Why innovation in the banking industry is critical

Ecrit par| Finance

Numerous industries have already been revolutionized by the digital shifting while the banking industry has been lagging behind. Originally a sector that has been considered as complex, secretive, sedentary and composed of high barriers to entry, it now sees young actors battling for their share of customers. The banking industry is in a dire need of change but what do the customers currently want or need from a bank ?

A bank to an individual is a service company, handling one of the most valuable resource of our current society. Therefore, any individual has a strong emotional bond to his money and has great expectations. Before the different financial crises, the banks were not to be questioned by the individuals as they were regarded as their safe and therefore highly respected. However, due to the financial turmoil in the past 30 years and greed of a few executives, this trust has been lost and has allowed new competitors to enter the market as a change was required by the customers.

The services that customers want are still the same than fifty years ago, incremented by the new needs of our digital era. Customers were expecting the bank to establish a strong, long-lasting and trusting relationship. They wanted to know that their asset was safe and well-handled.

Currently, the customers comprising the generation Y and Z are asking on top of that for a radical transparency/simplicity in terms of fees and contractual obligations from both parties and they also want a quick and reliable execution of all transactions/orders. Moreover, having access to a lot of information for comparison purposes, customers are becoming less loyal and are therefore asking for a pertinent added-value/feature from the bank. They expect the banks to implement a strong engagement pattern with them. They want to feel empowered. As a company service, the main purpose of the bank should always be: make the customer feel special and establish a trusting relationship that will render the individual loyal (no matter the banking account size). Luckily, thanks to automatization and digitalization, this is highly possible and should be implemented.

It is time that banks serve their customers rightfully. I’m glad to see that actors such as Revolut are bringing a change to the banking industry. For those who have never heard of it, Revolut is an online banking based in the UK that gives the chance to an individual to take control of his account through his mobile phone. I would encourage anyone to check out the company and look out for alternatives to the traditional bank account. A banking revolution is needed.

 

Santi Légeret

 

Last modified: 2 juin 2019

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