From international payments to managing direct-debits, money transfers to mobile wallets, and online paperless bank account applications to the heights of complex wealth management, there are multiple full-functionality apps, mobile and online solutions all vying for the custom of increasingly digitally-savvy UK consumers.
Jerry Young, CEO of ieDigital, believes some members of the UK’s army of traditional, long-established building societies and smaller banks need to urgently re-evaluate how they interact with customers, otherwise they risk being left at the starting blocks amid this digital whirlwind.
ieDigital, a solution provider for financial institutions and other financial services providers, is owned by Parabellum Investments, a family office operating as a global private equity firm, led by Rami Cassis, Founder and Chief Executive.
Even during a global pandemic, the UK’s ever-evolving digital banking sector refuses to stand still. Indeed, if anything, Covid has detonated a bomb right at the very heart of the UK banks’ digital offerings. According to a study by Salesforce, some 68 per cent of customers say that Covid has elevated expectations of their bank’s digital capabilities. Similarly, an Accenture study of more than 47,000 consumers reveals that more of us are being driven towards digital services because of the pandemic.
The global fintech market was worth $127.66 billion in 2018 and is expected to rapidly grow. Wall Street giant, JP Morgan, has announced it is to launch a new digital bank in the UK, operating under its consumer brand, Chase. It will be the second major US lender to enter the UK retail banking market, since Goldman Sachs started offering Marcus-branded digital savings accounts in 2018, and joins the British digital upstarts including Monzo, Starling and Revolut, which are also disrupting the market away from the six largest lenders.
Compare these changes with the substantial army of traditional UK building societies, some of which can trace their heritage back for hundreds of years – a fact they are, quite rightly, proud about. After all, trusted brands with a long heritage will command a level of respect that newer entrants are often missing. However, while some have made significant investment in consumer technology, some remain app-less, and some only have a limited online functionality. Their application processes can also leave a lot to be desired in comparison with new digital banks, with some insisting that prospective customers travel to a branch, clutching paper documents, to open a new account and make a deposit. And that’s why branches were even kept open during recent lockdowns.
Compare this to the new digital banks, offering a seamless online-only application process taking just
a few minutes. The cold fact of the matter remains that some building societies risk being left behind in the race to secure a slice of this lucrative digital banking revolution. And, with 24 new banks currently going
through the regulatory process, pressure on these traditional players will be intensified still further.
When it comes to attracting Generation Z, digital natives born between the mid-to-late 1990s and the next generation of savers and homeowners, the rewards have fallen to those with strong digital products and services. They are the ones that develop profitable journeys, giving Generation Z a reason to remain as a long-term, even lifetime, customer. These are the likes of Etsy, Amazon, Nike and Asos, and Starling Bank, Monzo and Revolut.
Digital investment will provide traditional players with a valuable, extra way to reach new customers. We are likely to see a new generation of re-invigorated savers, eager to open savings accounts to put aside money for near, mid, and long-term savings goals. Increased digital functionality will allow these traditional providers to reach-out to this brand-new demographic and to elevate their “local” offering to a national, much larger, potential customer-base.
For those traditional UK building societies and banks who know they have a long way to go to finesse their digital offering, it is not too late. It is essential to the very core of their business to understand that like it or loathe it, the mighty fintech wagon continues to blaze a trail through financial services. They may like it because its disruptive, challenging the status quo as it rolls through the dusty plains of established financial services. On the other hand, they may loathe it for the very same reasons – and because they are a member of that very status quo. Whatever angle they take, it is a given that 2021 and beyond will see more change.
For those concerned they are only starting their digital transformation today, it is still better than starting it tomorrow. With digital solutions being seen within the building society sector as offering a competitive advantage, now really is the time to act. Deploying digital banking services is not the vast and expensive undertaking it once was. Bespoke solutions can be created in as little as four months, resulting in a level of service that will propel the UK’s traditional players into the digital stratosphere.
The market has never been more competitive, and consumers expect to able to save online and access their money online, whether through an app, a website or mobile banking. Dudley Building Society, itself 160-years-old, provides a useful reference-point, recently introducing online tools to help members manage savings and mortgage accounts. This includes functionality around online applications and account management, and personalised features such as savings goals and budget planning.
The financial services sector was already undergoing substantial change before the advent of the Covid pandemic. However, Covid has injected a surge of energy into the fintech effect. If the traditional UK financial players act now, there is no reason they can graduate from simply keeping up with digital changes to actually leading them.
Read the original article here at The Fintech Times