Now we’ve taken a look at 2015 and predicted a dozen ways digital banking will change in the coming year.* At the center of these predictions is what Forrester calls the age of the customer: A 20-year business cycle in which the most successful enterprises reinvent themselves to systematically understand and serve increasingly powerful customers. To succeed in the age of the customer, digital bank executives must work with partners across their organizations to use business technology — which Forrester defines as technology, systems, and processes to win, serve, and retain customers — to deliver more compelling customer experiences to bank customers.
For several years, we have noted a shift in power from companies to customers. Customers call the shots; they can and do transfer their loyalty when they aren't catered to with engaging customer experiences. The age of the customer has reached the banking industry; as in other industries, banks must change the way they do business to move the customer center stage.
Thus, application development and delivery (AD&D) teams must work with their peers across the bank to develop and apply the technology, systems, and processes needed to win, serve, and retain customers, partnering with eBusiness executives leading digital banking initiatives to drive new digital innovations. And this is not just a minority movement: Forrester’s Financial Services Architecture Online Survey 2014 shows that close to 80 percent of financial services firms around the globe work on transforming their application landscape or plan to start doing so within the next two years.
To prepare for this transformation imperative, AD&D pros need to be aware of the key trends for banking applications; the emerging and accelerating architecture trends, products, and services; as well as their to-do lists for 2015, which you can learn more about in Peter Wannemacher's Predictions 2015 report. While some banks aren't yet ready to take full advantage of these trends, Forrester believes that AD&D teams must be aware of, learn from, and prepare for eight trends in 2015. Among them:
But many eBusiness executives are more concerned about the potential impact of technology giants like Amazon, Apple or Google with their deep pockets, technological prowess and broad consumer reach.
I originally posted this question on one of Forrester's internal collaboration platforms, but I was so intrigued by the results from my colleagues I thought I would post the same question here to see whether your perspective similarly is thought-provoking.
Please vote in my poll in the column to the right of this post. ->
Have I missed any firms that you think have even greater potential, or plans, to disrupt retail financial services?
Banks and other types of firms in financial services typically like to know the answer to the question: “What are the others doing?” They leverage the answer when, for example, assessing their overall strategic position, planning for the transformation of their application landscape to a more powerful customer-centric approach, or determining the “best” sourcing approach for this transformation.
It is time to update the survey results: Forrester has just started surveying banks in North America, Europe, and further geographies about their major business drivers, the current state of their application landscape, their key issues and concerns, and their plans for the future. At a high level, the survey is designed to answer the question: “What are others doing?” Phrased in a different way, it targets the question: “What are the key trends regarding the transformation of the application landscape in financial services in the Age of the Customer?”
To make this survey successful, Forrester needs your help. If you are working in financial services in any role that is related to financial services business applications, architecture and strategy, please participate in Forrester’s Global Financial Services Architecture Survey 2014. If you have not yet received an email invitation, please contact me – JHoppermann (at) Forrester.com and I ensure that you will receive a link to the online survey.
Last week I presented an overview of cloud adoption trends in the banking sector in Asia to a panel of financial services regulators in Hong Kong. The presentation showcased a few cloud case studies including CBA, ING Direct, and NAB in Australia. I focused on the business value that these banks have realized through the adoption of cloud concepts, while remaining compliant with the local regulatory environments. These banks have also developed a strong competitive advantage: They know how to do cloud. Ultimately, I believe that cloud is a capability that banks will have to master in order to build an agility advantage. For instance, cloud is a key enabler of Yuebao, Alibaba’s new Internet finance business. 80 million users in less than 10 months? Only cloud architecture can enable that type of agility and scale (an idea that Hong Kong regulators clearly overlooked).
In advance of next week’s Forrester’s European Forum For Technology Management Leaders in London (June 12-13), we had an opportunity to speak with Oliver Bussmann, one of our industry keynote speakers, about digital business and how UBS is responding to the challenges of digital disruption and to rising customer expectations.
Oliver Bussmann joined UBS in June 2013 as Group Chief Information Officer (CIO), responsible for the Group Technology organization. As Oliver will explain in his presentation on day 2 of the Forum, digital business transformation success in his view hinges on three key factors: A joint and strong partnership of IT and the business working together; creating a culture of innovation and entrepreneurship; consistent and authentic support of senior leadership to demonstrate by example that this transformation is real, necessary and appreciated.
I hope you enjoy Oliver's responses as much as I did, and do join us on June 12-13 to hear the full story!
Q: What is your agenda as CIO at UBS?
As CIO my job is to position IT as a business enabler, this involves understanding the firm's strategic priorities, and ensuring we strike the right balance between (1) managing the traditional IT functions to ensure a cost-effective, reliable and secure infrastructure and (2) focusing on strategic IT, driving transformational change through innovation, to increase revenue opportunities and deliver real value to our business.
When it comes to mobile banking, customers' expectations are growing faster than the hair on a Chia Pet. So every year, Forrester reviews and scores the mobile banking offerings from the largest retail banks in the US across seven categories: Range of touchpoints; Enrollment and login; Account information; Transactional functionality; Service features; Cross-channel guidance; and marketing and sales. You can read the complete report here or by clicking on the link below:
Here is a sampling of some of our findings:
Chase and U.S. Bank tie for the top spot. With scores of 69 out of 100, Chase and U.S. Bank received the highest overall scores among the five banks we evaluated. Chase delivers the basics superbly, with a wide range of transactional features for transfers, bill pay, and P2P payments as well as strong cross-channel guidance for customers to contact Chase and find ATMs and branches. By contrast U.S. Bank stands out for more advanced features, including marketing and research for additional products, the ability to take a picture of a paper bill to enroll in bill pay, and the ability to pay another person using the contact list in a mobile phone.
In Canada, mobile banking is growing up faster than Justin Bieber. So from March 21 to April 9, 2014, Forrester reviewed and scored the mobile banking offerings from the five largest retail banks in Canada across seven categories: Range of touchpoints; Enrollment and login; Account information; Transactional functionality; Service features; Cross-channel guidance; and marketing and sales. You can read the complete report here or by clicking on the link below:
Here is a sampling of some of our findings:
CIBC earns the highest overall score with BMO and Scotiabank on its heels. With an overall score of 71 out of 100, CIBC received the highest overall scores among the five retail banks we evaluated, continuing the firm’s leadership in mobile banking since it launched its first iPhone app four years ago. But the other large Canadian banks are hot on CIBC’s trail: BMO and Scotiabank each earned a score of 70 out of 100 with impressive – and recent – overhauls of their mobile offerings. Scotiabank lets users apply for new products via mobile with pre-filled, mobile-optimized applications. BMO, meanwhile, ensures that all mobile money movement task flows are clear and consistent -- incorporating the same progress meter at the top of every screen.
The first email I received at work in 2014 was from a bank; along with a festive new year’s greeting, the email touted the bank’s new mobile app and a new feature that let customers set up travel notifications directly from the bank’s website. Later that day, I was in an airport reading a friend’s Facebook post about how she wished “more apps were like Uber.”
These are just a few small anecdotes about ongoing digital trends impacting businesses and banks both large and small. I recently spoke with a banking executive who put it simply: “Digital is what we do now.” (This quote is now the header of my Twitter feed.)
Forrester recently published our Trends 2014: North American Digital Banking report, in which we identify major forces impacting banks and lay out five actions that we recommend digital strategists take to prepare for the future of digital banking. Here’s a sample of some of our findings:
Banks will face a sustained – yet unclear – regulatory environment. In both the US and Canada, banks are confronting an uncertain regulatory future. The Dodd-Frank Act was signed into US law on July 21, 2010, but a large number of the rules and regulations remain unwritten. It's unclear when they'll be finalized, and the fact that 47% of deadlines have already been missed – according to the law firm Davis Polk & Wardwell – doesn't bode well.
Yuebao is a hot topic in China, and has even gotten international attention. But what is it? Yuebao is a value-added service that customers of Alipay (China’s version of PayPal) can use to earn interest and to make payments and transfers. An individual can start a Yuebao account with as little as RMB 1 (US$0.17).
The Alibaba Group launched Yuebao in June 2013. By mid-February 2014, 61 million people had invested money in Yuebao, and total fund skyrocketed to RMB 400 billion (US$65 billion) – making it the largest fund in China.
People are drawn to Yuebao because of its:
High yield. The average annualized return is around 6% — much higher than similar funds and banks’ financial products.
Good liquidity. Yuebao offers great flexibility; investors can deposit and withdrawfunds anytime. Other financial institutions require lock-in periods and much higher initial investments.
Ease of use. Yuebao offers a much easier way to invest. People can see the value of their assets anytime, anywhere on their smartphones.