That the banking sector is facing serious challenges is nothing new. The impact of world events and economic trends, mixed with hyperspeed in communication and computer processing are turning the traditional ways of thinking on their head. However I am convinced that this is only the beginning. The true challenge for any player in the finance world is, and will always have to be, the customer. And that customer is now spoiled by amazing new technologies, alternative payment methods and even totally new digital currencies.

The development of the Internet over the past 20 years or so has taught us a number of things. Most important to me is, that digital has the power to overturn all the elements of a company. It is not just a communication tool or a new channel, it’s a force that has a profound impact on the relationship development between customers and service deliverers. Looking at the (retail) banking sector, apart from all the newspeak about ‘Fintech' and some improved communication channels, nothing has fundamentally changed in the way banks treat their customers. In order to harness the potential of the digital era, this is where banks will need to focus.

I would like to zoom in on three areas where digital disruption has a crucial impact on the banking sector

To redevelop a sustainable business in such a volatile environment, the banking sector needs to adopt a true spirit of entrepreneurship and innovation.

First of all, innovation is unpredictable. That is why a lot of experimentation is done, lot of brilliant ideas end up not working, and a number of simple ideas become a hit. Also, the future needs off our customers are not yet known because they do not know them themselves. Digital innovation sprouts new opportunities, which can lead to new products that may answer needs that lingered in people’s minds for decades, but they never realised it themselves.
To redevelop a sustainable business in such a volatile environment, the banking sector needs to adopt a true spirit of entrepreneurship and innovation. The complete company needs to be reorganised to get rid of old ways of thinking. They must open up all those talented bankers' minds for unbridled creativity, careful experimentation and smart ways of building businesses from opportunities. The type of organisation probably best fit for this mission is the platform. Over the past decades a number of successful digital companies have adopted the platform strategy. Amazon for one, was once an online store but has grown into a platform for e-commerce where all the elements that make up a successful retail operation are delivered by semi independent companies, attached to the Amazon platform. I am looking forward to the first traditional bank to adopt platform strategy.

The power of the new digital communication channels is an opportunity for the banking sector to turn around it's image for the good.

A second thing that has changed is the access to information. Because of this, customers have become much more critical for any brand or supplier. A bank used to be an institute of trust and it is now often perceived as an institute not to be trusted. Customers now know more or less what happens on the inside of the bank, and they found out that it's not always what the TV ads told them. But more than a threat, the power of the new digital communication channels is an opportunity for the banking sector to turn around it's image for the good. Developing a strong vision for your company is best done together with your customers and teams, a process for which social media offer numerous possibilities. And the positive story of your company's mission is one that can be passed along through attractive content marketing.

Close customer interaction, a flexible organisation combined with both functional and hands-on knowledge of new technologies is crucial.

Finally, a platform based company with a strong sense of purpose and value, that has build trust through modern communication channels, should have no problem developing excellent products, services and interfaces for their customers. I am not talking about a better online banking site or a fancier smartphone app, but real solutions for real problems of real people. This will require close interaction with customers to truly understand their needs and a flexible organisation that allows for experimentation. Those two, need to be combined with both functional and hands-on knowledge of new technologies. Ranging from back-office big data and blockchain solutions over Artificial Intelligence to customer facing solutions brought by API’s, mobile, Augmented Reality or conversation based interfaces.

So the mission for banks is to innovate bottom-up and outside-in, taking advantage of new technologies, devices and channels to bond with customers to deliver them exceptional value.

Read more opinions and insights on banking in "2020: Beyond The Digital Bank"

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