Banks must shift their focus from being product-centric to customer-centric

Incumbent banks have traditionally been product-driven organisations. Most still see the sale of products as their central role, largely because they are incentivised to do so.

The pioneers of change within banks are those who are always thinking about the customer first

But the competition is growing in maturity while banks continue to face operational inefficiencies, siloed data, lower margins, and inflexible technology, leaving frustrated customers to seek services elsewhere.

Build the tech around the customer

A bank’s mission should be to make its customers’ lives easier. Customers want a home, not a mortgage. They want their child to go to university, but they aren’t motivated by any desire to get a loan. It’s the outcome, rather than what underpins it, that they care about.

Incumbent banks are now listening to the needs of customers but to deliver on those needs requires a fundamental shift in the way banks work. For example, having a single view of the customer at any one time, so they know what products they are consuming and how, is a simple step in understanding how best to provide support and deliver a more personalised approach.

A business problem, not a technology problem

To make genuine progress, banks need to recognise that while outdated technology is the current hinderance, the issue expands far beyond the obvious nuts and bolts.

The pioneers of change within banks are those who are always thinking about the customer first. The banks that will benefit most from transformation are those that think primarily from a business outcome perspective – “How can I serve my customers better?” rather than “I need to upgrade my technology stack.”

Banks embarking on any journey of transformation should do so incrementally. This reduces the cost and risk of change and gives the cultural shift time to bed in. Replacing the core, which could be a 30-year-old mainframe, brings multiple challenges that need specialist expertise to navigate. Many a career has been lost by trying to replace something this large in one go.

Banks tend to tackle the issue in one of two ways: either as a hardware problem that can be addressed by moving to the cloud for more flexibility and lower cost, or as both a hardware and software problem, with the view that the system must be entirely upgraded to work in an always-on, real-time world. One approach focuses entirely on the tech, whereas the other starts to build in the business outcomes.

Iterative transformation

Human connection is still vitally important. Most banking activities today are only undertaken online, which works to a point. But when there is a problem, query or complexity, people want to talk to a person, not a chatbot.

Serving customers better requires banks to improve their service as well as their offerings, with a fundamental shift in their focus from being product-centric to becoming customer-centric. One of the key areas they can break free from is the cycle of manual processes to clear the way for hyper-fast growth and real-time data insights that enable hyper-personalisation.

However, despite vast levels of tech innovation in financial services over the years, there has yet to be true transformation. At the top of the change agenda is the need for banks to modernise and replace unnecessarily complex legacy systems with a fully managed, future-proof core.

This approach ensures everything from maintenance, security, compliance, upgrades and new features are fully up to date without disruption so that all banks need to focus on is their data and delivering innovative, personalised products at speed with none of the noise, none of the complexity and at a fraction of the cost.

About the author:

Antony Jenkins CBE is the founder, chair and CEO of core banking fintech 10x Future Technologies Group.

Additionally, since April 2021, Antony has been an external member of the Prudential Regulation Committee for the Bank of England. He is also chair of Currencies Direct.

Previously, Antony held leadership positions at Citigroup and Barclays PLC, including as group chief executive at Barclays from 2012 to 2015.