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Opinion > Masthaven

Digital banking: what challenges lie ahead?

Simon Furnell, chief operating officer at Masthaven | 17:04 Wednesday 6th June 2018

The banking industry is undergoing one of its most significant periods of change as digital banks challenge the older, established institutions with new technologies and a new mindset towards customers’ service expectations.

Like all revolutions, it is unlikely to be without a few bumps along the way.

What stumbling blocks do the new specialist, digital banks need to negotiate if they are to flourish?

Are we machines – or are we humans?

Fans of pop culture may recall how in The Prisoner – that great, short-lived TV series of the late ‘60s – Patrick McGoohan’s character said: “I am not a number. I am a free man.” Or how in Charlie Chaplin’s 1940 film The Great Dictator, his protagonist – a Jewish barber living in a dictatorship – warns prophetically: “More than machinery, we need humanity.”

We are living in the age of the machine, one that is evolving day by day and has significant knock-on effects for customer experience, the way we bank and the way we lead our lives.

In digital banking, this is best illustrated by automation – the use of technology instead of human beings for all sorts of facets of the banking relationship.

The plus side: it can be efficient, largely error-free and relatively cheap.

The down side: rather than bring us closer to the consumer and make their experience simple, automation can place considerable distance between us and make their online experience cold and distant rather than warm, bespoke and personal. As consumers, we expect it to be there 24/7 with no interruption and when it goes wrong, we tend to be vocal.

Technology is important, no doubt. But it’s crucial that those of us in newer banks don’t forget about the human experience when it comes to customer service, transactions, complaints and a whole range of other vital interactions. How we act and react when things go wrong is what sets good businesses apart from great ones. As great as technology is, we must not forget that there is a human being at the other end of every transaction.

Cyber risk

Reliance on legacy systems, rapid adoption of new technologies and a much more connected digital ecosystem – big data, the cloud et al – make mitigating cyber risk an essential in digital banking.

That’s not to say many banks aren’t prepared – in most organisations, cyber risk is a business priority backed with investment – but given the ever-changing, unpredictable threat it poses, banks cannot rest on their laurels.

It’s important to think about cyber in the context of change. Digital banks are tech-driven, so cyber risk should always be considered when embarking on change – whether that’s adopting a new system, switching to a new transaction platform or upgrading old equipment.

And rather than react after the event, banks need to continually pre-empt, thinking about cyber security before making key decisions around changes to systems and processes.

Digital vision

Lots of banks claim to be ‘digital’. But when you scratch beneath the surface a little, what does that really mean? Being digital is about much more than having a ‘cool’ website, a social media strategy and an app. In time, consumers will sort the wheat from the chaff, identifying those banks who truly are digital and human, ignoring those who are superficial.

Digital banks need to have a fully thoughtout service as well as technical proposition if they are to thrive. They also need to always be striving to improve, not only keeping on top of trends, but setting the digital agenda, meeting the core needs of their audience in the process. Digital can make an organisation scalable and efficient, but it is the customer and their needs that remains the key to digital sustainability – and the key to success.

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