A new era of Engagement Banking

I recently had the pleasure of participating in a joint interview with ausbiz alongside a couple of luminaries from the mutual banking space: Steve James, CEO of Teachers Mutual Bank, as well as Greg McKenna, CEO of Police Bank. While they provided many invaluable insights into the mutual banking space, our discussion also explored several of the trends we are seeing across the wider banking and financial-services industry.

My fellow interviewees agreed that the future is digital and collaborative. The Covid-19 pandemic has changed the ways we conduct banking, and consumers now expect and demand digital services. Banking players must make the necessary investments or cooperate with fintechs to be able to develop and offer innovative digital solutions.

Technology for technology’s sake doesn’t cut it anymore; it all comes back to the customers. Banking players looking to get ahead must harness digital tech to create truly engaging, compelling customer experiences and meet their ever-changing needs. The possibilities offered by automation are impressive, but as I emphasised in the interview, customer relationships cannot be automated.

The good news? Australian financial institutions have already taken this to heart. According to a recent Forrester report commissioned by Backbase, 64% of Australian consumers felt it is critical for banks to offer digital money management tools and services. 92% of banking decision makers surveyed said that implementing or expanding financial wellness would be a priority for their organisations in the coming months. And 90% said that developing money-management tools would be of great importance to their bank.

The evolution from personal financial management (PFM) to digital money management is clear, and new and old players like CommBank, Apple Pay Later, and Monzo are battling it out in this space. Another key trend we discussed was how technology is helping to eliminate friction for both organisations and for their customers. Businesses are now able to bring their solutions to market at unprecedented speeds, while customer onboarding processes can be shortened from days to mere minutes with a similarly minimised number of steps.

This digital wave has been a long time coming – we’ve seen how innovators like Airbnb and Uber use technology and platforms to dramatically disrupt the hotel and taxi industries, respectively. While many banking players still feel held back by legacy infrastructure and technology, I truly believe that the disruption that was introduced in the last couple of years is a once-in-a-generation opportunity. Banks are now able to create some real changes in the industry, with those offering inadequate digital services at serious risk of being left far behind. An IDC study released earlier this year found that digital banks had grown their customer bases at 3 times the rates of traditional banks.

This brings me to my final point, which we alluded to during the interview, but we didn’t have the time to fully explore: the rise of platforms in our everyday lives. Banks should be taking inspiration from the disruptors of other industries, such as Netflix and Spotify. Consumers have embraced these platforms with open arms, valuing the holistic experiences that these platforms offer for specific segments of their lives, whether it be content consumption or transportation.

Similarly, consumers are looking for tools that will give them access to their personal finances anywhere, at any time. I firmly believe that the future leaders of the banking industry will be the ones who figure out how to offer such platforms. These organisations will be the ones to go beyond the simple digitisation of products and services to craft truly disruptive customer experiences. In the process, they will build a bank that people love.