Customers expect clear communications, good web sites and mobile functionality from their financial firms. They want respect and help with their financial lives, and most U.S. #banks don’t rank high in those areas.
Financial Technology
Countries across the world are gradually following in the footsteps of #Open #Banking in the UK and PSD2 in the EU, given the vast future potential offered by these schemes. In #Australia, the federal government has agreed to implement the recommendations made by the Open Banking Review team chaired by Scott Farrell, for the regulatory #framework under which an Open Banking regime would operate. And initially, the four major #banks in Australia have been mandated to make banking data available to TPPs (third-party providers) by June 2019.
It is designed to give customers more control over their information, leading to more choice in their banking and more convenience in managing their money—thus resulting in more confidence in the use and value of an asset mostly undiscovered by customers: their data.
One could consider the UK’s Open Banking technical specification as an example approach. Specific API design principles—such as redirect-based authorization and authentication flow—have been taken as the starting point for setting data transfer and authentication standards in Australia, though these would be adopted only with appropriate considerations.
Contrary to PSD2 and UK Open Banking, Open Banking in Australia is part of the Consumer Data Right. The CDR will give consumers greater power to control their data—and banking is the first sector in which it will be applied. So, the focus of all the developments is to form a single, broader framework which is interoperable across sectors apart from banking. The Farrell Review has given special consideration to how Open Banking is going to work with existing laws and systems such as the Privacy Act, Competition and Consumer Act 2010, and Anti-Money Laundering law to avoid any uncertainty and ambiguity.
Australia has taken a very structured approach in planning for Open Banking to work with existing regulations and incorporating lessons learned. It has also addressed considerations such as customer education, dispute resolution, the ACCC breach reporting obligation and post-implementation assessment to make Open Banking more effective in Australia.
The post Open Banking framework comes to Australia appeared first on Accenture Banking Blog.
PREMIUM – More U.S. #banks are awaking to the idea that supporting #realtime #payments (RTP) could add value not just to their customers, but to their revenues. A new report titled “2018 Global Payments Insight Survey: Cross-Vertical,” from ACI Worldwide and Ovum released today shows that 86% of banks expect to see improvements in their […]
Bank Innovation
#Finastra, which was formed from the union of Misys and D+H, and calls itself the world’s third largest #fintech company in the world, has acquired American software company #Malauzai in an attempt to strengthen its #foothold in the American banking market. The #acquisition gives Finastra access to Malauzai‘s over #community #banks and FI clients and […]
Bank Innovation
PREMIUM – The #mobile app is at the top of most #banks’ digital strategy. This is especially true for José “Pepe” Olalla, head of business development at #BBVA Compass, the U.S. subsidiary of the Spanish bank BBVA S.A. At BBVA Compass all innovation initiatives fall under Olalla’s business development department. And among the various innovation […]
Bank Innovation
PREMIUM — APIs — application programming interfaces — are still in their early days in banking, but are starting to show their promise. Data is flowing from your account to third party service providers in your mobile device and beyond, so you are never far away from knowing how much money you don’t have. APIs […]
Bank Innovation
17 percent of US banking revenue now comes from truly #digital banking relationships
Modern metal starting blocks for sprinting—complete with offset footrests—first appeared at the 1948 London Olympics. This innovation both reinforced the benefit of a crouching start position and also signaled the end of athletes digging holes for their toes in the dirt to get a solid foundation to push off of. It demonstrated that when something truly new comes along, it can make the old ways immediately obsolescent.
After years of hype, but little real change, we are now seeing the truly new arrive in US banking, and it is beginning to make the old business model look obsolete. Accenture research shows that 17 percent of US banking revenue now comes from truly digital banking relationships and that number is increasing quickly.
In response, most incumbent US #banks will likely default to trying to be a better version of themselves and adopt a digital relationship management business model that seeks to be most things to most customers, and relies on a mix of fees and balance sheet spreads for income. As digital advice and increased efficiency squeeze fees, more attention is going to focus on net interest margin, particularly in a rising rate environment, where there will be increased competition for both assets and liabilities. As we enter this transition it begs the question, “How #well does your #pricing #strategy fit the digital #economy?”
It’s a question more than 80 banking executives in North America explored through dialogue and demonstrations at the recent Banking Growth Forum 2018 jointly hosted by Accenture and our partner, Nomis Solutions. We concluded that a product orientation when it comes to pricing will no longer drive success in the world of truly digital economy. Instead, building and delivering a true digital relationship manager strategy will mean a level of pricing sophistication that is challenging for most banks.
The fact is that many banks are culturally and organisationally tethered to product-based pricing, as it fits easily with banks’ traditional internal organisation and allows effective aggregate balance sheet management. Yet, it is also limited when it comes to optimising margins and truly differentiating the customer proposition—two key elements of running a successful digital relationship manager business model.
Even in setting simple cross-sell pricing, banks need to utilise a customer profit view to target the retention of their most profitable customers. And while cross-selling usually gives customers some choices like product packages or a rewards wrapper, it is still based on selling products. True relationship pricing on the other hand requires sophisticated lifetime value analysis to shape decisions, drawing on vast stores of customer and transaction data to offer the right product at the right price through the customer’s preferred channel. Rather than products sold, it hinges on promises delivered, backed by accountability, transparency and explainability—a notion that typically runs contrary to the traditional organisational structures of banks.
As industry change accelerates, banks will need to offer something genuinely new in their pricing. Those that will thrive will enhance their existing capabilities to advance along the pricing and offer management maturity journey—pivoting from a product focus to a real-time, intelligent, customer-relevant, promise-centered approach. That will be a strong foundation on which banks will be able to sprint forward and remain competitive.
For more on this topic, I invite you to read our report, Ready, Set, Next: A Guide for Banks in Advancing to In-The-Moment Pricing
The post How well does your bank’s pricing strategy fit the digital economy? appeared first on Accenture Banking Blog.
PREMIUM – Millennials have Venmo, #banks have #Zelle, but what’s the P2P payments preference for #credit #unions? It’s not that credit unions cannot connect to the bank-backed (and bank-owned) payments system that is Zelle. In fact, credit unions like America First Credit Union and Mountain America Federal Credit Union are already connected to Zelle’s platform. […]
Bank Innovation
PREMIUM —In #2013, Bank Innovation asked readers to predict the #state of innovations in #banking for 2018. Data collected in the September 2013 Bank Innovation survey showed that our readers had excellent foresight into the current innovations and challenges of the #fintech industry. For instance, one respondent posted that “customers will interact with their #banks […]
Bank Innovation
Around the world, #banks are engaged in the transition to what we at Accenture call “the New”; they are undertaking initiatives to digitize operations, reduce costs and create previously unexplored revenue streams.
The transition to the New is based upon the twin pillars of #technology and #talent. The technology—in the form of cloud, big data and analytics, #blockchain, robotic process automation, machine learning and artificial intelligence—is readily available, and although it may not be easy to identify the right solutions and to graft these solutions onto the existing computing and data framework, it can be done.
However, as banks are discovering, it is just as difficult to build and maintain the talent pillar as it is to develop or acquire needed technology. Banks are competing for new talent, not only with other banks but with technology start-ups, internet giants and a variety of digital players. Indeed, digital players interested in making inroads into the banking market are poaching talent from the banks themselves.
Banks have not helped themselves on the talent front with their unrelenting focus on cost reduction. They have announced staff reduction objectives connected to plans to digitize and automate. This may please shareholders, but it can hardly be expected to please staffers worried about being displaced by digital technologies. Banks will be unable to compete with the Googles and Apples of the world if they are not seen as valuing the major asset (along with capital and liquidity) embodied in the competency and customer focus of their people.
Banks have not yet come to grips with the full impact of digital transformation, including automation and artificial intelligence. In my next blog, I will look more closely at how artificial intelligence will affect banks, and how banks can create a powerful new force by combining AI with human insight and judgment.
For further reading about the impact of technology on the workforce, read Whose Customer Are You? The Reality of Digital Banking.
The post Talent and transformation: New strategic approaches for banks appeared first on Accenture Banking Blog.
Reply