People don't actually care about banks and they actually don't care about money: they care about what money enables them to do.
3. How can banks offer more personalized propositions, while looking to the next generation of banking customers?
Jan Bellens
Historically, banks have mainly played a conventional servicing role when it comes to mortgages. However, we’re starting to see institutions include themselves in the additional parts of the journey when buying a home, so they can anticipate customers’ evolving needs, better. In doing so, banks can target customers with more personalized propositions. If banks can offer a product that’s tailored to a customer’s particular profile, underpinned by data and as close to real-time as possible, they will have a greater advantage of retaining and growing their customer base.
Kathleen Calabro
Personalization and real-time offerings are of special interest to banks looking at ways to cater to the digitally native demographic. With needs extremely different from those of other customer cohorts, banks are beginning to grapple with how to service this “always-on” generation. Banks are considering questions such as:
- Is there an opportunity to look at securitizing their future net worth?
- Is there an opportunity to look at small businesses that sell products over TikTok, and capture data about them and their likelihood of success?
- Should banks start to treat such successful individuals differently in areas such as credit risk scoring?
4. How should banks use data and technology to their advantage?
Kathleen Calabro
We’re currently in a new era of data-driven insights, and the value for banks lies in the density and richness of their data. Most FinTechs tend to focus on one or two core banking domains, whereas banks have entire consumer or commercial banking profiles at hand. As we delve deeper into this era of intelligence and the monetization of data-driven insights, banks are realizing the advantage they have over many FinTechs.
Jan Bellens
Cloud-based platforms such as EY’s Nexus for Banking platform work to accelerate a bank’s journey to build out digital propositions much faster. Traditionally, banks have been big collectors of data, but not great users. Additionally, due to their focus on compliance and reporting, banks haven’t been able to focus on how to leverage the data they have in the best interests of the customer and their overall experience. This is the next big battle banks will have to encounter.
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5. How can banks use digital platforms to succeed in our digital age?
Kathleen Calabro
Banks must be able to adapt and continuously bring new propositions and new products to market. However, they are often hindered by their legacy systems, prohibiting them from moving quickly. As a result, many institutions have started to take a page from the big technology players’ books around platform-based businesses. It’s essential for banks to invest in reusable, technical assets, such as event-based architecture. The concept of real-time insights is enabled when banks build platforms to be event-driven.
These platforms really need to look at the problems that exist around data and create a taxonomy that allows data to be joined from multiple sources, to make it more powerful. This will help to create more personalized experiences for customers, helping to create new revenue streams. Issues such as data regulation, retention, and access, customer consent, and revocation of consent, need to be deeply embedded platforms when they are being built.
Jan Bellens
Innovation really starts to arise when institutions show that they understand the changing market, realize the gaps or friction that may exist for their clients and start to think innovatively about how to use data, partners, and technology to create propositions that continuously evolve. Having a very flexible foundational platform such as EY Nexus for Banking offers that ability. Banks also need to decide how to govern and manage the data underpinning these platforms. One bank we're currently working with is very keen to democratize their data and make it available to the whole organization, rather than solely to the different silos it existed in before.
The true value of these platforms lies in making them available at an enterprise-wide level so that these silos are reduced, and institutions begin to realize the significant efficiencies that can be gained across different business lines. The ability to aggregate different insights created through these platforms will result in real value creation for both customers and banks.
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Summary
Embedded finance is of major interest to banks today. Banks that successfully integrate embedded finance into their offerings will enable greater flexibility and adaptability in their business models, improving their chances of engaging on a more meaningful level with all customers.
