Customers with connectivity at their fingertips are demanding cheaper, faster, and better financial products, services, and experiences.

Not that long ago, futurists predicted human bank tellers would all be replaced by bots, digital advisors would put financial advisors out of work and customer service centres would go dark as cloud-based chatbots took over the customer interaction.

You don’t need a crystal ball to predict that Financial Institutions will need to undergo digital transformation to keep up with consumer demands. It’s about innovation and competitiveness. Companies willing to make more radical changes will be better positioned to lead the financial services industry in the years ahead.

Where is it all going?

Technology is enabling Financial Service providers to improve customer experience and allow for a more customer-centric approach. Anticipating what customers may need or want in the future is a difficult challenge. For example: Automation improves efficiency and can offer customers a better transactional experience however there is a fine balance between implementing full automation and managing customers’ expectations.

In fact, data suggests that most customers want the benefits that come with automation (speed of execution, increased efficiency & enhanced security) but still prefer some level of human interaction. Being able to engage with an actual person gives customers the reassurance that there is still a level of accountability. 

Big steps needed

Some banks are modernizing and becoming better however they are unable to change quickly enough or flex far enough to keep up with digital disruptors. Especially when it comes to things like digital products, modernization, customer experience, personalisation, transparency and pricing.

This is where FinTech’s have an advantage over banks. They can easily re-evaluate, re-imagine and re-define their business models and operating strategies for long-term sustainable growth and implement these things all quickly with very little risk to their businesses.

A strategy for success

With the pace that technology is changing the financial services sector, traditional banks can no longer afford to conduct business the way they always have. They need to seriously start thinking what they want to become and how they can get there.

A number of traditional banks have purchased digital banks as a way to acquire technology quickly. Scotiabank acquired digital bank ING Direct, Nordic bank Nordea acquired Gjensidige Bank and Royal Bank of Scotland (RBS) recently purchased a 25 percent equity stake in digital start-up Loot.  South African banks will need to follow suit if they intend to keep up with the digital revolution.

The question that banks have been asking themselves for years is: How do we deal with industry changes driven by rapidly evolving customer expectations, emerging technology and new digital challengers when all we have is bureaucratic processes, conservative mindsets and legacy systems to work with. Things that have worked in the past but aren’t fit for the future.

For now, the UK is leading the way in terms of innovation in the financial services sector. British financial organisations have been investing in technology long before the world went into lockdown.