The banking industry has seen unrivaled transformation over the last decade — from significant regulatory reform to the establishment of multiple digital banks changing the game for incumbent high street players.
To put the challenger banks’ development into perspective, Monzo now has over 5 million active users; Starling reported 600 percent revenue growth for its 2021 year-end; and Revolut was valued at £24bn — more than NatWest — during its funding round in summer 2021. Traditional brick-and-mortar banks are facing stiff competition from their neobank counterparts, with customer experience at the heart of the digital competitors’ value propositions.
It’s this customer experience that’s now playing a central role in decision-making. In fact, recent MagiClick research found four in five (81 percent) adults said the quality of their online experience determines who they bank with. This has a huge impact on retail banks’ strategy to attract customers. It means they must prioritize customer experience in their digital transformation plans as a key feature to invest in.
With the more established banks’ market shares legitimately under threat, there is a clear requirement for further digital transformation to underpin innovation. As banks have multiple departments, products, and services — from current accounts to mortgages and savings — many of those products are supported by different customer databases and systems, resulting in data silos and multiple views of the same customer. This can negatively impact the customer experience in several different ways.
Aging Foundations Creaking
To add to this, many traditional banks have technical debt on their hands and are still reliant on technology like mainframes, literally built in the 1960s, to process their transactions — with cloud migration proving a lengthy and complex undertaking. This aging infrastructure is also typically reflected in the systems banks use to enable their employees to perform their roles, with the complexity of change also delaying much-needed transformations in the back office.
Yet with their rivals acting and customer priorities changing, time is absolutely of the essence for traditional banks to maintain market relevance. Competitors are seeing this and ramping up the likes of cloud deployments to make their architecture as open and streamlined as possible, helping them spin out new products and services at a significantly faster rate.
Changing Regulations and Expectations
Customers expect a consumer-like banking experience — from having enquiries managed via DMs on social media, to being able to make account changes when securely authenticated through a bank’s app, without having to talk to a real human. They want speed and simplicity, with jargon-free websites and apps that are easy to navigate and use.
Changing regulations such as PSD2 and the resulting Open Banking requirements have forced banks to reconsider their entire technology architecture to ensure they can securely connect with third-party organizations for the benefit of their customers, as well as safeguarding authentication processes. With this in mind, banks need to be able to open up new partnerships quickly, whether it’s through partnerships with retailers or other financial services organizations, like Klarna or other similar providers, to differentiate themselves from their rivals.
Taking the Workforce Out of the Workplace
For banks to deliver such a seamless user experience, they need to be able to attract innovative thinkers and leaders. For many this might mean rethinking the way teams perform their roles — embracing the likes of hybrid working to bring in recruits from different age-groups and backgrounds.
By reimagining ways of working to enable employees to work in the most productive and efficient way — whether they’re at home, in the office or working remotely — banks can gain access to a greater talent pool, beyond the locations in which they have a physical presence. Doing so requires them to think differently about security though, harnessing techniques such as zero trust security to ensure that however employees are working, there is a baseline of security protocols that are always adhered to whatever the context.
With cloud architecture underpinning their workspaces, traditional banks can rival their neobank competitors by providing a transformed user experience, with customers safe in the knowledge of their industry heritage and credibility. The high street brands might remain, but we’re set to see a new era of agile and seamless services, built on the foundation of the cloud. Those who embrace it will reap the rewards for the long-term.
Learn how Citrix’s finance IT solutions can provide employees and customers with secure instant access to apps and data on any device, over any network or in any cloud environment.
