The View from the Top of FinTech is Clear: Banks Must Speed Up Digital Transformation

by Seeta Hariharan, GM and Group Head, TCS Digital Software & Solutions Group

For more than a decade, Wall Street and the rest of the financial services industry looks forward to IDC’s annual ranking of the top FinTechs.

For banks, it’s not just about the handful of FinTechs they must now get to know. It’s also a learning moment for the industry. A chance to look back over the past 12 months and ponder what trends and insights can be gleaned from the handful of firms perched at the top that have earned bragging rights for the next 365 days.

So when IDC recently announced that TCS captured the #2 position on the 2017 IDC FinTech Rankings, I took it as an invitation to share our view with customers on the constantly evolving financial services industry.  (To see more of our views from the top of the financial services technology industry, watch this video featuring IDC Financial Insights Research Director Jerry Silva.)

GM & Group Head Seeta Hariharan and IDC Financial Insights Research Director Jerry Silva speak about trends in the financial services industry.

TCS’s longstanding relationships with the world’s largest and most successful banks as well as leading companies across other industries give us a unique perspective. From this vantage point, it allows us to spot trends playing out in one sector that often hold crucial lessons for another.

The telecommunications industry is a perfect example. I often tell banking customers that on many levels, the disruption they’re facing from today’s born-on-the-web firms reminds us of the disruption telcos faced beginning in the late 1990s.

Back then, telcos began struggling against a new type of competitor – the over the top (OTT) providers. This new wave of compelling content providers quickly began offering popular video content like YouTube, chat and other social media services such as Facebook and Twitter. While industry pundits debated whether the telecom industry would transform itself to offer higher value in the form of smart pipes, the telcos became providers of commodity infrastructure, or dumb pipes.

I think we all know how that turned out. The telco industry’s failure to digitally transform became a business school case study.

Yet banks aren’t destined to repeat the mistakes of the telcos if they can speed up the pace of digital transformation.

Banks that used to rely on profitable financial products like fee-based checking are under pressure to develop new revenue streams. Their agile new rivals are not just undercutting them with competing financial products for free or at low cost. They’re also more adept at using digital technologies to deliver a better overall customer experience.

Despite investing to varying degrees in digital transformation, most large and midsized banks remain burdened by multiple legacy platforms inherited from decades of M&A activity and industry consolidation. It’s left them mired in various stages of defining their long term digital strategies and challenged to make headway against crafty competitors who count themselves among tech’s early adopters.

In less than a decade, the competitive arena for banks has shifted. Their rival digital upstarts have taught them a valuable lesson: To successfully compete for revenue and consumer loyalty, instead of pushing products they must sell superior customer experiences.

Fortunately, every bank is sitting on a treasure trove of data that can be turned into revenue if they can mine the insights to deliver winning customer experiences. If banks can truly understand their customers’ individual consumption patterns, they can deliver value at every touch point.

As digital natives, born-on-the-web rivals may appear unbeatable at leveraging customer data. But every customer lives in a digital and a physical world. That gives banks unleveraged assets the upstarts lack – physical locations in the form of branches.

That’s right — banks can actually deliver superior customer experiences by better understanding the consumption patterns of their customers. They can monetize their data by deeply understanding the choices, desires and aspirations playing out in the consumer’s converged physical and digital worlds. It requires capturing vast amounts of online and IoT data; connecting, analyzing and sharing it across company silos; drawing inferences through partnerships; and continuously detecting and learning consumer behavior patterns. All in real-time.

This approach is critical for banks to survive. But it demands a new kind of insight — “Connected Consumer Intelligence” — which TCS Digital Software & Solutions Group employs in its software. It’s the way banks can deliver superior customer experiences across the physical world and the digital world, which to consumers are now indistinguishable. And it’s the way banks can speed up their digital transformation and not go the way of the telcos.

2 thoughts on “The View from the Top of FinTech is Clear: Banks Must Speed Up Digital Transformation

  1. The opportunity for the banks is unprecedented.. .. For most customers, they have so much data on a customers entire life.. and yet the data is not converted into information much less experiences!

    All the hassle when applying for a loan, when they have access to everything to determine credit worthiness, based on years of data on income and spending patterns..

    Predictive analytics could create valuable offerings for the bank and unexpected (pleasant) experiences for the customer. Cross mapping financial patterns would lead to more partnerships delivering more value to the customer and to the bank..

    Even a simple NSF letter could be a positive marketing and relationship building opportunity. The NSF letter generation system could look at the history of the customer and determine if instead of the ‘nastygram’ it would be better to send a letter acknowledging their standing with the bank and offer a one time complimentary waiver highlighting their ‘loyalty’ and avoid the unpleasant discussions with customer service personnel; which in most cases result in a waiver by a supervisor/manager who sees the customer record. This leaves a bad taste/poor experience for the customer and the cost of call handling escalation for the bank.

    So, financial institutions have a LONG way to go, and an opportunity to align their strategies based on insights from troves of data ONLY they have.. This external customer value mindset will add to differentiation and sustained growth instead of the inevitable future many industries are experiencing from ‘softwarization’.

    Like

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