Banks must concentrate on harnessing a range of digital technologies or risk losing customers to a new wave of competitors, according to a new report by the BBA and Accenture.
Called Digital Disruption, the report features interviews with leading experts from banks setting out their vision of the future and raises questions for regulators about when a non-banking firm should be overseen in a similar way to a bank.
It urges regulators to ensure that all organisations offering banking services are regulated in the same way to give consumers certainty that they are properly protected wherever they choose to bank. Policymakers must also be minded to the threat posed to financial stability from providers of banking services not covered by existing regulation. The report argues that regulators have to take care not to hamper either innovation or competition.
Peter Kirk, a Managing Director in Accenture’s Financial Services operating group and co-author of the report, said: “The traditional model of banking is under threat from new competitors and is subject to increasing amounts of regulation. Paradoxically, the digital revolution is opening up new opportunities for the banking industry. Digital is enabling banks to provide much better, more personalised services to customers and at the same time cut costs dramatically.
“The UK banking sector has made some good progress in grasping the opportunity that digital has created, but the pace of change will only accelerate and amplify the disruption.”
The new report sets out six recommendations:
Anticipation: Innovative entrants are developing lucrative products and services. In order to remain relevant, banks must look ahead to spot those parts of their business models more vulnerable to these entrants.
Speed: In order to meet rising customer expectations, banks need to increase the speed of innovation.
Branch evolution: The role of the branch needs to evolve towards offering seamless customer services.
Harness data: Exploring customer appetite for banks to use the data available to them could open a new channel of communications between banks and their customers.
Invest: In the digital age, customers expect transactions on their current accounts to be virtually instantaneous. So banks need to continue investing in their IT platforms to meet customer expectations and avoid IT outages.
Culture: Change the internal culture to one which is more agile and innovative.