Eapen thomas's List: Project

According to recent research by Novantas, most 18 to 29 year olds (64%) prefer to use remote channels for the majority of their bank transactions, compared to the minority (37%) of over 55’s.

But then they find that the overwhelming many – 92% – of general bank customers want branches.  Even the ones who use all the tech stuff that Novantas call the “virtually domiciled”, want branches near their home as the second most important factor in choosing their bank.  78% believe this important, with only user-friendly online banking being more important (86%).

That’s a transitional point.

It’s a transition point that says, like cash, we need this stuff to reassure ourselves we can pay (cash) and get our money back (branch).

I wonder how long it will take for that attitude to change?

Allow users to get in, out, and on with their lives. Due to the limited time people spend on mobile devices and the concern for bandwidth, a good mobile site or app allows the user to get in and out and on with their lives. So, why does not this apply for all platforms?

As marketers, we like to believe consumers want to spend hours on our site reading pages of invigorating copy, commenting on posts and analyzing every picture. And while this is the case for some users, in reality, many want to perform a simple task and move on.

Other platforms should look to mobile as an example of sticking to the basics. Sure, that image is beautiful, but does it really help the user complete a task? If not, remove it.

This is the problem I want you to have in your head.  Lots of data, lots of system, the user is changing . 

Meantime, when I try to get service from your company, banks, you have trained me to get crummy service.  Sometimes people take a long time to answer, shift me around.  Same as airlines. 

My daughter has no idea why I expect that service, but she expects instant gratification. 

For example, my daughter and I are in the car going to the airport, and I am trained for crummy service so I call the call center. 

My daughter says, what are  you doing?  Doesn’t that airline have Google?

I try to explain that this is much more complicated due to legacy applications and complicated IT. 

She could care less.  “I’ll get you the gate on my iPhone”, she says. 

She expects to get immediate answer to any question she’s got when she wants it.  That demographic that’s changing won’t tolerate what I tolerate. 

So the future world of banking will be more complicated with more data, more urbanization and an expectation for immediate service as people sort through zettabytes of information trying to get an answer to a simple question.

Which brings me around to the specific challenges in banking.

Banks have all these channels: ATM, Branch, Telephone, Internet. 

Now I remember when I worked for NCR in 1995, and an analyst said: “you know debit cards are going to rule the world and there will be no more cash by 2000.  We will be a cashless society.  I remember hearing that internet banking would eliminate bank branches.   At NCR, where I worked at that time, if people don’t use cash or branches, it is bad for our business.  Now, years later, I have a lot of cash in my pocket and I still use it. 

The fact is that, with these secular trends, nothing tends to go away.  Everything tends to add.  Things get more complicated, not less. 

It is because the customer wants choice.  I still want cash and a debit card. I want internet banking and a branch and a call center. 

Retailers face the same problem.  Grocery stores were going to be no more, and were going to be replaced by internet ordering and a delivery van but there are still lots of grocery stores.  Do some people use internet to shop? They do.  Do some cross shop?  They do. 

It just means there is a lot more change, more complexity, more data, more mobility, more growth in markets yet to be developed and my pitch to you would be simplify, simplify, simplify.

Most banks have silos of data everywhere.

My pleading would be integrate, simplify, move away from as many apps as possible.  Simplify your apps.  Free up as much money to innovate. 

All of you in IT and banking have really hard jobs for all the reasons I described.  You have more change coming at you.  There is a ton of data and a world of unhappy users, who won’t be satisfied with bad service and are highly mobile, looking for answers to questions as fast as they can and getting answers from old creaky silo technology systems. 

This is a period of time to transform these environments and it’s time to move. 

For example, if you bought a car from the IT industry, how would that work? 

Here’s how it would work.

First, you would call the muffler company, then the windshield, then the tyre company, the engine company and so on.  And all the pieces would arrive as parts in your driveway.  You would then hire a car integration company to put it together in your driveway.  Once assembled, you would then be told you can drive the car for four days a week, unless there is a lot of traffic, as a result of various auto Service Level Agreements. 

In other words we, as an industry, have fragmented so many of the parts of technology that it takes  hundreds of employees to cobble it together. 

That’s got to change and if we can provision, test, integrate and remove service and complexity, and support it remote, then that would be a sea change in the industry.  There will be a forcing together based on what you can see, in terms of lower integration and operating costs. 

For the next few minutes, Hurd made his case using a Powerpoint presentation: A big-bank customer of Oracle, which he did not name, has an annual budget of $13 billion for research and development in information technology — almost as much as the combined spending ($14 billion) of IBM, Oracle and Microsoft.

What does this big bank get in return? Software applications that are on average 15 to 20 years old, and an infrastructure that is about a decade old.

"Most of those applications are old and homegrown, and most of the people who developed them are gone, and most [of the apps] are in maintenance mode and hard to evolve and support," Hurd said. He mentioned another bank customer with a comparable R&D budget that covers 9,000 individual applications.

"These costs on a long-term basis are nonsustainable," Hurd said.

ssures.

 
• Banking: Highly vulnerable because the commercial banking side of the business has historically benefited from public policy which has regulated prices for banks over time. Recent trends suggest that there is decreasing protection from public policy resulting in erosion of the industry's ROA over the past couple of years.