The flight from Singapore to Boston gave me time to reflect on my recent attendance at Sibos – an annual global conference held for nearly 40 years focused on the commercial banking industry. At the first show I attended in 1983, the major challenge facing financial institutions was how to handle the mechanics of international business.
Over the years, Sibos has matured from being mostly transaction-focused to addressing emerging issues that will affect the future of banks and regulators. Today, global banking executives struggle to comply with increasingly complex regulations, risk and operational costs, the monumental shift in consumer expectations, and upstarts luring customers away with innovative technology.
We are in the age of the empowered customer. These customers expect fast, consistent service anytime, anywhere, on any channel. They also have an unprecedented ability to switch financial institutions based on level of service and functionality. Why? Corporate clients are looking for banks to not just meet their basic needs, but to surpass their expectations. A recent study commissioned by Pega found 78 percent of banks admit poor service has cost them corporate business in the last 12 months.
Many banks admit they are struggling due to a lack of digital processes and holistic visibility into their clients’ needs. Per the previously mentioned survey, 62 percent of banks report they still manually route and assign work or rekey data several times over. This is a big problem.
Today’s empowered customer and the demands they’re placing on banks can pose significant challenges, particularly when they’re also looking to new, innovative Fintech alternatives. Customers are demanding a consistent, positive, and efficient experience all the way from an initial inquiry to onboarding to long-term relationships, and banks need the technology in place to meet those expectations. Traditional banks struggle with how to approach digital transformation. They see their siloed approaches slowing them down to a point where they cannot provide the requisite levels of service, and are at the same time anxious about the disruption required to change the status quo. Those that are successful will see an exciting opportunity and embrace digital transformation instead of shy away from it and hope it goes away.
Siloed, traditional approaches need to be left in Sibos history – they won’t keep customers happy. That starts with developing a strong, service-based backbone and an end-to-end approach, from customer engagement to fulfillment. Today’s complex banking environment, coupled with empowered customers, means banks need to adopt new software and processes that will let them combat the digital disrupters. The financial industry needs to take a serious look into what’s holding them back and tackle the organizational, political, and technical changes that will make transformation possible. Banks that don’t eliminate their silos and don't put customers at the center of their business, will be eaten away by fast moving Fintech competitors that are providing better solutions – silo by silo.