The New Retail Banking Imperative: A Segment of One

These new factors will sit side-by-side traditional ones but ultimately will grow in importance.

2. Developing a true 360 degree view of the customer. Upgrading core systems; outsourcing key activities/ functions (IT, marketing, data mining, etc.); moving to ‘the cloud’; implementing new software tools and systems (RPA, AI); or any combination of these—whatever investment is needed to get a true picture of customer preferences and needs is essential—and it needs to be proactive. Increasingly, data from external sources will become more critical. Therefore, any retail banking organisation needs to have an executable strategy whereby it is appropriately imbedded into multiple social media platforms so that the new lifestyle data continually permeates decisions around customers.

3. Blending of retail banking with traditional retail (consumer) industries. Partnering with core lifestyle companies (e.g., auto, beauty, fashion, food, travel, sports, etc.) will become the norm for retail banks. This will need to occur from both a marketing and delivery standpoint. As part of this new business model, retail banks will also need to become much more embedded in e-commerce platforms beyond simply acting as a payment provider/conduit.

4. Employing staff with new skills. Turning all front-line (as well as many middle and back-office) staff into digital experts and champions will become a core operating requirement for all retail banks. Also, banks will need to change the way all staff (virtual or otherwise) interact with customers--understand needs first, sales after.

In addition to the above, there are some core operating essentials for retail banks--all basic transactions to e-channels, simple products, no paper, significant reduction in cash usage, new branch formats, etc. Also, in this new connected world, all banks must ensure top-class cybersecurity and data privacy.

EXECUTING THE VISION

In my view, what separates ‘the good from the great’ is execution—and execution which truly engages the employee population. Therefore, the key to winning in this race comes down to how well and how quickly any retail banking business can implement this new way of interacting with the customer. Therefore, retail banks must:

• Ensure unwavering and vocal senior management support of the vision.

• Create and sign-off on the investment needed (technology, training, hiring, marketing, and so on).While this seems obvious, many ‘great’ ideas are discussed and agreed to—but never funded. While it may be imperfect, the roadmap and business case needs to be put up-front in the transformation process.

• Craft and implement an organisational model which effectively supports the right balance between truly understanding customer preferences and potential ‘over-engagement’.

Can retail banks really create and implement this new model and way of thinking? Absolutely. In fact, we bankers have no choice. The banking/financial services industry does occupy a unique place in most economies and people’s lives. Granted, banks have lost some of that leverage in recent years but still retain much of the regulatory advantages and the customer intimacy relationship which comes with dealing in money and wealth.

In this highly competitive race, surely the leaders shall dominate the followers. This shifting of the traditional view of the customer to this customised view is a game-changer. It is the paradigm shift which will determine the winners and losers in the retail banking space over the next decade.