A number of factors have transformed the public face of banking over the past 35 years: increasing digitisation of the economy; decreasing cost and increasing availability of digital delivery channels; and tighter integration of banking activity with purchase and other payment transactions. It has allowed banks to increase their share of household borrowings and consumption, and has in part driven the expansion of household credit.
These developments have helped drive consumer and business lending volumes while delivering customers genuine benefits in the form of increased access and convenience.
The downside has been to depersonalise many banking relationships and commoditise banking products and services. Technological change has also almost certainly lowered the entry barriers to consumer banking; the fact that in Australia the number of new entrants to the banking scene has been limited and their performance patchy, does not mean that powerful groups — including well resourced non-bank entities — will not at some stage bid for a serious presence in consumer banking.
Technology will facilitate this process, not hinder it.
While we have made it easier for people to undertake transactions and manage their accounts, we must ensure we understand how customers want to relate to and interact with their banks and also appreciate they are becoming more demanding of their financial relationships.
KPMG believes the delivery of consumer banking services ought to take place within a framework that puts customer needs, expectations and aspirations ahead of the technology. We will make better business decisions about these matters if we always test our thinking against a customer perspective. Small changes in design and delivery can make big differences to customer experience.
Some recent developments in distribution around the world include:
Ziraat Bank, one of the oldest banks in Turkey, is investing heavily in consumer banking pods which target consumers in congested or new urban locations where traditional branch banks are either impractical or unviable.
Ziraat estimates the initiative can increase its process efficiency from 70-80 transactions per day for a branch teller, to as many as 140 transactions for each pod.
Smartphone and tablet innovation is set to continue at pace as Apple, Google and Microsoft vie for supremacy. By 2013, PayPal expects its mobile payment volumes to total US$7.5 billion.
With mobile set to become the dominant channel in digital banking, customer demand is placing growing pressure on banks to deliver advanced and engaging services through mobile platforms. As KPMG's recent report Monetizing Mobile made clear, enormous benefits will accrue to those banks that seize the initiative.
Facebook has announced the launch of a 'video calling' feature for its 750 million active users. Meanwhile, Google has launched a beta test of Google+, its social network platform, adding video conferencing services to enrich the emotional and social experience. Such announcements are potential game changers in how people interact, not just within their social networks but also in the wider business and banking environment.
National Australia Bank has launched Virtual Terminal, an online portal which provides real-time responses for credit and charge card transactions. BBVA in Spain launched a virtual chat agent, Nathalie, which uses artificial intelligence to build on her ability to answer staff queries.
For more information on emerging trends in customer and channels, please contact us.