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Retail banks must change to face realities of digital world

Retail banks are facing the toughest of trading conditions, claims a new report from Oracle which says that three quarters lack suitable technology to complete the path to a digital world, leaving them vulnerable to new competitors.

Of more than 100 top executives at major retail banks around the world quizzed by Oracle, 94% say that having a digitised omni-channel customer engagement strategy is important to their future success, with a third claiming that success is entirely dependent on this.

Yet there is little confidence among respondents about their ability to meet the threat. Nearly all banks – 88% – say that they face a challenge in overcoming their legacy systems to achieve omni-channel digitisation. The key to beating this problem is the use of new technologies but 75% of bankers cite a lack of suitable tech as another barrier standing in their path to a digital world.

Current Direct Competition

Current Direct Competition

Meanwhile, respondents are worried that new, tech-savvy rivals without complex legacy issues will prove a huge threat within the next five years. Some 29% of those surveyed expect social media networks to be serious contenders for their business by 2020, the same percentage think telecoms companies will be a threat, and 22% retailers.

More than half believe that both private label banks and alternative payment method providers will be major competitive threats – a greater percentage than are worried about other traditional high street players.

Customer engagement channels

Customer engagement channels

When it comes to the services respondents think are important, 90% cite mobile payments and real-time synchronisation. A large proportion also think that providing customers with real-time spend analytics, comparison services and offers via social media are valuable.

Oracle says that these advisory services show that banks must use digital to become more than transactional outfits, positioning themselves as “financial gurus” offering guidance at the tap of a screen.

Yet, despite being recognised as important by over four-fifths of banks, fewer than one in three currently provide real-time analytics, fewer than one in four provide real-time synchronisation and fewer than one in five provide location-driven services.

Oracle blames this on defensive mindsets, with banks focusing on preventing customer defection, complying with legislation and reducing the cost base, rather than actively seeking growth and improvement. Most respondents think the industry will fail to meet the challenge.

Concludes the report: “Failing to meet customers’ expectations is dangerous in any industry; it could be lethal in an environment where the competitive landscape is becoming ever-more congested.”

DBOF_Industry_Research_Report

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