Survival of the Fittest: 3 ways banks can embrace the inevitable

Survival of the Fittest: 3 ways banks can embrace the inevitable

It’s been a rollercoaster few months for the banking industry following major announcements from Old Mutual and Barclays. There’s understandably a lot of trepidation right now about the high cost-to-income ratios banks might encounter in emerging markets. However, I believe it’s also the perfect moment to rethink how traditional banking models approach these markets.

Africa is a continent uniquely filled with opportunity, given the skyrocketing mobile penetration rates and relatively low adoption of traditional financial services. This means the market is ripe for innovations like cash vouchers, digital transactions and ultimately full-service digital banks.

Prospects are plentiful and the continent serves as the perfect ground for banks to evolve digitally. As banks move deeper into new markets on the continent, they don’t have to deal with outdated legacy systems and can leapfrog straight onto digital platforms.

Charles Darwin once said that it is the species that is most responsive to change that will survive, and the same holds true for banks. But how can they bring together their people, processes and technologies to drive this adaptability? I believe there are three key steps:

Step one: Really know your customers

By next year, smartphone connections will account for more than a third of Africa’s total internet usage. Yet many African banks are behind the times when it comes to the mobile experience. In some places mobile money services are rapidly outpacing banks as transactional platforms. They are just better suited to the lifestyle of a majority-unbanked population.

Stats like these should serve as a wake-up call to any bank that’s trying to drive innovation without considering their customer’s needs. If companies are to survive in the digital age, they need to adopt a people- first mindset and enable technology that makes it happen.

Consider the finches that Darwin studied in the Galapagos Islands, whose beaks evolved according to their different diets. If you’re failing to adapt your customer journey to the needs of the unique environment around you, you’re headed towards starvation.

Step two: Use the power of (re)imagination

I recently chatted to a colleague who was able to renew his passport in just five days and with no hassle. It made me think of the rigmarole we go through every time we sign up for a new banking product. Even today, we sometimes still need to walk into a physical branch to get the job done.

Financial institutions must reimagine the very foundations of what it means to be a bank. How relevant are brick and mortar really? Can banks use digital platforms, mobile applications and even VR to cut down the time that customers spend in a branch?

Do they have the right partnerships in place to deliver their products – whether device bundles, rewards programmes or mobile services – to the right people? Are they working with the best suppliers, logistics companies and marketers to ensure they’re seeing the most value out of them? Once you know which partners or platforms offer the most strategic value, it’s easy to trim the fat.

Successful evolution is by its nature ‘lean design’, removing inefficiencies for a more streamlined result. Just look at the Eastern coyote. It’s not a new species, just a hybrid of the best traits of both the coyote and wolf.

Step three: Bank be nimble, bank be quick

Twelve-month product lead times might as well be twelve years in a world where competitive institutions are working on two-week cycles. Banks need to become more agile and shouldn’t take no for an answer when it seems impossible to achieve something in a set timeframe.

We think of evolution taking place over a long time, but it often needs to happen quickly and in adverse circumstances. When the Industrial Revolution came to England, moths adapted within a few generations to better camouflage themselves against their polluted environments.

To be an agile organisation requires an entrepreneurial mindset. It calls for small iterative changes to processes in short sprints, underpinned by transparency, efficiency and flatter hierarchical structures.

These ‘small’ changes become part of an organisation’s DNA, ultimately leading to largescale evolution.

Are you making incremental changes to your internal processes and structures? And how are you using data on your customers to drive them?

--------------------------------------------0O0------------------------------------------

About Lee Naik

Lee Naik is the Managing Director of Accenture Digital in South Africa. Lee has a deep understanding and appreciation of the transformative role that technology and digital can play, and works with organisations to transform their businesses to remain competitive in an ever-changing and increasingly digital world.

Lee was named one of Top Voices of LinkedIn for 2015.

Read his other blog posts and follow him on LinkedIn and Twitter

Christian Menchhofer

Strategy, Planning & Key Programs - Office of the CEO

7y

Great insights Lee! From experience, the largest challenges big banks are facing in attempting to shift into the new digital frontier is the Chief Compliance Officer. Due to new regulations such as Dodd-Frank and enforcement agencies such as the CFBP, CCOs are winning the battle in the board room as fear of lawsuits and government backlash can overwhelm the lean retail banking margins presented by the COO. Something for us at Accenture to consider and solution alongside our digital product offerings.

Lerato Mphaka ACXC®CPPC® BP Group

Business Manager and CX professional driving Strategic Projects and Client Experience

7y

insightful article. The idea of being customer centric and using client data for service delivery cannot be hammered enough.

This is a very interesting topic, not only in Financial Services Industry but also across all other industries. I like the emphasis on Agility, because as humans, in our nature are driven by new experiences and continued growth, inter alia (we want better experiences, faster customer responses and etc.) and the increasing element of curiosity continue to drive this type of human behavior. I always ask, how cool will it be if organisations started to deploy digital solutions (using their customer data for advance analytics, designing mobile and interactive platforms to engage customers more productively and in accordance to their specific needs and preferences. Even more exciting, organisations should get to the levels of disrupting customers using all these capabilities available by advising and or recommend to them on how they could better achieve results in whatever areas of interest (these are value adds that could potentially result to more business opportunities) They have the data, they have the ability and power to embed all these digital capabilities to become Agile and Proactive organisations for the better. Thanks for such a nice article Lee Naik.

Tejas Gihwala

Data & Analytics Delivery Manager - BNP Paribas (RCS)

7y

Interesting article Lee. I find that you're spot on with step two, (re)imagination. Often these Financial Services Institutions are led by 'older' folk and they struggle to (re)imagine the way they should be changing and operating.

Mangaliso Molomo

Automotive Digital Transformation

8y

Well written. I often ask myself what role banks will play in the not too distant future where in theory, a salary wouldn't need to be paid into a bank, employees receive their e-salary directly, and consumer transactions need not take place out of a bank account.

To view or add a comment, sign in

Insights from the community

Explore topics