Global Banks have a grueling task of repositioning their business portfolio in view of financial upheavals in the wake of European crisis and American journey, to achieve financial freedom. In parallel to this unstable scene, revenue models in retail banking are radically changing, as traditional revenue sources of transaction-driven volumes are drying up and are being replaced with new wave of portfolio-driven revenue propositions, where customers are increasingly expecting banks to guide their financial destiny.
Post first decade of this 21st century, banks are increasingly looking to transition from “run-the-bank” to “Change-the-bank” paradigm. Consequently, technology plays a vital role in assisting banks in positioning themselves to the needs of intense personalization, micro-profiling, predictive behavior analysis, and relationship based pricing, while maximizing potentials of its usage.
Investment patterns by Retail Banks could be mapped in three distinct business objectives such as achieving enterprise growth, enriching Customer Centricity, and optimizing Opex. While retail banks in APAC and Middle East have higher thrust on enterprise growth and enhancing customer centricity, banks in North America and Europe are keen on optimizing Opex.
However, some of the technology initiatives in mobile and social space across North America and Europe have created new wave of revenue-led opportunities and enabled customer centricity. North American banks have also taken steps in brand nourishment with new projects such as strengthening customer on-boarding process, intense customer and operational analytics, and matching European banks in card space for EMV chips, and so on.
For the financial year 2012, Gartner1 has prescribed the following key essentials for Retail banks:
• Innovate, regardless of economic conditions
• Focus on performance, not just compliance
• Simplify apps architecture and infrastructure
• Deliver context-aware experiences
Retail Banks are experiencing the new wave of technology adoption, in which, the definition of the customer relationship is transforming from mere call center and branch-driven interaction to that of intangible world of Internet, mobile, and social media. Moreover, the “definition of a customer” is changing from being “a person transacting with the bank” to that of “any individual whose perception may impact on overall brand of the bank across traditional as well as new media, whether he has transacted with the bank or not”.
Moreover, social media has moved from mere means of marketing banks products and services to that of positioning bank’s proposition, acquiring new customer segment, relating to the aspirations of the customers, creating new campaigns and loyalty programs, test marketing the new initiative, mining the new opportunities, predicting the perceptional transition of the bank’s brand in the minds of the customer, and so on.
In today’s most challenging environment, IT vendors providing services to retail banks need to enrich strong domain influence, create deep understanding of customer’s business needs, establish profound research commitments, and develop exemplary execution capabilities. While the decade post Y2K paved way for rationalization of applications, conceptualization of SOA architecture, decomposition by way of new business focused hubs, multi-channel integrations and so on, the decade ahead would see a new wave of light-weight technologies and customer-intrinsic applications.
Moreover, the days of strong consolidation, reduced margins, inexplicable jerk to traditional stronghold are not too far, when generation X passes the baton to Generation Y. Banks are increasingly focusing on their core activity, while the technology and service providers have a bigger role to play in supporting the core as well noncore dimensions of the business.
Banks are increasingly expecting technology vendor to play a role of partner-in-progress with every new technology innovation such as cloud computing, big data, banking apps store, mobile-commerce, Hyper digitization, with complex event processing, mining customer data to seek new opportunities to relate, advise, recommend, execute and seek profitable avenues, and so on.
Participating in Banking 3.0 revolution by radical shift in visible front-end design of CBX framework, Bank-in-service-box concept using Knowledge-shelving-wiring (KSW) tool, Core Banking product suite supporting the entire retail banking life cycle, and niche-consulting to banks in their growth roadmap; Polaris is a strong contender as a “key Partner-in-progress” for banks and financial institutions across the globe.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Asian Banking & Finance. The author was not remunerated for this article.
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Shripad Vaidya heads the Global Retail Banking Practice at Polaris Financial Technology Ltd. He has many years of experience in Retail Banking and new generation Online Banking Channels including social media.