Technology is changing the game
Consulting firm Accenture is assisting Chinese banks in their bid to adapt to a world of apps and develop interactive digital services
For traditional retail banks, the real challenge is meeting the needs of today's digitally empowered consumers.
Despite efforts to sharpen customer focus, these banks tend to manage their extensive channel networks - including digital - separately, and not as an integrated retail operation.
Sushil Saluja, the senior managing director for financial services in the Asia-Pacific at Accenture, said these banks must reshape their business in the context of the latest technological advances, including mobile broadband, cloud computing and "big data" analytics.
"Our view is that every business is now a digital business," Saluja said.
Ireland-based Accenture, the world's largest consulting firm by revenue, is helping banks across mainland China and Hong Kong jump on that digital bus.
The firm, which posted revenue of US$28.6 billion in its financial year to August, recently launched its financial service innovation centre in Beijing to demonstrate and help banks develop interactive digital services.
Saluja said Accenture's clients typically do not announce that they have sought counsel on how to modernise operations. But the trend is unquestionably clear: more banks recognise that if they do not offer advanced digital services, their customers will go to a bank that does.
For many banks, maintaining teams of information-technology specialists and funding new digital programmes represent a daunting investment.
Technology research firm Gartner has forecast information-technology spending by the global banking and securities sector to grow 3.5 per cent to US$465 billion this year.
Banking and securities companies spend about three times as much on information technology as a percentage of revenue than the average of all industries, according to Gartner. This trend is expected to continue due to a significant amount of technology needed to run such key activities as lending, payments, trading and risk management.
In an interview with the South China Morning Post, Saluja explained what senior management at retail banks must do to keep their customers happy.
Where should banks start in developing services that meet the standards of today's digital-savvy consumers?
We work with the leading players in all the countries in which we operate, and our philosophy is always to start with customer needs. People who are now in their 20s and 30s are much more sophisticated in their use of technology. They also have different values in terms of sharing information and have different expectations in terms of price points for services.
To be sure, banks unquestionably want to harness the constant, real-time interaction that today's consumer has with his or her smartphone because this will strengthen customer relationships. It is just often harder to do than they expected. First of all, these services all have to work. And work quickly. Banks need to continuously invest in platforms that synch-up with the latest devices in a user-friendly manner. People want the channels for services to be intuitive and easy to use.
On the mainland, the scale of bank customers is in several hundreds of millions. So for this market, we advise segmentation of customers into different needs and type. Focusing on different segments and adapting matching services are important.
For example, the banking requirements of a newly married couple are very different from those of a family with growing children. These change again when people enter their retirement age.
It is not unusual for us to hear clients say they lack the right skills to constantly maintain their digital programmes, or that the cost of managing digital channels is on the rise while their budgets are fixed or shrinking. This is where we come in with a team of experts to either offer advice or do it on behalf of the banks.
What are some of the key factors to establishing user-friendly mobile banking?
What we have found is that mobile is the next frontier for all players in the market. I think in the early stages of development, many people tried to put everything on the front screen of their mobile applications. So we advise them to put less functionality on a mobile app, compared with their [desktop-based] internet app.
Most people, typically, just need to see their bank balance and recent transactions, and make payments using their mobile app. Other functionalities can be put in the second or third tiers of the app, or not included at all. If they need to do more, they can either go to the bank's online [desktop] site or other channels.
We've done a fair bit of work for financial institutions on the mainland and other markets in the Asia-Pacific on how to drive up usage of mobile apps. One of the common themes is about usability, or the number of clicks to do something. A customer should be able to get to the mobile app's home page after a relatively small number of clicks. The customers should not need to read a manual or go to a Help screen.
Banks should also make sure that its entire spectrum of business is efficiently linked to its digital service. When you apply for a new credit card, for instance, and then you get updates via a text message that the application has been processed - that is a little touch that reassures customers about the bank's efficiency.
Standard Chartered, for example, aims to become the "digital main bank" for customers. It has turned the disadvantage of restricted branch licensing in markets such as China and India into an advantage by leveraging digital channels to access the customer.
On the mainland, the bank launched "Breeze Living", a lifestyle smartphone app that offers open, social and location-based mobile discount coupons. This application has garnered thousands of downloads and tens of thousands of unique hits to its website.
How do you see big data analytics helping banks?
With big data analytics, banks now can tailor and personalise their offers and services to meet their customers' needs. This technology is attractive to consumers because they can get relevant products and services offered at their time of need, sometimes at advantageous pricing. This also allows banks to lock in longer, multi-faceted relationships.
But not all institutions have really worked out how best to implement big data analytics. For many banks, basic analytic research needs to be used more efficiently.
Consider when a customer chooses a credit card. It may have different types of loyalty programmes with it - which programme the customer chooses indicates interests. If a customer wants stock information, that person may also be interested in bonds but may want guidance on these investments.
The problem for many banks is that the data is fragmented, or it is not scaled to meet demand. Collecting data is one thing, using it to drive more efficient business is the important next step.