Digital Transformation and Code Halos - 12 Trends that are Impacting Banks Today

The banks of the future, will not look like the banks of today. 

I have met with the business and IT strategy teams of many banks around the world over the past 12 months.  These discussions have been some of the most interesting as there is a sense of urgency.  The banking and financial services industries are feeling tremendous pressures from both internal and external sources to respond quickly to emerging mobile and online technologies, and the changing behaviors of consumers.   

Here are 12 talking points from my latest workshops:

1. Mobile and online technologies are transforming the way banks serve clients
2. Mobile banking adoption rates will reach 33 percent this year, up from 20 percent in 2011. Source: Swacha
3. Mobile payments will reach $90 billion by 2017, up from $13 billion in 2012.  Source: Forrester’s 2013 US Mobile Payments Forecast report
4. 60% of smartphone or tablet users who switched banks in the fourth quarter said mobile banking was an important factor in the decision. Source: AlixPartners
5. Consumer preferences are changing and a generational shift in behavior is driving to new digital channels
6. There is a rapid adoption of digital consumer banking in both developed markets and in markets where consumers are predisposed to using mobile technology rather than bricks-and-mortar (emerging markets)
7. Banks are being presented with new competition from non-financial firms providing financial services
8. The ability to innovate will be a key competitive differentiator, and innovation a critical driver of growth in the future for banks
9. Uniform experience (omni-channel) will be required across all channels, and is a prime factor in customer satisfaction
10. There is a growing convergence of personal financial management tools and mobile banking
11. After providing basic consumer banking services on mobile apps, the next steps are to understand individual consumer’s transactions, and the nuances of their unique investment behavior using Code Halo strategies
12. Banks are seeking efficiencies and cost reductions.  The average cost of a mobile transaction is 10 cents, about half that of a desktop-computer transaction and far less than the $1.25 average cost of an ATM transaction. (Source: Javelin Strategy & Research).

Mobile apps are rapidly replacing branches as the preferred form of customer interactions with banks. Customers are evaluating the quality of a bank based upon their mobile banking capabilities today.  In customer service surveys, providing great mobile apps represents an important component of customer satisfaction.  As a result, you would think that budget priorities and investments in mobile technologies would be jumping up in response, but as of today, budgets for mobile apps and mobile banking services represent less than 5% of IT budgets.  

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Kevin Benedict

Writer, Speaker, Editor

Senior Analyst, Digital Transformation, EBA, Center for the Future of Work Cognizant

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***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I am a mobility and digital transformation analyst, consultant and writer. I work with and have worked with many of the companies mentioned in my articles.