Data is banks’ most precious commodity

Ahead of Efma and EY's joint projects for 2021, Nigel Moden - EMEIA Banking & Capital Markets Leader at EY - shares his vision on the challenges that banks have, and will have to face in the near future, to remain competitive in a market targeted by more and more new players.

Data is banks’ most precious commodity

People have changed the way they bank. What are the new standards when it comes to customer expectations?

Even before the pandemic, we were already seeing a significant shift in the needs of consumers. They wanted more joined-up propositions that would help them navigate the big milestones in their lives. There was a demand for better integration between branch networks and digital channels that would allow customers to switch seamlessly and provide 24-hour access. There was a growing desire for more personalized offerings from their providers. Offerings that were shaped by their own personal circumstances and informed by intelligent analysis of their own spending habits.

And finally, what we’re starting to see is consumers being more willing to share data, often more quite personal data with their providers, in exchange for better advice and more attractive deals.

All those trends remain true despite the advent of the COVID-19 pandemic. And in many ways, COVID-19 pandemic has had an accelerating effect as we’ve all been experiencing lockdowns and forced to behave quite differently and interact remotely and digitally with our financial services providers. And I think those trends are here to stay.

More than ever, consumers expect their banks and need their banks to be good listeners, solution providers, and trusted advisors. And all of those things delivered with empathy and understanding. That’s a tough ask to do that at scale and consistently, but that is what consumers expect in the new world.

Neobanks are popping up everywhere with very attractive Customer Experience (CX). Are they really threatening traditional banks? And if yes, what can traditional banks do to stay relevant and compete against these tech-first banks?

Neobanks have certainly been a source of dynamism for the banking sector. They put pressure on incumbent banks to innovate and generally up their game in terms of CX. But despite all of that pressure, switching rates amongst customers remains pretty low. In many of our markets, people are more likely to move to a new house or indeed even to change their partner than they are to switch their primary banking relationship.

On top of that, we’ve seen neobanks struggle in the race to scale. Yes, there are many examples where they have rapidly built a customer base, but many have not done so profitably. And unfortunately, the current crisis has exposed the challenge of building a profitable banking business in what continues to be a difficult operating environment.

One of our own clients recently saw the opportunity of leveraging their established brand and reputation to take advantage of a market opportunity in the digital payments space, in the face of lots of competition from new entrants. Using EY Nexus for Banking assets, they basically turbocharged their own data, analytics and investments to enable them to launch very rapidly a digital proposition that is already taking significant market share.

I believe that with the right technology backbone, the right creative approach to data, and a continual focus on identifying and serving customer needs, the future for incumbent banks is bright. Harnessing innovation and scale will be a very powerful proposition.

Some banks have invested heavily in digitization but it hasn't necessarily had a serious impact on their return on investment (ROI) and customer satisfaction. How can this be explained? Are these investments worthwhile?

Being digital isn’t the same as doing digital. Nor is it just about repeating the same things that you’ve always done, only more efficiently and faster. Being digital is about reframing banking, rethinking the relationships that banks want to have with their customers and their broader role in society. That requires a different leadership mindset.

Being digital isn’t an overnight transformation either. Many of our clients have been on multi-year journeys. And I’m sure, when they look back and reflect on some of the investments they made over the years, there’ll be things they question. Was it right to choose that platform over the other platform? But overall, I do see the ROI coming through in many of those investments.

I don’t subscribe to the view that customers’ stickiness is just down to their apathy. I think it’s down to the fact that banks for the most part are meeting many of the needs and are evolving their services to make sure they stay current and relevant. But of course, there’s so much more they could do and that’s why we’re seeing many of our banking clients improving their digital transformation journeys.

Why is data so important to CX?

Banks are obsessed about data, and it’s no wonder. Data is banks’ most precious commodity, and a key battleground for competitive differentiation. How to orchestrate, leverage and protect data is a strategic as well as an operational question. We are increasingly seeing the role of chief data officer being combined with senior business leadership roles, and in some cases with the chief technology role, in what I think is an explicit recognition that data is at the heart of the future business and technology architecture choices that banks have to make.

The advent of cloud technology, APIs and the adoption of open banking, and a whole raft of analytical tools make this a really exciting time for customer experience professionals. These advances open up a possibility for banks to finally bring together a coherent data fabric that can serve multiple stakeholders, whether it be assuring regulators that the bank is resilient and in control, bringing greater forward-looking insight to the CFO rather than just relying on rear view mirror measurement, and of course providing a golden source for customer insights.

From a CX point of view, data is only worth something if it can be converted into that magic word, insights. Insights drive closer customer connections and are key to growth. They enable banks to add value to their customers through the timely provision of personalized services and products. This era of hyper-personalisation will be a key feature as well all emerge from the pandemic, and I’m really looking forward to seeing the pace of innovation in this space accelerate.

It's impossible not to touch on the COVID-19 pandemic. What are some positive and negative impacts of the pandemic on banks in terms of CX?

The COVID-19 pandemic has presented banks with significant operational, risk management, people, and customer challenges. And I think the response to these challenges has been pretty remarkable across the sector. And the banks can take some really valuable lessons with them into what we hope will be a much less turbulent 2021.

The lockdowns we’ve all experienced in our countries are proving to be the single greatest catalyst for mass digital adoption and banks have responded with incredible agility and speed of thought and action. Customer journeys were adapted and designed at lightning speed to deal with the unprecedented volume of queries and government stimulus loan applications from understandably stressed customers. Chatbox were developed and rolled out over a weekend. And large numbers of the workforce were redeployed to areas of greatest need.

That speed of decision-making, that ability to change a pace in response to customer needs, have to be part of the banking DNA going forward. Returning to the old ways of multiple committee meetings, design processed that take months, is not going to help banks deliver the transformation that most are now committing to.

And finally, I guess one of the most uplifting aspects of the banking response to the COVID-19 pandemic is the shift to long-term value. We’re seeing the banking industry being very vocal in its commitments to building back better, and making sure that future success is not only defined by financial returns, but by the broader societal and stakeholder impacts. I think that shift in mindset is fundamental to the sustainability of the banking sector going forward and it needs to come through loud and clear in the experience that customers receive every day.


Covid-19 Customer experience Big data GAFA/New competitors Digital/Mobile channels


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