Accelerating into the future of customer-driven banking

Financial institutions are digitising products, services and processes at speed to maintain competitiveness. US banks will invest $86 billion in tech advancements in 2023 and $112 billion by 2026, as they seek to compete with technology companies, financial technology (fintech) firms, and full-service international banks that have come stateside.

Press forward with customer-focused transformation

US consumers have so many options, that banks that don’t innovate will lose valuable business.

US banks closed 2,927 branches last year, largely because customers aren’t using them as much. Customers can deposit checks online, use services such as Venmo and Zelle for instant payment transfers, and access myriad other services via mobile phones and apps. Speed and seamless experiences rule the day.

USAA is a financial institution that serves the military, but is essentially branchless, with only four locations. The company recently redesigned and relaunched its mobile app, which is used by 10 million of the company’s 13 million members, who engage with it an average of 18 times per month. Now, members can use two taps or less to complete 98 per cent of all transactions. In addition, the app leverages data and machine learning to delight members. Examples include sending financial checklists to members who are predicted to deploy soon and delivering personalised experiences to those ending their military careers.

So, how can retail banks keep up in this forever-changed reality? Here are four steps to speeding the path to customer-centricity and unlocking the value of accelerated product innovation.

1. Organise around the customer: Banks have decades-old core systems they need to transform, as well as tangled processes and bolted-on products. They’re also typically organised in business functions, such as technology, operations and finance. To organise around the customer, banks are creating cross-functional teams focused on achieving key outcomes. These teams are given a mandate to rationalise existing offerings and reduce waste, as well as budgets and customer analytics to inform new product innovation. Schroders, a global investment manager, aligned IT teams to individual areas of the business, adopted agile practices across the organisation and accelerated project release by 20 per cent in just nine months. In addition, the number of projects seen as at-risk has fallen by 20 per cent, while the business satisfaction score has increased by 20 per cent.
2. Create powerful data analytics: Financial services companies typically have multiple siloed data sources, meaning that business teams wait for days or weeks to obtain the data they need for modelling. Banks are creating a single version of truth: integrating data into a data lake, cleaning and rationalising it, and running analytics on customer interactions. They’re also setting up appropriate governance structures, including centres of excellence, to make data mastery a core competency. Finally, by deploying data visualisation dashboards, IT teams can empower business users to generate their own analytics and reports. A recent report from Dressner Advisory Services found that 62 per cent of respondents across verticals say self-service business intelligence is critical or very important to their organisation, as it enables teams to innovate faster.
3. Automate manual processes: Banks are using cloud services and no-cloud robotics process automation (RPA) platforms to free their people from the drudgery of repetitive, manual processes in business functions ranging from human resources to accounting and payroll. A leading insurer is using RPA to transform batch processing for transaction reconciliation, eliminating the 24-hour shifts of staff that have been required to maintain this important, but highly routinised process.
4. Develop new skills: Leaders and teams are also transforming, to develop the new skills required to build a growth-oriented culture and make decisions amidst uncertainty. A Mexican bank is holding executive masterclasses on what the leaders of tomorrow will look like and how they’ll operate. The bank is teaching its executives how to embrace growth versus fixed mindsets; model servant leadership; and create a culture of psychological safety where its teams aren’t afraid to experiment and fail fast on the path to developing high-value products and services. The bank is also making operational changes to ensure new beliefs and behaviours stick.

Differentiate services in a digital world

When US banks adopt an intense customer focus, powerful data analytics, automated processes and flexible leadership skills, they are able to interpret changing demand patterns, zero in on what customers want and speed product innovation. Leaders at these retail banks know that the faster they can take products to market, the more customers they can acquire and the more revenue they can drive.

Leaders can learn from companies like USAA. Even though the company has a captive audience of former and current military members, USAA is well along its path to becoming a mobile-first business. It has modernised its technology to use industry-standard components, so that it can do native app development and deploy code more quickly. USAA expects to contain all experiences within its app in the next 18 to 24 months.

It’s time for all US retail banks to accelerate into the future with capabilities that will stand the test of time.