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Is big lender’s technology enough to fend off challengers?

Eric Crabtree_Unisys

One of the main discussion points in most large UK lender boardrooms is how to change consumer perceptions of their services and products to increase relevance and loyalty and drive top-line growth.

Part of any strategy will of course involve using technology to improve the user journey and attract a new generation of customers.

This year we have already seen brands such as HSBC, Barclays and NatWest implementing biometric solutions such as voice and fingerprint authentication.

As well as this, Nationwide and Barclays have also rolled out video conferencing capabilities for mortgage advisory services. These have been seen as a welcome addition by all generations of their customers. But the big question is: is this enough to keep them ahead of the curve?

As in any industry, new challengers bring new challenges for the major players. In the middle of all this, there are digital banks emerging such as Mondo and Atom.Although they are not currently at a stage to have a major impact on the larger institutions, they have promising capabilities.

Agility is one of the main strengths that newer banks possess. Compared to their larger competitors, many new entrants primarily offer online and mobile services, so they are not encumbered with legacy issues.

They are also smaller and as a result able to make changes to their products and services quicker than the established banks.

Another advantage we see is that many new banks are extremely end-to-end digitally enabled. Their ability to leverage user data, in a relevant and timely manner, gives them a competitive advantage.

It is with this real-time data that the digital banks can step out of the shadow of the better known ‘high street’ brands and offer customers something different. Be it frictionless processes, better customer experience, stronger security, better delivery or more competitive offers.

Another issue large institutions are facing is being stuck with legacy back office systems which are not able to capitalise on the huge amounts of data that is readily available. Tackling this issue takes significant investment with prolonged procurement and implementation periods.

The newer banks are not typically faced with these problems as their modern and future-proofed systems give them the agility to be nimble and make gains in the market.

Millennial banking customers are now more prone to going online to research their best options. This trend is only going to increase as generation Z starts to put its foot on the property ladder.

Customers are no longer having the traditional (in-branch) level of interaction with banks as they have done in the past. This is where the digital financial service brands are gaining traction, as they are perfectly positioned to offer the digital service that customers expect and demand.

The ease of use, and ‘always available’ service that these organisations can deliver will drive the growth of their customer base. Coupled with their agile ability to analyse and react to their user data, they are perfectly positioned to adjust their offering to suit customers and to attract new ones.

All banks must now really start to examine their business models to ensure that they are using all of the capabilities technology can offer them. By investing in upgrades to their top-level and mid-tier legacy applications, banks will be able to innovate and offer the products and user experience that customers demand.

As a response to the new threat, many of the UK’s high street brands are now focussing hard on developing their digital strategies. They are upgrading their infrastructure and their segmentation to keep them strong and relevant.

At the same time we know that the emerging banks may not individually have any impact on the big boys, but they are changing the game, which should have a positive impact for customers from generation Y to generation Z.

By Unisys global head of financial services Eric Crabtree


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