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The Need For Innovation in Banking

We take a look at how Innovation is helping banks deliver value to their customers

6Jan

At the Chief Innovation Officer summit in New York we heard from Heather Cox, Chief Client Experience, Digital and Marketing Officer for Global Consumer Banking at Citibank. The face of banking has changed considerably over the last decade, with the internet changing the way customers, particularly those in the 18-34 age bracket interact with their banks.

The ability to bank online is now deemed a necessity by those between the ages of 18-34. Heather states that 31% see online banking as the top factor, whilst mobile banking, customer support, the ability to pay for bills online and convenient access to branches also important. Before, convenience was deemed to be most essential, with someone's choice of bank determined by which branch was closest to their home.

With the internet breaking down locational barriers, this isn't as important as it used to be. In 2014, 5.7 million transactions were made using smartphones, double the amount that were made in 2013, a number that's only expected to rise in 2015. But it's true that online banking isn't for everyone, with older generations still enjoying the personal touch. Although recent research by Deloitte shows that 'silver surfers' are now the fastest adopters of digital banking in the UK, demonstrating the ubiquitous nature of this trend.

In order to meet client expectations, financial organisations such as Citibank have to drive personalisation with considerable importance placed on transactions being made instantly. There needs to heightened responsiveness that makes online banking far more innovative and useful than physical branches.

Whilst banks are normally described as a necessary evil by the public, there's real evidence to show that financial institutions are slowly being judged by the same targets as other commercial organisations. Increased competition has meant that banks like Santander use customer panels, consumer focus groups and mystery shopping to help deliver value to their bank.

These initiatives have given Santander a platform to develop products and services like the Extra20 checking account that pays customers $20 per month as long as they direct deposit at least $1,500 and pay at least two bills online each month. This incentivises their customers to bank online, which in turn allows Santander to lower the pressure placed upon their physical locations and even close down branches that are no longer necessary.

The future of banking is online. Customers want their information on demand and in the easiest, most stress free way possible. Innovation will be central to any bank's ability to keep its customers information safe and readily accessible. There are still gaps to fill however, and the rate of innovation in 2015 will only increase as banks look to improve the way they interact with consumers. 

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