<<<We are on the cusp of the most profound changes in banking since the Great Depression.>>>
Sort of an old article, but still very relevant.
pwcglobal.com
Creating tomorrow's Leading Retail Bank
Online environment offers 'make or break' challenges for retail banks
21 June 1999 - The Internet holds the key to the successful retail bank of tomorrow. That is one of the fundamental findings of a global study, Creating Tomorrow's Leading Retail Bank, released today by PricewaterhouseCoopers and the Economist Intelligence Unit.
"We undertook this study because we are on the cusp of the most profound changes in banking since the Great Depression. Leading retail banks around the world are striving to protect market share in the face of unparalleled challenges. Several converging forces are driving them to adjust their growth strategies and develop new operating capabilities. The winners will be the ones that move quickly toward the new online banking model. And those banks which dismiss the Internet as just another delivery channel will miss the boat," Rahoul Chowdry, Banking Sector Leader for PricewaterhouseCoopers in Australia, said.
"But while this is a long-term global trend, a real challenge for Australian banks in the shorter term will be balancing the drive to this new model with the immediate needs of their customer base. Not all their customers will be instantly comfortable with online offerings and the transitional phase will have to be carefully handled."
Financial Services partner Richard McManus said: "After compiling this report, it is our belief that the Internet will revolutionise how banking business models around the world are structured, as well as drastically alter the cost structures to support all this. The Internet will change how banks communicate, both internally and externally, and how they manage employee and customer relationships.
"The banks that grasp this and act quickly will be able to achieve 'virtual customer intimacy', using this newest technology to establish an intimate, personalised association that is based entirely on the customer's terms. The banks that don't understand and act on this will be left behind.
"As Robert Hedges of Fleet Financial Group says in this report, 'All the great work done by banks to build brand value will not be able to offset what search engine technology is about to deliver'."
The report points out that globally banks have long been dragged along by technology. In the past, when banks decided they needed to upgrade or install new technology, they simply bought it. In many ways, they were behind the curve as an industry, but that wasn't a major concern. That's not going to work well for banks looking to lead the industry in the next three to five years. The explosion of the Internet and real-time technology, coupled with consumer readiness to utilise these channels, has outpaced the banking industry's delivery capabilities. For the first time ever, technological shortcomings are increasingly costing banks customers in a significant way.
"Australian banks have generally been much quicker to embrace new technologies than many of their global counterparts and today - with the possible exception of a handful of top US banks - they compare very favourably in technology terms with the rest of the banking world," Ian Hawthorn, PricewaterhouseCoopers' Financial Services partner, said. "Australian banks have also been very successful in using new technologies to reduce their cost structures.
"We should be clear that the term 'banking technology' means a lot more than a customer being able to bank on-line. We are talking about every aspect of client service and product delivery (ATMs, web access, defection protection, call-centres, and so on), the ability to effectively cross-sell other services, the ability to keep favoured customers content and allowing the interaction between automated process, the back office and branch employees to work smoothly. More importantly, we are talking about the ability to create a highly personalised interaction for a consumer or business customer, uniquely crafted for them, delivered at a low cost."
While the global study showed that US banks are currently leading the charge online, ahead of European and Asian banks, Australian retail banks are not far behind.
"This is one area where size of market or geographic distance need not be a factor. Australian retail banks can - and I predict will l- react quickly to these challenges.
"As we pointed out in our analysis of the four major retail banks' half-yearly results recently, smart banks will use new technology to get closer to their customers, to see, track and treat them as individuals. They have been sitting on a goldmine of information about their customers for years but this information has not been converted into knowledge. Now they are working hard on ways to use that information to better tailor and deliver their products and services," Mr Chowdry said.
PricewaterhouseCoopers' financial services industry group created the Tomorrow's Leading series to examine the industry trends facing financial services institutions and what successful companies will need to do in order to sustain profitability in the 21st century. In addition to Creating Tomorrow's Leading Retail Bank, the series includes Tomorrow's Leading Life Insurer, Tomorrow's Leading Investment Managers and Tomorrow's Leading Investment Bank.
PricewaterhouseCoopers is the world's leading professional services organisation. Drawing on the knowledge and skills of 155,000 people in 150 countries, we help our clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance. PricewaterhouseCoopers refers to members of the worldwide PricewaterhouseCoopers organisation.
The Economist Intelligence Unit is a member of The Economist Group, the global communications and information firm and publisher of The Economist. For more than 50 years, the Economist Intelligence Unit has been a leading provider of information on global business and financial developments, economic and political trends, government regulations and management practices. The Economist Intelligence Unit's network of more than 500 analysts, consultants and researchers provides reliable and accurate intelligence to a client base that consists of the world's leading businesses, financial institutions and government agencies. Its home page is located at www.eiu.com. |
