How integrated retail banks can focus on new revenue streams

COVID-19 has definitely been a big accelerator of digital transformation. This applies to any industry but, in financial services, the evolution towards digital and mobile has been truly spectacular. According to a recent report by Boston Consulting Group, consumers’ digital attitudes are here to stay. In our opinion, Identity and Access Management (IAM) can play a key role in helping banks digitally transform, reduce costs and increase customers’ mobile experience.

BCG’s report ‘The Front-to-Back Digital Retail Bank’ proceeds from the observation that customers are moving to digital channels faster than they ever have in the past: “Online banking use has risen by 23%, and mobile banking use is up by 30%.” BCG says these changes “are likely to be permanent, accelerating the migration to digital channels by three to four years over precrisis trends.” While the digital acceleration has been driven by Corona, now that people are in the habit of performing financial services online, they will not be returning to the bank branches any time soon. For many people, the pandemic was the trigger to get some experience with online and mobile banking. BCG expects a further increase in mobile banking.

Dangerous digitization

All this seems good news for retail banks that were undertaking a digital transformation anyway, but BCG sees some dangers too. Now that consumers have become more digitally aware, they may defect from their traditional bank to more digitally advanced competitors or nimbler and innovative challengers. And as digitization has made it far easier to make the move from one bank to another, competitors are just one click away. To cater to the digital appetite of customers, banks have invested heavily in improving the customer experience, sometimes to the detriment of their operating margin.

Redesigning value streams

According to BCG, retail banks now need to focus on two things: drive down cost and look at new revenue streams. To make this happen, BCG advises retail banks to take an integrated approach, and redesign every value stream, both at the back end and at the customer-facing end. In doing that, retail banks can maximize the value of each interaction between the customer and the bank.

Marrying customer experience and cost control

At TrustBuilder, we believe that IAM plays a key role in achieving the goals that BCG sets for retail banks:

  • Adding revenue streams is what we see as the fourth stage in our IAM Maturity Model. By building digital ecosystems, retail banks can tap into new sources of revenue, for instance by reselling products that complement their financial products. By bundling these products into a single package for customers, they are making life easy for their clients. Acting as a one-stop-shop will enhance the customer experience.
  • Mobile channels are growing in importance, but vulnerability to attacks usually comes bundled with that smartphone. Making mobile financial transactions safe sometimes leads to cumbersome procedures with codes sent through unsafe channels such as SMS or apps that you need to switch to in order to get a code. Not so with TrustBuilder Mobile Authenticator. This tool makes the dream of passwordless authentication come true. That is the kind of customer experience the digital generations expect from their banks.
  • Retail banks have long had the tradition of building the back end of their bank from scratch, rather than choosing ready-made solutions from specialized companies. When not building this themselves, they bought pieces of the puzzle that IT still needed to fit together. Taking the integrated approach that BCG suggests, does away with that attitude. Most companies are trying to reduce the number of technology partners they work with, opting instead for end-to-end solutions. Not only will it save them time, it will also prove to be more cost-effective.

    It may seem that customer experience always comes at a cost. However, by making smart choices when it comes to technology partners, this need not be the case. Customer experience should never compromise cost control. And cost control should never compromise customer experience.


Frank Hamerlinck

Frank Hamerlinck

As co-founder of global trade management leader Porthus, customer experience platform NGDATA, and strategic consulting services company innacco, Frank embodies the entrepreneurial mindset. His 20+ years of ICT experience is complemented by his position as ‘Entrepreneur in Residence’ at iMinds and coach at Netwerk Ondernemen.

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