1 Launching a digital brand The development of a digital brand involves two approaches. The first looks at how a bank can position the new brand differently from its existing brand. The second seeks to develop a set of digital processes that enable the bank to compete differently with this new digital brand. Many banks also tend to use a digital brand as a way of seeing how they could try new operations and processes that differ from those in their mainline brand, and to see how they could position themselves differently. To go to market differently, they need a set of digital processes so that their operations can be frictionless, and to make it easy to acquire customers in an online channel. Another important element of the digital experience is capability and how a bank might want to adapt and deliver different experiences to different personas, or to drive a different experience
Many banks also tend to use a digital brand as a way of seeing how they could try new operations and processes that differ from those in their mainline brand, and to see how they could position themselves differently. To go to market differently, they need a set of digital processes so that their operations can be frictionless, and to make it easy to acquire customers in an online channel.
Another important element of the digital experience is capability and how a bank might want to adapt and deliver different experiences to different personas, or to drive a different experience
2 Digitising processes Even if a bank doesn’t want to develop a digital brand, it still needs to remain competitive in today’s digital world. This means developing a set of digital processes. For instance, to originate an account, a bank needs to move beyond just an attractive web page on which people have to input their details, which are then printed off in the back office, with paper being moved around through various stages. Instead, the whole process needs to be digitised so that the bank can track it through the different parts of the origination process. For example, if someone orders a Domino’s pizza in the US, it can be tracked from the pizza shop through to the delivery to the customer’s home (and the customer can order it and track its progress via his smartphone). However, in most banks, it’s not even very easy to track a mortgage through the loans process, as this process hasn’t been digitised properly. So, what is a digital process and how can it be differentiated from traditional banking processes? Firstly, there’s an aspect of the process that is customer-facing and another aspect that is enterprise user-facing. However, there are various other elements to a digital process that make it unique. For example, one southern European bank has recently launched a new digital account opening process. This uses hardware such as mobiles and tablets to help the relationship managers during the process. As a result, it’s become a leaner, cleaner process for the customer, showing that digital can really enhance the customer experience
Processes and Competition
Banks are facing competition from many different areas, including non-traditional players. These
players don’t necessarily follow the rules that banks have been following over the years. They do things
differently. For instance, telcos might onboard the customer first and then start applying rate plans.
Similarly, many fintechs are creating new business processes. When banks start on the road to digital
transformation, their first efforts might involve trying to develop the right customer experience; and a
‘sexy’ user interface. They then need to compete with fintechs and other non-traditional players. But
how can they do this effectively from a process perspective?
One of the key problems facing many banks is that all of their processes were designed in the past, at a time when they had a strong and thriving branch network. The processes therefore tended to end in the branch, with an employee taking care of the necessary documents or perhaps explaining to the customer which details needed to be filled in.
This has created a major hurdle: when banks want to switch to a digital approach, they have to re-think their processes to avoid the need for any intervention from an employee. Some of the new entrants in the market are much more experienced in this area because they don’t have the same legacy as the banks – and this is one of the main reasons why it’s so difficult for a more traditional bank to simplify all of its operations.
Furthermore, in a traditional bank, the different processes aren’t always aligned across the different silos, which makes life more complicated. With an analogue approach, this hurdle isn’t a major problem, as the bank’s personnel are used to it. However, once the bank wants to avoid the need for the customer to fill in the same data numerous times, everything can become much more difficult if the processes are organised into silos, which is the case in most banks. This therefore becomes a very important second hurdle to digital transformation.
Another important issue that arises when changing to digital is that involves the use of a lot of data and various algorithms. At this stage, particularly in Europe, banks can be thwarted by local regulations relating to privacy and data protection. This is a further reason why it’s difficult to transform the digital processes – because at some point they will hit the barrier formed by local rules. This is complicated still further because every country has different rules.
Local regulations play a very important role in digitising processes. Unless there is a central repository of authentic information, the ‘last mile’ of connectivity into full digitisation is likely to remain incomplete. So, there can still be problems in terms of the geographical restraints of the market.
Price Once products are no longer stagnant piece but are dynamic, how should this affect their price? Pricing might be another interesting digital service – instead of pricing its products individually on a product processor, perhaps banks should start to change their approach and price them based on the value of the total customer relationship. When providing a relationship price, banks can use this to deepen customer loyalty by providing transparency on pricing data and the value of the total relationship.