The story of how digital technology has revolutionised retail banking is well documented. Consumers have been enthusiastic adopters of online services, mobile banking and digital payment systems. But in the rush to deploy digital services, have bank branches been left behind? Ashish Gupta writes
Branch transactions are declining and more than 600 bank branches have closed across Britain over the past year. And most of those that remain look and feel pretty much as they did 20 years ago. Like other retailers in the British high street, banks need to provide a better bricks and mortar experience for their customers. There are plenty of digital possibilities available, such as proximity technology that identifies a customer when he or she enters the branch, self-service kiosks, interactive window displays and mobile tools so staff can look after customers on the spot.
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Barclays begun its digital transformation more than three years ago, introducing free wi-fi into 1600 branches. Customers can now combine digital services with human assistance and employees equipped with iPads can serve people anywhere in the branch. Wi-fi is accelerating take up of Barclays’ digital services by enabling branch staff to give tuition to customers on how to use apps. It also draws in casual visitors, who might be encouraged to switch to a Barclays account.
Digital transformation can improve the customer experience, reduce operating costs and free up employees to be more productive. So what is stopping more banks from taking their branch network down the digital route? After all, CIOs appreciate the urgency. In recent BT research into the Digital CIO, we found that every single CIO who responded saw the digitisation of business as a personal priority. And there’s no doubt that boardroom colleagues expect the CIO to be a strategic and creative leader for the digital age.
The CIO’s plate is already full
The trouble is that CIOs have too much on their plate. They are so busy making sure that all the lights stay on, that old legacy systems continue to perform and that online channels deliver, that they have no time and no headspace for digitising branches. It’s a universal problem. Close to two-thirds (61 per cent) of senior IT decision makers feel that the CIO is spending more time maintaining current IT systems than searching for new solutions. While that’s down from 2014, when the figure was 74 per cent, it’s not enough to free up the CIO to focus on digital possibilities for the future.
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By GlobalDataIn order to address the problems of legacy technology while creating the right infrastructure for the digital future, retail banking CIOs need to rebalance their IT estate. A practical approach is to move towards a dual operational model that allows the winding down of legacy systems, alongside a strategic cloud platform to host all new and future digital solutions. In other words, keep separate the new and the old. Only migrate to the cloud those legacy systems that will be essential to a digital future.
Already, one quarter of banking spend on technology takes places outside the IT department. It is only a matter of time before the bank has a mishmash of autonomous digital solutions that must be properly secured and managed. This task will be much easier if all digital products and services sit on the same cloud platform, in a ‘cloud of clouds’. Such a strategy will also demonstrate that the bank has the right security and compliance measures in place to mitigate the operational risks of cloud computing.
Running a technology trial in a few branches is pretty straightforward; rolling out innovations consistently across a branch network is less so – unless you base digital transformation on a single cloud platform. It also lets the retail banking CIO provide flexibility and choice to the business while managing digital transformation from the centre.
A better customer experience also requires meaningful insight from myriad streams of data – from customers, branch applications, external services and business partners. A dual operational model will allow the bank to prepare an infrastructure ready to collect, aggregate and consolidate that data, and host analytical tools that are available across the organisation.
One fifth of global organisations are already completely cloud-centric, and a further 46 per cent have more than half their applications and infrastructure in the cloud. For retail banks, establishing a cloud platform is an essential step in creating the branch experience customers increasingly expect.
A viable and vibrant branch network
The local bank branch still has an important role to play. Complex financial transactions are sometimes better handled face to face. Younger people, inexperienced in financial affairs, want the reassurance of guiding hand and many older people simply prefer to bank in person. What’s more, banking is an intangible service and the branch is the physical presence and human face of the brand. By delivering a great experience that attracts customers in person, and enabling staff to be more productive, digital innovation can help Britain’s retail banks to maintain a viable and vibrant branch network.
Ashish Gupta, president, UK and global banking & financial markets, BT Global Services
