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Efma’s Banking Distribution Summit was held in Amsterdam this year from March 18 to 20. In this setting, more than 80 banks and enterprises presented initiatives currently implemented to further develop sales models to an audience coming from 45 countries. A 3-day specialized conference on “Digital banking and social media—decision time: move forward or stagnate” also took place in conjunction with the Summit. The key insights of presentations and discussions during the breaks—with a focus on common features and patterns—are outlined below:
Complex products can also be sold online
The online banking solutions presented live were combined with the provision of video advice by personal advisors, screen-sharing, parallel generation and dispatch of documents. They demonstrated that even for products and services requiring intensive advisory support, deals can already by securely closed online in real time today. One reason for this is technological progress made in recent years, which allows for a positive customer experience.
Secure online authentication
Intensive efforts are being made to ensure complete online authentication while all the participating banks are working towards a solution for ensuring full online identification of new customers. Under national legislation, some banks have already rolled out solutions. Biometric solutions are planned for broad scale introduction next year. In the medium to long term, the replacement of passwords by voice recognition is certainly an exciting and practicable solution for which the first examples are expected next year.
Mobile first
Competitive online services are considered a must today, but large parts of retail banking will be covered by mobile services in future. The general opinion on this aspect was best summarized by a speaker who stated that “If we can’t do it for mobile, we won’t do it at all!” PFM is a key element of mobile services and already constitutes the market standard for participating (certainly rather innovative) banks today. Moreover, context-based solutions for the sale of products and services going beyond simple banking transactions (including, for example, also construction finance) are currently being rolled out and tested. The fact that this requires a radical simplification of many processes from a customer perspective is seen as a positive side-effect spilling over to other sales channels. Industry-wide, the major challenge continues to lie in existing core banking systems.
Social media—a matter of course
The potential offered by social media is systematically used especially for customer contacts and services, feedback and product development. Innovative banks even go one step further by providing a special product offering and integrating them into customer verification/assessment. However, market observations have shown that social media have not been widely taken up in German banking. There is considerable development potential here, especially for smaller financial institutions.
Digitalization actively drives change
Digitalization has already changed the organization and culture of banks. Based on previous analyses of the topic of digitalization, many participants realized that today many bank organizations are too big and too complex, cultures are too deeply rooted in traditional banking and, as a result, banks cannot keep pace with the high speed of digital change. As a consequence, numerous measures were put in place to implement digital change in banks at the high speed required. These included, in particular:
- assignment of responsibility within the board, in most cases to the CEO;
- permanent close networking of functional and IT aspects (at least by cross-departmental project teams of equal partners, but also by concentrating responsibility assigned to a chief executive for sales and IT);
- concentration of all digital endeavors in priority projects or in dedicated organizational units;
- recruitment of employees with “new” competence profiles (in particular from startups with a focus on final customers);
- establishment of systematic innovation processes;
- willingness to work with “80% solutions” in a testing, learning and developing process with shorter release cycles; and
- standard interfaces made available to external developers.
In this context, please also see our BankingHub article on the challenges of digitalization.
Emerging countries as drivers of innovation
The openness to mobile innovations in banking and the willingness to take the risk involved in using them seems to be higher in emerging countries. These innovations, however, are also fostered by the missing branch and core banking infrastructure as well as by a “mobile first” approach because communication with the majority of the population is only possible through mobile phone networks in many countries. In comparison with these countries, the speed of digital adaptation appears to be rather sluggish in Germany.
Challenges in the next years
Based on the presentations at the Efma conference, the key challenges for banks certainly are the need for organizational and cultural changes to handle the digital transformation and the adaptation of existing core banking systems. Moreover, competences in data collection and utilization definitely have potential for development in comparison with e-commerce applications in order to further personalize customer contact points across all sales channels. For all retail banks operating a branch system, complementary fields for action are the establishment of systematic multichannel management and the transformation of the branch system in parallel to the gradually increasing utilization of digital channels.
Ultimately, this is just one more confirmation of generally known challenges. At the same time, however, many presentations and specific practical examples always highlight new aspects to be taken into account in related projects.
