Digital Innovation And New Products: Banks Need To Accelerate
We live in a world where consumers have more rights than ever before. In this era of advanced technology, customers can communicate with any person at any time.
Digital Innovation And New Products Banks Need To Accelerate
They no longer rely on traditional ways or methods to serve any organization. So banks like other organizations should plan how to serve the future customers rather than the present.
Failure to do so may put today’s banks at risk of not being able to adapt to the changing circumstances of the future.
Kevin Hanley warned the existing banking sector while discussing ‘innovation’ at a conference called the Financial Services Forum. He is Director of Design and Services at Royal Bank of Scotland.
According to Kevin, “We spend most of our time solving current problems in the banking industry. We set our goals based on how to achieve more profit. But innovation is a completely different matter. “Innovation means thinking about the future and deciding to change something overnight.”
In his presentation, Kevin gives examples that often come up when discussing economics. For example, the world’s largest taxi company (Uber) has no vehicles of its own. Similarly, the largest accommodation company (AirBnB) owns no land. According to Kevin, “Such changes are coming in the banking sector as well.”
He said, “From the beginning of bringing the currency to the market until the return of the currency to the bank, the entire system is no longer under the control of the bank. Banks are no longer needed to raise funds, take loans or trade any country’s currency. Currently around 15% of payments are made through institutions that are not directly associated with banks.”
Kevin talks about his recent discussions with Tom Chee. Tom is the co-founder of Google’s experimental lab ‘Google X’. He told Kevin, the time gap between the initial idea of Google Glass and the creation of the first Google Glass prototype was only six hours.
Even though the first Google Glass was imperfect, Kevin was moved after hearing Tom’s words. Because existing banks cannot act fast enough to innovate. In the case of banks, when implementing any new innovative idea, obstacles come from within the organization. Officials in various responsibilities initially do not see any similarity between new innovations and reality, or they remain uncertain. Second, they do not consider such innovations necessary.
This is why the Royal Bank of Scotland is placing an increasing emphasis on working with technology and innovation. They are expanding their ‘Technology Innovation’ department to stay ahead of other organizations.
Kevin believes that several of the technologies Royal Bank of Scotland is working on will impact the future of banking. One of the main technologies is cognitive computing. Through this, the computer will be able to understand and solve various problems by itself without the help of humans.
Such technology is already being used in the field of wealth management under the name of so-called ‘robo-advisor’. This technology will contribute to the service sectors of the economy, like banks, in the future.
According to Kevin, blockchain is “one of the most unique of any new technology”. Also considering blockchain’s impact on information flow, its discovery is similar to the invention of the Internet.
Kevin also pointed out the importance of biometric systems. According to him, in near future all types of security will be ensured by biometric system instead of password.
Ross Wainwright, the global head of the financial services division of the German multinational software corporation ‘SAP’, expressed his opinion on this matter. He said that fintech (fintech) or the technologies used in the financial sector, the amount of investment is increasing day by day. And this proves that the future of banking is going to change very quickly. He noted that fintech firms raised $2.3 billion in capital in 2015 through just 25 deals.
According to him, “Fintech companies are transforming various financial services through marketing systems and spending. They are focusing on innovative technologies targeting millennials as potential customers.”
And banks that want to stay ahead of the times are partnering with or buying ownership of these fintech firms. Many banks are again launching separate fintech divisions for themselves. Among banks that are already planning for the future, Wainwright gave the example of an Australian bank. He said, ANZ Bank of Australia is field testing the entire process of mortgage application so that customers can complete it through their smartwatches.
According to Kevin Hanley, the pace at which existing banks are innovating and coming up with new products needs to change dramatically.
He added, “If we don’t find new ways to innovate, we will be at risk in the future. One day it may be seen that we have built our institutions for a world that has advanced far behind us.”
Wainwright agreed with Kevin’s statement in a statement before the conference. He noted there, “Digital technology is now playing a huge role in the way financial institutions maintain relationships with their customers and employees. Therefore, organizations should focus on creating a foundation for this digital transformation.”
If financial institutions fail to think ahead and take the right steps, they will soon start losing customers. Their market share will be captured by smaller firms that have been able to adapt to the technology. And only these organizations can fulfill the expectations of the new age customers.
