BIG SURPRISES IN THE FEDERAL ELECTIONS; IS …...an inarguably useful database for secure banking transactions. Attacking these trends There are four positive ways banks can attack

BIG SURPRISES IN THE FEDERAL ELECTIONS; IS DFA REFORM NEXT?

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These trends include expansionof mobile banking, implementa-tion of a fintech strategy andattention to and investing in creat-ing the ideal user experience(UX). The last of the trends, whichaddresses the five generationsspanning the Silent Generation toGen Z, considers a global market-place that both complicates andenriches the task of the otherthree trends.

Each generation has its prefer-ences about mobile banking,delivery of financial services andtheir receptiveness to efforts to

enhance their user experience.The significance of these trends is a mandate for banks to be pre-pared for anything.

They need to be willing to leap,switch directions, turn on a dimeand be dexterous so they can gowhere they must to protect theircustomers’ hard-earned moneywhile also serving them and theshareholders by being profitable.It also means elevating their customers’ experience while pro-tecting the security of customers’financial information in order tore-establish and maintain trust.

4 trends banks must embrace in 2017By Michael Adebisi

The banking industry cannot afford to be conservative thesedays. Conservative with their depositors’ money, yes, but notwith how they go to market. In order to defend and capturemarket share in 2017, it is important for banks to embracethe concept of nimble, quick, agile and deft as they attackfour inescapable marketplace trends.

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• Offer a first-level appthat allows at a mini-mum: depositingchecks; sendingmoney; paying billsboth domestically andinternationally; order-ing, opening andclosing credit cardaccounts; transferringbalances; receivingalerts; and text bank-ing.

• Embrace ArtificialIntelligence (AI), thenext tsunami to floodthe banking world, evi-denced by thebanking “Chatbot”named MyKai,released by AI soft-ware company Kasistoin June.

• Answer mobile bank-ing customers’ needsto protect their identi-ties. “Selfie” facerecognition is anexample.

Simplify the mobile banking expe-rience, especially in the face of thenewest apps, AI and cyber securitysolutions. Develop uncomplicatedinteractions with the technology, suchas voice authentication log-ins, click-to-call features, 3D touch and othereasy-to-use capabilities. Randomizedpop-up fraud inhibitors might deterimpostors and increase users’ trust.

Implementing fintechStarting early in 2017,banks will need to devoteadditional resources to fin-tech analysis. They willneed to determine the beststrategies to not onlymerely survive but also tocatapult their bank past thecompetition.

To enable or enhancetheir fintech services, somebanks would do better topartner directly with or evenacquire an existing fintechcompany. Others might findstarting programs to incu-bate fintech companieswould yield the best serv-ices. Success will requirean open mind set for effec-tive fintech conversion.

After a fintech optimiza-tion strategy has beenoutlined, specifics relatingto fintech should beaddressed starting withblockchain technology.Blockchain is here to stay

and banks will ignore it at their peril.While the cryptocurrency Bitcoin wasslow to take off, the newerblockchain technology with built-invalidation must be reckoned with.

In short, the tamper-proof, trans-parent and independent,communally shared permanent data-base offered by blockchain makes itan inarguably useful database forsecure banking transactions.

Attacking these trendsThere are four positive ways bankscan attack these trends starting in2017:1. Expand mobile banking.2. Implement a fintech strategy.3. Pay attention to and invest in cre-

ating the ideal user experience(UX).

4. Understand generational differ-ences and expectations.

Starting right now, banks haveopportunities to act quickly or beswallowed up. In addition to beingquick and adroit, banks might alsoneed to heed the words of Louis V.Gerstner Jr., author of the epic IBMturnaround account, “Who SaysElephants Can’t Dance?”

“Watch the turtle,” Gerstner says.“He only moves forward by stickinghis neck out.”

Banks cannot hide in their shellsbecause today’s consumers are nolonger patient. Customers do notstand still for promises. They willwant to see results in all four of thesecategories.

Expand mobile bankingMapa Research, digital bankingexperts, predict that by the year2020, the mobile device will be theworld’s primary connection tool tothe internet. Starting in 2017 (if theyhaven’t already begun) banks willneed to: • Budget for mobile banking

innovation.

Banks cannot hide in their shellsbecause today’sconsumers are

no longer patient.

Banking chatbots and facial

recognition security may be

something customers are

looking for in 2017.

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Sometimes referred to as a mutualdistributed ledger (MDL),blockchain’s biggest advantages areits ability to both serve and protectbank stakeholders by cutting costsand enhancing trust.

Beginning in 2017, successfulbanks will enable fintech throughincubation or acquisition and possessthe knowledge base necessary toquickly enable blockchain technology.

Creating an ideal user experienceThere’s no question that banks mustbe present on mobile devices, butnow it’s a race to see who can ele-vate the user experience across thedigital spectrum. ATMs, humantellers, customer-service representa-tives and their virtual live-chatcounterparts need to represent thebrand the bank wants to embody inthe marketplace.

Continuously challenging the cus-tomer-facing teams to solve — orbetter yet, to anticipate — customers’real problems in “disruptive” ways willrequire unremitting dedication to offer-ing the untried. The reward will becustomers’ loyalty, a prize truly worththe effort these days. There’s a star-tling disconnect: “80 percent of bankexecutives understand they are at riskof customer attrition; just 40 percentare focused on improving the cus-tomer experience” (ACI Worldwide).

2017 is the year to turn thisaround. Experimentation across theuser-experience spectrum that wouldput holograms in the customer-ser-vice space might be the imaginativetouch to separate the meek from thesurvivors. For best results, the words“conservative” and “bank” shouldnot be uttered in the same breathafter 2017 is over.

Addressing multiple generationsOpportunities abound for banks thatunderstand how to address all thegenerations. Life-phased productsand services that present genera-tionally and appropriately intuitiveand emotionally rich customer expe-riences will win.

To stay ahead of the crowds ateach opportunity, bank marketersshould begin 2017 by focusing on

the all-important B-to-C challenge forall five generations in the market-place: Silent, born before 1946; babyboomers, born 1946–1964; Gen X,born 1965–1980; Gen Y or millenni-als, born 1981–1997; and Gen Z,born 1998–present.

While the millennials and boomersrepresent the biggest numbers (mil-lennials surpassed the boomers inpopulation in April), the SilentGeneration represents investmentstrength and the Generation Y “kids”characterize the future.

Gloves-off engagement by usingthe age-old “advertiming” (e.g., radiomessaging during commute hours)and celebrity endorsements mighthave been anathema to banks in thepast, but should be strongly recon-sidered as competition heats up tocapture market share within andacross the generational diversities.

Here’s another scary statistic:Millennials ages 25-34 are two tothree times more likely to close allaccounts with their primary financialinstitution than people in other agegroups (FICO).

Impatient and flighty, these 75.4million millennial consumers aremoving into their peak income years.Reaching them through concerts,online videos, music, sports and viatheir social groups will be key toattracting them as customers.

Keeping them will be harder. Theyneed to trust the people they dobusiness with. They demand excel-lent, frictionless transactions andthey are not a patient lot. Seniors aremore forgiving, but need education

and communication in the face ofintimidating (for them) technologyinnovations.

Revenues, profits and survivalResearch firm McKinsey & Companyindicates that the following five majorretail banking businesses are vulner-able to attack and poaching:mortgages, consumer finance, smalland medium enterprise (SME), lend-ing, retail payments and wealthmanagement.

From 10 to 40 percent of rev-enues (depending on the business)and between 20 and 60 percent ofprofits (with consumer finance beingthe most vulnerable) will be at risk by2025. Attackers will likely captureonly a small portion of these busi-nesses; most of banks’ losses willcome from margin compression asinvaders force prices lower.

As digitization accelerates, bankswill be in a battle for the customerthat will define the next 10 years forthe industry. Banks of all sizes areincreasingly susceptible to the needto not only protect market share, butalso to win customers from theircompetitors.

The balance of power has shiftedfrom provider to customer not solelythrough the application of fintech,but also because global media out-lets and accompanying social mediatransparency force everyone to beon their best behavior.

The savvier banks are choosing tokeep on top of mobile banking, fin-tech and generational trends, butthey must also offer a stellar five-staruser experience. It’s not just bank-ing. No industry, company, productor service is immune to the possibil-ity of losing customers to acompetitor that constantly innovateswith creative discipline. The bywordfor bankers (all industries, really) for2017 and beyond is “nimble.” Michael Adebisi has 15-plus years’ experience in

investment banking, financial services and con-

sulting. As director of NEWTIME Consulting, he is

currently involved in origination and management

of strategic client relationships in project finance,

fintech and systems consulting transactions

across the EMEA and U.S. For more information,

contact [email protected].

For best results, thewords “conservative”and “bank” shouldnot be uttered in thesame breath after

2017 is over.