The irresistible rise of digital banking

Clayton Locke, Intelligent Environments

The banking industry, integral to our commercial and personal lives, has always evolved with the times to embrace new challenges and consumer attitudes. Technology plays an obvious and increasingly important role in this evolution, writes Clayton Locke, chief technology officer at Intelligent Environments.

Inventions such as the ATM and credit cards launched in the 1960s, internet banking services in the 1990s and now mobile banking and payments, have all fundamentally changed how the work of banking is done. A major driver in banking industry change is the consumer demand to be better connected to their money. This demand is now supporting a new breed of digital banking services that is coming to the fore. How can banks benefit from the new types of customer interaction enabled by digital serices; and how will banks stave off competition from more digitally-advanced retail and telecoms companies?

Eric Schmidt, executive chairman of Google, said recently that “everything significant we are working on is around mobile”. This statement rings true for the banking industry. There is increased attention being put on mobile financial solutions that can be used by consumers whenever they want and wherever they are. It is a form of technology that will become more prevalent and critically important to banking over the next three years.

A poll carried out in November by mobile advertising company Verve Mobile, showed that 63% of US consumers put the smartphone as their overwhelming platform of choice for banking. The desire for mobile-led banking solutions is already playing a major role in vital aspects of everyday consumer life – something that will not slow down. Near Field Communications devices, for example, are now being trialled at high profile events in the UK. There is been a steady uptake of mobile banking solutions amongst UK consumers and the number of registered mobile banking users is expected to treble by 2015. Yet despite this demand and the initial success of mobile payments and banking solutions, banks are still failing to maximise the true potential of these transactions.

The challenge many banks face is making their mobile solutions truly useful for their customer base. Mobile banking represents a new way of interacting with banking customers. Where desktop based internet banking moved the relationship from the branch to online – mobile takes it on the move. Banks must now connect money to people through a channel determined by the customer. Retailers and mobile operators have made significant strides in changing their business models to take advantage of these new opportunities. There are lessons that banks should take from the success of these sectors to ensure similar, high value propositions can be adopted by the banking sector.

For example, retailers have used mobile as a key to unlock a treasure trove of information about customers’ individual needs, harnessing this information via a joined up proposition that creates bespoke offerings direct to a customer’s device. The technology enables consumers to remain always connected, always on, when it comes to their relationship with their bank.

Consumers increasingly demand an end-to-end experience and greater consistency when accessing their bank accounts via their mobile, their iPad, their PC, or even their Smart TV.

Modern banking is about connecting people to their money more quickly, accurately and efficiently than ever before. As banks begin to place the focus more firmly on what customers want from mobile, banking will evolve a very different business model from what exists today. The banks that become the earlier adopters of this new technology will undoubtedly be best positioned to lead the industry forward.