The explosion of new tech is speeding up
It’s all about tech these days, and it will continue to be for years to come.
Moore’s law and cloud-based storage and processing capabilities combine to give mobile devices enormous power and to support cheap, scalable technologies. Historically, technology was capital intensive, giving large companies with access to extensive financial resources defensible advantages in the development and delivery of high tech solutions.
The rapidly falling costs of building and delivering technology has broken the corporate hold on tech and supported an explosion of cheap, convenient, easy to use solutions aimed at consumers and businesses alike. As development, hosting and processing costs continue to fall while device power, speed and connectivity improve, today’s technology boom will gain momentum, transforming the world even more rapidly than we think.
The continuation of rapid developments in technology means two fundamental things: the user experience will continue to improve, and waves of new technological solutions will proliferate rapidly and then quickly become obsolete.
Online Technology has only just started to transform banking
Retail customers have benefitted royally in recent years from technological improvements in a vast array of industries, from commerce to telecommunications to banking and many more. Online and mobile interfaces are ubiquitous today. They represent the primary channel by which most customers interact with the companies they buy from.
Online and mobile banking are prime examples of the way interaction between customers and companies has benefitted from automation to become faster, cheaper and remotely accessible. Virtually all banks today offer customers the ability to transact, check balances, access new products and perform basic functions online and on mobile devices. Sure, some banks offer much better digital solutions than others—for now. In the same way that a few players led the way in the early days of online banking and others followed, some banks must by definition upgrade and improve online and mobile banking more quickly, while others lag slightly behind. Have no doubt that they will follow.
There are a number of “next-generation” digital-only banking propositions coming to market in the UK, US, Europe, Canada and Asia, and they are being welcomed with great fanfare. These new banks are trailblazers. They are raising customer expectations for what digital banking should be, and they are raising the bar for the industry in the process. Incumbent banks, loathe to make the large investments in dated technology necessary to support great user experience in a digital world, are nonetheless forced to keep up with changing customer expectations. In five years, all banks will offer solid digital banking solutions. Any that don’t will hemorrhage digitally-enabled customers to competitors.
What advancing banking technology means for customers
Customers should expect phenomenal digital user experience from their bank, and they should be ready to switch if it isn’t delivered. Great technology is becoming a basic requirement to compete in banking. Banks must see that technology is increasingly important to customers and must undertake the planning and investment necessary to ensure they deliver it now and over the long-term.
With all banks offering strong digital user experience, the market opportunity to compete on dramatically better technology will fall away. Banks must recognize this now and build strategy around how they will differentiate after the technology opportunity has played itself out.
To be competitive, some banks will focus on expanding their offerings beyond the traditional walled garden model, incorporating third party products and services for the benefit of customers. Other banks may focus on price. CivilisedBank will differentiate through great customer service, personal touch, culture and values. Each bank must adopt the best strategy for its customers based on the resources it has or can build.
In the next few years, retail banking customers will see improvements in experience, convenience, cost and usability that far outstrip the advances they’ve experienced in recent years—and they won’t all be driven by tech.
New entrant banks are already solving the technology problem, and they are increasingly turning their sights to customer experience innovation as well. It will soon be the incumbent banks’ turn to prove they can deliver long-term value for customers.
With everyone fighting for them, it's a great time to be a retail banking customer.