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2014’s priorities for retail banks: digitisation

I’ve talked about other folks ideas for 2014 and the key technology trends, as well as a few wild predictions.  Today, I start the first of three blogs focused upon retail banking (tomorrow commerical banking and next week investment banking).

So here are my specific predictions for retail banks this year. 

Customer focus is the top priority

Customer focus is always a priority in retail banking but, this year, it will become the focus.  The reason being that banks are highly aware of customer dissatisfaction, disillusion and dissidence.  Sure, lack of trust in banks reached an all-time low in the last few years, but most banks sat and thought: so what?  We make our money from corporate customers and investment banking, retail customers don’t matter.  Even if they did, they never move to another bank unless we push them.  That attitude will change in 2014 as account switching, competition, regulations and technology all come to a head.  Banks will find that customer engagement and the user experience will be their key priorities, as they recognise that the customer is now a remote technology interaction, rather than a branch footfall.   This will lead to a major investment in new business models and structures.

Segment-based business models

As discussed in the outlook for banking, banks are restructuring into new business models, based upon customer demographic and geographic alignment,  These models focus upon customers by industry in a corporate context, but we will see more of this focus in a retail context in 2014.  Banks for digital natives, digital immigrants, digital detestors and more will start to appear, ands the multichannel bank model will start to crach.  This is especially true due to the march to digitisation.

The result of both of the above is that banks will invest heavily in systems renewal for digitisation and to support their new business models.  In other words, as previously mentioned, it makes 2014 the year of the vendor.

Digital becomes the mantra

As mentioned last year, digital has been the big theme of 2013 and that will continue in 2014 but even louder.  It will move on beyond mobile however.

Mobile is no longer the priority focus

Banks have all been moving toward mobile and tablet app deployment.  Last year, many banks were building or deploying these services and so 2013 was the year that they felt they locked this down.  This does not mean that mobile will no longer be a focus, but higher on the agenda will be customer engagement through social media.

Banks really commit to the use of social media for customer service

We will see a revolution in 2014 as retail banks really commit to the use of social media for customer service.  Many banks have tip-toed into facebook and twitter with varying results.  On the one hand, ICICI Bank saw their customer approval ratings change from a net negative 3% to a net positive of 43% in just over a year thanks to Facebook banking; on the other, we saw JPMorgan suffer a twitter meltdown, when they mistakenly thought the online world liked them.

These are just teething troubles in the bank markets, and banks will realize in 2014 that customer engagement through social platforms – and facebook and twitter are platforms – is critical to ensure that the bank can really show that it’s listening.

Therefore, the integration of CRM with social media and customer interaction will become par for the course this year.

Banks will play with wearable apps

As wearable is the theme of CES this year, banks will experiment with wearable apps. That vision of the internet of things pinging you every few minutes with offers related to where you are breathing will become a reality.  As you pass that showroom, banks saying ‘need a loan’, ‘want a credit card’, ‘buy this and pay later’, ‘give us your money’ and similar statements will be all around you.

Branches will be further consolidated

No brainer that the branch shutdown consolidation program will continue and, if anything, with more speed as retail banks want to cut costs.

Helpful and honest banking

Banks will work hard on rebuilding tarnished reputations by providing far more open and transparent services, charges and fees.  Cashbacks and gifts will become a competitive force and many banks will really try to push the envelope of loyalty offers as they fear customer defection rates rising.

There are other priorities like regulations, management structure, governance and more, but all the above are more top of mind in retail today.

Tomorrow, commercial banking …



About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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