Banks to improve customer services offerings as economy stabilises

As the global economy moves towards steady growth – with rates expecting to see rises over the coming years – banks are entering a more stable mode of operation. A new report considers how the industry may need to shift towards more customer centric operations, among five other key trends.

The international financial sector was rocked in 2008, as a lack of financial regulation led to unchecked gambling of assets, which ultimately saw a domino effect cripple the global economy. Governments across the world intervened, ultimately leading taxpayers to foot the bill of bankers, whose corporate culture had initially caused the recession. While the assorted stimulus packages staved off the worst possible scenarios for global capital, states executed extensive austerity packages in order to compensate for the bailouts, with wide ranging negative impacts on society.

Improved financial stability has finally allowed banks to begin to strategise additional revenue opportunities and lessen their focus on compliance work. This is because, even though new landmark regulations such as the GDPR and MiFID II come into force in 2018, compliance has become more natural to the banking sector’s culture, while litigation from the post-crises period is also declining, as the number of unmet grievances dwindles.

Now, as the global economy experiences a period of steady growth, with unemployment in many developed economies falling towards full employment – in the UK employment is at the highest level seen since the 1970s – while real-wages, albeit not in the UK, are set to rise. The strengthening global economy is likely to impact rates, which remain at historically low levels, while quantitative easing programmes are likely to end in the not too distant future.

Amid this general upturn in the prospects of the banking sector, new analysis from Deloitte has explored the shift in market conditions faced by banking sector incumbents.

Customer centricity

Deloitte’s analysts argue that many banks have not, as yet, undergone transformations to make them more customer centric, which creates risks for nimbler FinTechs, among others, to offer propositions that are more centric to the customer – although banks to continue to be seen as more trustworthy than FinTechs.

In the US, while many large institutions (55%) have well defined customer experience offerings, a good third remains behind, with regional banks performing slightly worse (50%). Community banks and credit unions, which are often inherently aligned with customer needs, are the worst performers – at 16% and 27% respectively with defined customer experience programmes.

Digitalisation is one avenue through which customer services has shown improvement, with various services provided online, from bill payments to transfers, deemed key to wider services offerings. Demand for digital skill sets has, in light of the wider shift, increased focus on talent demand – with almost 80% of CEOs of banks in the US at least agreeing that the nature of banking is set to change over the coming decade.

The shift has seen more executives take on projects that require the development of new skills, while 60% said that the organisation is developing digital talent and driving new forms of learning at work.

Broadly, the firm envisages five other factors, aside from customer centricity, to affect the wider banking market going forward: regulatory recalibration, technology management, mitigating cyber risk, Fintechs and big techs and reimagining the workforce. Each of these are set to affect different banking divisions in different ways, with some more disruptive than others – Fintechs, for instance, are continuing to eye payments. Adapting to the changes, as well as mitigating the risks that come with digital itself, will face the future of the industry.

Concluding, the authors of Deloitte’s research stated, “In the end, banks have to contend not only with running the bank, but also transforming the bank to grow in a sustainable manner. Banks will likely have no choice but to balance these goals against the exigencies of the day. And those that are able to achieve this balance could be amply rewarded.”