still not reached their full potential. Over the coming year, I expect them to continue to grow their customer base; more significantly, that will likely be through acquiring customers whose traditional loyalty lies with legacy banks.
This is likely to happen as the agile and cheap model that challenger banks boast is something that traditional counterparts have attempted to catch up with for years, to little avail.
Subsequently, don’t be surprised if a traditional bank attempts to acquire one of these challengers over the next year. If you can’t beat them, you may as well join them.
Digitisation will change the way companies work
This year, we are likely to see the biggest transformation to the workforce yet. As the digitisation of banking continues, organisations are shifting from traditional, functional roles and are prioritising people who can help evolve what the bank does.
While this approach will benefit banks in the long run, it will result in a vastly different workforce that has a different skillset.
Banks will be looking for employees that can interact with customers in new and creative ways, and who are able to collaborate and express empathy. They will shift from looking for employees with more technical expertise to those who have the soft skills that will help banks build the services that will attract customers – and those who are fast learners.
This shift in the workforce will be part of a move from legacy IT systems to newer, modernised services. And banks will likely outsource the development of their new cloud systems and digital solutions to third parties.
Trust and social purpose will be at the heart of services
The banking industry’s social purpose has been increasingly put in the spotlight in recent times. With the Bank of England paying closer attention to climate change and leading world financial institutions such as J.P. Morgan taking further action towards sustainability, banks across the world are focusing on new ways to go green.
This is part of a wider movement in banking to put trust at the heart of their services. Banks are some of the most trusted organisations; given the data they hold, customers trust that they will keep it safe and act responsibly.
Take Lloyds’ M-word campaign. Finance is only a part of a person’s mental wellbeing; but by being candid about these sorts of topics, banks are able to support on issues that are top of the mind for many customers. These measures can help to improve the relationship they have with their customers.
This is particularly important for traditional banks. These banks have been household names for much longer than challenger banks, and many people will bank with them from a young age – when parents have more of a say in what Bank to choose.
This position of trust will be crucial for traditional banks as they look to compete with challengers. We found that two-fifths (40%) of customers in the UK don’t trust challenger banks at all, amid 77% banking with high street banks.
Source - Read More at: www.globalbankingandfinance.com