Sustainable experiential banking – are banks ready?

Pandemic. The most used term of the past 18 months has permanently changed the banking landscape. Within a sector already facing low interest rates and intense competition from new-age players, the global health crisis brought struggles to a rapid boil. So, in H-2 2020, traditional firms quickly closed branches, optimized their workforces, exited non-core businesses and geographies, reduced discretionary spending, and hit the transformational reset button faster than ever. Early results looked promising.

By H-1 2021, banks reported high profits, thanks to an extensive injection of public money and record-low corporate bankruptcies. However, customer satisfaction, engagement and, retention rates remained lackluster at best − not a good sign for future revenue.

Banks continue to lose customers to agile competitors as they fail to sync their strategic priorities with customer demands for convenience and personalization.

There is simply no way around it. Banks must deliver superior customer experience (CX).

• Capgemini’s 2021 World Retail Banking Report found that more than four of 10 customers face medium to high friction while engaging with their bank (loan application, problem resolution, advice, information queries, and more.)

What is stopping banks from delivering empathic banking? The report found that only ~30% of banks take periodic steps to understand their customers’ needs.

Fewer than half of banks periodically capture Voice-of-Customer insights

Capgemini’s report found that bank-customer perception gaps are widest around omnichannel experience, environmental, social, and corporate governance (ESG) initiatives and product/service fees.

So, are banks prepared to adapt, lead, and thrive in the Banking 4.X era?

Long-term sustainable growth powered by efficient platforms and customer centricity make up the foundation of Banking 4.X. Success enablers include data, embedded finance, and an intuitive digital CX layer.

The roadmap to this new banking era includes mileposts such as adopting Banking-as-a-Service (BaaS) solutions. This way, banks can monetize their business expertise by sharing their regulated infrastructure and distribution network while leveraging FinTech innovation to boost CX, last-mile delivery, and efficiency.

• In fact, 70% of banking executives we interviewed said they believe BaaS will help them innovate faster, expand their customer base, and diversify revenue streams.

Let’s not forget that customer sentiments and preferences toward banking with BigTechs, retailers, and mobility service providers are changing.

To prepare technologically for Banking 4.X, banks must evolve legacy systems toward core modernization and, in parallel, embark on a fast-paced cloud-first API-enabled digital transformation journey.

Begin with a robust and resilient digital foundation

A single, 360-degree customer view is essential to hyper-personalize services at the right price and through the right channel. Timing is ideal, as customers have matured about the use of their data.

• 86% of customers say they are ready to share their data.

And, by leveraging open banking, firms can enrich their customer knowledge by accessing alternate data. The ability to leverage data is a Banking 4.X competitive differentiator.

Customers will share data to personalize their banking experience

Building an intuitive, data-centric, and intelligent digital CX layer is fundamental for an interconnected ecosystem. Banking will be invisible in the future, and as we transcend to Banking 4.X, banking transactions will happen seamlessly, with much emphasis on value-added financial and non-financial products and services.

In addition to generating efficiencies, BaaS has the potential to address financial inclusion, as banks can leverage ecosystem synergies to make banking universally accessible. For instance, banks can become agents of change and reach a broader range of customers by innovating existing credit risk models and using behavioral and contextual customer data.

Banking will be ecosystem-integrated, customer-centric, invisible, and socially responsible. So again, I ask, are banks ready to lead and thrive in the Banking 4.X era?

Elias Ghanem

Expert in FinTech, Insurtech, Payments

I am the Global Head of Capgemini’s Financial Services Market Intelligence Group. I am responsible for Capgemini’s global portfolio of financial services thought leadership initiatives, with a focus on an outside-in perspective, including the renowned yearly World Reports series and Top Trends books in Financial Services. I oversee a team of strategy consultants and sector analysts who deliver a wide range of strategic research to help Capgemini’s financial services clients across the globe to address complex related to the future of Banking and Insurance.
I was previously the Chief New Technologies Officer (CnTO) and FINTECH Lead for Continental Europe at Capgemini FS, with the mission to closely work with the Financial Services Institutions on their major challenges of digital transformation. My focus has been on engaging with FinTechs and InsurTechs scaleups to actively and efficiently embed them with Capgemini Financial Services clients. For that purpose I launched the Capgemini ScaleUp Qualification program, an end-to-end methodology to evaluate scaleups maturity to effectively collaborate with corporate. By end of 2019 more than 70 ScaleUps around the globe were already qualified though this unique-in-its kind program.
I am a Payments expert, with 20+ years of industry experience at Visa and PayPal with roles spanning from APAC Head of Visa Consulting, up to PayPal regional MD in South East Asia & India and Middle East. Since 2013, I am a serial Fintech entrepreneur, launching Telr (www.telr.com) in Singapore and Dubai, an online Payment Gateway, which has won the “2014 Start-up of the Year” award in MENA. I advise several high-growth and disruptive payment startups in Washington, Singapore, Barcelona, Beirut and Dubai and sat at the Board or Chairmanship some of them. I am a certified “Scaling Up” coach; an inspiring thought leader, and enthusiast speaker on the future of payments in Emerging Markets.
Elias has lived in US, LATAM, APAC, Middle East and Europe and is fluent in English, French, Spanish, Portuguese and Arabic.