The past five years have been awful for most European retail banks. The financial crisis, and the resulting recessions in most of Europe's economies, nearly destroyed some banks and crushed the profitability of many of the remainder. Worse than that, it was a problem that was partly or largely of (some) banks' own making. Banks are being forced to shrink their balance sheets, sell off non-core businesses and cut costs (i.e. fire employees) just to survive. And Europe's ongoing financial crises are far from over as banks' fortunes are closely entwined with those of their indebted governments.
There's one small silver lining among these dark clouds. Over the past 15 years, eBusiness has evolved from providing an electronic brochure to become a fundamental strategic function within retail banks. One of the effects of the financial crisis has been to force most European banks to focus on how to generate profits in their core retail banking operations by serving customers efficiently. Digital banking is a big part of the answer. So, despite the bleak economic outlook, most retail banking boards know that they must continue investing in digital channels. Digital strategy is an increasingly important component in overall strategy.
I'm still surprised when I find heads of eBusiness who remain marginalized within their firms, reporting into IT or marketing rather than a centralized distribution channels function alongside branches. The leading banks no longer make that mistake. That has greatly increased the power and influence of digital banking executives, but also their responsibility for the overall success of their businesses.
Here's our view of the top five priorities for eBusiness and channel strategy executives at European retail banks:
- Developing a new generation of digital banking. As we first wrote in our research on Next Generation Digital Financial Services, eBusiness and channel strategy executives need to combine a wide range of technologies from touchscreen mobile interfaces and rich Internet applications to predictive analytics and customer data integration to build a new generation of digital banking that is both more integrated and more intelligent.
Thinking mobile first. The rapid growth of mobile Internet use means that bank channel strategists need to think “mobile first” and seek new ways of creating value that go far beyond cramming online banking functionality onto a small screen. I wrote in a previous post on this blog about the fundamental strategic shift caused by mobile banking.
Using digital channels to deepen customer relationships. Digital banking teams need to use the web to help customers deal with austerity and manage their money better, such as by offering online money management (or PFM), to deepen customers' relationships with their banks.
Right-channeling customer interactions to improve service and encourage sales. To increase service efficiency, encourage product sales, and eliminate costs, eBusiness and channel strategy executives at many banks need to continue right-channeling routine interactions toward self-service and high-value interactions toward employees by giving customers (and employees) incentives to change their behavior.
Integrating multiple touchpoints for greater operational effectiveness. Even the best strategies are worthless without great execution. Digital banking executives, as always, need to work with their colleagues in other roles to develop the right infrastructure and help deliver their strategies.
Forrester clients can read the full report, which assesses the industry and customer trends affecting banks and recommends what actions digital banking executives should take, here. (My colleagues all told me it was too long, like this blog post. Sorry about that. I hope you like it anyway.)
If you've read this far, you're clearly either interested in digital banking strategy or very bored. If it's the former, I thoroughly recommend that you join us in London next month at our inaugural eBusiness and Channel Strategy Summit, which is taking place in London on May 23rd. Among the speakers are digital banking leaders from two of the most innovative retail banks worldwide: Drew Unsworth of Commonwealth Bank of Australia and Jurrien Kamst from SNS Bank. I hope to see you there. The details are here.
What do you think are the most important challenges facing digital banking executives this year? Do you agree with our list? Let us know in the comments below.