The future of corporate banking. How to carry out a digital transformation process and check its effectiveness
We sit down with Adam Walendziewski, Director of Agile Centre – Digital Platforms at ING Bank Śląski, who shares his views on technology aspects of corporate banking.
- The corporate bank of the future will focus on a broad presence in various digital channels and strong relationship management with customers. Paradoxically, the digital revolution will prove the latter a competitive advantage on the market.
- The key areas of digital transformation are processes, relationship management, stability and security.
- Quantitative measures of a digital transformation’s success revolve around reducing the costs of traditional customer service.
- OpenApi and PSD2 provide banks with an opportunity to provide customers comprehensive services together with third parties.
Adam, how does ING, the undisputed leader in corporate banking digitization, see its future? Simply put, how would you describe a corporate bank of the future?
It must be an institution where customer relations are of key importance, constituting the grounds for an effective bank-company cooperation. The second aspect is customer service, rapidly moving towards digitization and self-service giving the customer the opportunity to handle as many banking matters as possible without the relationship manager’s help – conveniently, as and when they please, freely switching between channels.
Another thing, linked to the above, is understanding the changing needs and expectations of increasingly digitized corporate customers. The corporate bank of the future won’t be able to meet all these needs on its own. This will require opening up to fringe services being out of the bank’s reach for regulatory reasons alone - but doable in agreement with an external partner.
So, I believe that the banks of the future will be financial service centers of sorts, or hubs providing basic financial services such as cash management or loan-granting, but at the same time offering beyond banking solutions related, say, to e-commerce. Solutions that are currently made available to customers by external partners - under banking auspices.
But if we base our business on strong customer relations, why invest in IT? If the biggest profits are made by the relationship managers, maybe investing in their training and personal development would be enough?
Gaining a customer, establishing good relations and maintaining them is one thing. However, the traditional customer-service model is both labor-intensive and costly. If the relationship manager received a hard copy credit application from each of their customers, entered each document into the system or, as they used to do, send or bring piles of application forms to the operating units for analysis... it would take a lot of time and resources, also on the part of the customer. That’s why such measures have been simplified.
The role of the relationship manager, based on their knowledge of the customer’s business , is to help choose appropriate products and services that will help the customer run his business.
And on-line tools make it easier for the relationship manager- displaying which customer submitted a credit application, whether it has been approved or rejected, whether the customer is waiting for a debit card, or why he still hasn’t received one. This is when the relationship manager contacts the customer - to explain banking mechanisms and procedures, as well as to communicate the bank's decision regarding a given product.
But doesn’t that customer lose the sense of uniqueness along the way, assured by calling the relationship manager and saying "do something" - and it would be the relationship manager doing the clicking and document-collecting?
Even in private banking, the concept of customer-assigned advisors is being abandoned. Every customer, either retail or corporate, is aware that customer service is increasingly moving to remote channels.
Of course, not every customer will be happy. However, what’s important is to emphasize the benefits of a modern service model: independence, convenience, a multi-channel model and, at the same time, contact with the bank when needed, at the branch, by phone or online.
What are the most important areas of corporate banking requiring investment in technology?
It’s security first and foremost. Hackers are constantly looking for ways to empty our customers' accounts. Each bank has to cope with such attempts and at the same time prevent fraud, phishing and other methods of theft - there is no room for savings here.
Another area is numerous legal regulations, frequently amended and updated. Our products and services must meet the requirements of the regulator but at the same time be useful for customers.
Also, new market law, e.g. the open API: making banking infrastructure available to external suppliers under the PSD2 Directive. We don’t know whether bank customers will want to use services that aren’t provided by banks. But in fact we have to be prepared for this possibility - with investments, not only financial ones.
So, the bad fintechs will come, squeeze the banks dry, and do big business?
No, no...On the contrary, this is an opportunity for all parties involved. As a bank, we can also learn from others, and if the solutions put forward by fintechs benefit our customers, why shouldn’t we cooperate? Turning it around, fintechs, especially the smaller start-ups, need both capital and customers to thrive. The benefit is mutual. Moreover, we as a bank can act as a fintech, using information from other banks and, for example, presenting it better than our competitors. And thus improve our customer relations.
If you were to give advice to a corporate bank that is just beginning its digital transformation process... what three areas requiring special attention would you indicate?
First of all, a scrutiny of basic processes – looking into how the bank works and why. It’s not just about creating an attractive internet banking interface if it’s supported by tedious manual processes. And they need to be looked at as a whole and automated.
Then: getting to know the customer. Who they are, what their expectations and needs are, what products and tools they use - what is worth developing and how? It’s all about responding to specific needs and solving specific problems, providing tailor-made service.
Finally, the stability and security of services, not only front-office, but also back-office ones, operating in the background.
What goals should a bank undergoing such transformation set for itself - in the customer context?
To educate the customer on how to do banking on their own, which means providing the self-service model in a user-friendly way - winning the customer’s approval by presenting real benefits from such. Take card customization - the customer orders the card, and it’s instantly visible in the system, ready to be used virtually. No signatures are needed, neither is a piece of plastic in your wallet.
The omnichannel approach is important: with access to banking services on any device and from any location. Customers can switch between banking activities from one channel to another - starting a process from behind a desk - on the web, continuing on the go on a tablet, and finalizing the transaction on the phone.
How can progress be measured here?
Simply by applying "the less, the better" principle. The less paper we use, the better; the less paper statements we send to the customer, the better; the less transfers customers make at a branch, the better; the less time they spend on service, the better.
Everyone seems to be outdoing each other in innovation these days. How can we identify innovations which add value to the customer, innovations allowing the customer to bank easier, faster, and cheaper? Ones that will not scare people off?
At ING, ideas that come up are tested and verified quickly - most often as 3-month projects, carried out in line with our internal PACE methodology. In short, we check whether an idea is valuable and whether there is any rationale behind it, what the market response would be, how to approach the implementation, what technology should be used, and, above all, what the customer's real problem is and how we can solve it.
Are there still any undeveloped niches where technology could bring a high cost value to both the bank and the customer?
This is where blockchain comes in. This technology can change everything, including the way inter-bank information is exchanged.
The technology is there, so are the niches. In most cases, however, there’s no will to act. But this is because of the rapidly changing market of modern technologies - banks are just getting accustomed to PSD2, with a blockchain revolution already knocking on the door.
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