Change in the way the banking world operates is now more obvious than ever.
In our recent research, consumers told us that a quarter of them believe the high street bank will be dead in just five years.
But it’s not all bad news – because big banks still retain a lot of trust (60% of consumers say they trust them). And the appetite for digital innovation is high, as 31 per cent want to use digital payment methods for everything that they can.
So it would seem the answer is clear for the high street banks. They must innovate and upgrade their offerings fast so they can capitalise on high levels of trust and retain their customers in the future.
Of course, it’s easy to talk a good game – but it can be much harder to implement in practice. Here we’ve pulled together a series of hints and tips for banks to employ to help them move into the new economy at pace.
Consider BaaS providers
BaaS – or, Banking as a Service – can be a great option for big players.
It works in much the same way as Software as a Service, in that banks can outsource particular areas of tech development to experts in the field.
If a financial institution wanted to create a new rewards scheme or functionality , the digital architecture they need to enable it may already have been built by someone else and properly licensed and checked.
In this case, it would be a huge wasted investment to build an entirely new application from scratch – as costs for all of the required talent and development time soon stack up.
The BaaS alternative allows for faster deployment and a more reliable product, all whilst maintaining brand protection which is so important, using outsourcing experts who fully understand all the relevant regulation and compliance requirements.
Don’t try to do everything at once
Whilst it is true that customers are crying out for innovation and new products – it’s clearly impossible to do everything at once.
One of the main strengths of many Challenger banks is that they know what to focus on. The reason they are winning customers is not because they make lots of changes all at once – rather, they’ll have a high pace of innovation, and simply get through lots of updates, one at a time.
Take Monzo, for example, who even went as far as publically publishing a list of updates they wanted to make – then went about ticking them off one by one.
Trying to everything at once simply makes for a jumbled mess – getting it right first time before moving on to the next makes for a far better customer experience and allows for a faster pace of innovation in the long term.
Think outside of the box
Our research shows there’s a lot of appetite in the UK for new payment methods. More than one in ten consumers told us that they would like to move from cards to other payment ‘tokens’, like a watch, phone or a chip in jewellery.
There is a world of opportunity opening up in finance – and currently much of the innovation is coming from Challengers.
But they haven’t won it all. Big banks still have plenty of opportunity to deliver new and interesting solutions – they’ll need to get creative, speaking to consumers and start taking risks if they want to win. Otherwise it’s the Challengers who look like they’re the only ones who are innovating.
Remember that banks still have some great cards to play
There is a wealth of assets available to big banks that Challengers simply do not have.
The first of these, as we’ve already seen, is a great amount of trust amongst consumers.
But more than this, banks also have access to a far larger customer base. At its latest count, Revolut had four million users – by contrast, Barclays has over 24 million.
Accessing these huge databases to find out what kind of innovation their customers actually want should be a top priority for all big banks. And most important, once they’ve established what’s really important for consumers, is acting upon it.
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Contis believes the way forward for traditional banks is increasingly in partnership with nimble FinTechs who are not constrained by legacy technology, systems, infrastructure or culture. Open banking has enabled new customer-centric businesses to develop new features and technology, powered by APIs for quick legacy-free integration.
Contis has a proven track-record of providing established financial services brands with the payments solution they need, using its robust, secure, highly configurable and fully API-enabled white-label platform as a ‘one-stop shop’ solution. Contis has the licenses and certification to operate across the EEA on SEPA and UK banking and payments ‘rails’.