New technologies are changing the face of banking globally, like all industries, by modifying the behaviour and expectations of customers, turning the competitive playing field upside down and radically altering the way business is carried out.

The digital flux is forcing banking to advance existing sources of revenue and also generate new ones. But how can banks grow and flourish in the fast moving digital age?

To expand in an increasingly globalised and regulated environment, banks need to utilise their digital assets and skills to create innovative value propositions for their customers.

Banks have a real opportunity here to preserve and enlarge their privileged position in the value chain line-up by instigating pro-active, cross-business offers and services in real time.

>See also: Digital transformation: how banks are cashing in

The key move here is to not just focus on life events that happen to customers, such as getting married or buying a first home, but also engaging in their customers’ daily lives. This requires customer data to be used in new and disruptive ways.

How would this work? Technology literally changes the way people behave and interact in daily life. Huge amounts of information, previously unavailable, has opened up new channels – from proprietary big data to new public sources of open data.

Analysis and processing capabilities have also made remarkable leaps forward with cloud-based algorithms disseminated via digital networks. The rapid adoption of smart, powerful mobile devices has made this information accessible to users around the globe.

Using a blend of existing tools and technologies such as personal finance management (PFM), data analytics, biometrics, APIs, social collaboration or geo-location, banks must enhance how they approach customers’ everyday life moments by offering pro-active offers and services that match them.

With this goal in mind, let us visualise what a customer’s everyday life moments may be and how they can be interacted with. A scenario for you as a customer in 2019. You get a Facebook message from a friend saying he paid for dinner last night as you forgot your e-wallet. You click the bottom of the message authorising and executing a payment to reimburse your friend without even leaving your social media app.

You enter a shopping mall. Having opted in for a service with your bank you get discounts for all the stores you have visited previously. Your bank in addition provides extra-discounts at selected stores if you pay with your corresponding credit card.

Looking at your customer journey. You can see that banks have a real opportunity to engage and add value to almost every moment of the daily life of a customer. These have the potential to create new revenue opportunities.

Real possibilities – not sci-fi banking

The customers of today, just like those of tomorrow are looking for immediacy, agility and service from a financial service provider they know they can trust. Living in a 24/7 connected world – they expect their bank to fit into this paradigm.

The information age has created informed customers who actively compare offers across different platforms, including social media and collaborative tools. Banks must take on board the fact that external forces are changing the way things are done, and sometimes even why they are done.

Other customer expectations number personalised services on demand, transparent and easy-to-use products and services that can be mixed and matched to requirements. New regulations are underpinning these trends by improving transparency of fees and prices and making it easier to switch between banks, for example.

Banking customers today are often multi-banked and tuned in to new alternatives such as crowd-funding and Peer2Peer lending, led by such players as Kickstarter or Funding Circle, to support projects and communities they believe are important and can make a change.

The speed at which technology is being adopted is unbelievable, making the challenge of dealing with the ever-changing business landscape even more difficult. Notably competition has moved to so called ‘business moments’ – short every day moments when business opportunities pop up that cross multiple channels and ecosystems. An example being that you receive a consumer loan proposal just as you were considering a high ticket purchase. A digital organisation will be able to spot this ‘moment’ before it disappears or a more agile competitor seizes the sale.

Banking must integrate seamlessly into the life experience to exploit the opportunities the digital age is sowing. Transactions and interactions need to be straightforward and invisible. Banking in essence must become simple. Moving from the ‘Straight Through Processing’ standard to one of ‘Touch Through Processing’. Integrated platforms provide access to products and services outside the realms of financial services, as well as peer-to-peer advice and activities that can all engage and add value for the customer.

At the same time, core banking products must be developed that are simple, modular and transparent. Products that customers can easily understand. Products that do not involve complex penalties in the small print. This paves the way for innovative value added services such as peer advisory and wallet solutions.

Another key factor is the concept of pro-active advice. Customers expect banks to manage and optimise their cash and investments. Banks, for example, should be pro-active in advising customers to move funds from a low interest account to one that yields higher interest. Such proactive advice should be real-time and take into account the location and context. It is about banks understanding each individual’s banking profile and servicing it accordingly.

>See also: What is a true digital enterprise?

A smarter way of thinking

Banks will face challenges on the digital highway, but this flexibility and openness is possible by taking a smarter approach. Banks need to adopt cutting-edge tools, including multi-channel customer experience platforms, advanced analytics for CRM and marketing to target offers and open platforms for app stores and APIs to take part in an extended ecosystem.

This is just the beginning. From a longer-term prospective, banks will require a deeper transformation in terms of both organisation and culture to really achieve the full potential digitalisation has to offer. Main focus areas include talent acquisition, culture and a technological revolution they must be part of.

Banking must continuously and doggedly work to advance at higher velocities to meet the challenge of the digital age. Those that do will prosper.

Sourced from Ahmed Michla, Sopra Banking Software