‘Traditional banking’ is facing extinction as our digital click-swipe-tap culture is consigning it to the history books. But just because their business models have fallen out of favour does not mean that venerable institutions are suddenly irrelevant.
Neo banks and digital banking are in the ascendancy in the GCC. Saudi Arabia is home to new brands like STC Pay, D360, and Saudi Digital Bank. UAE consumers have Liv., Xpence and others. Many of these fresh faces are funded by incumbent names, at least in part. Behind this digital banking trend is a burning desire to accommodate customers–to meet them where they are and transact with them on their terms. In some countries, policymakers are even compelling banks to act this way. For example, last year, the UK government’s Financial Services Authority (FSA) introduced rules that forced banks to deliver “higher and clearer standards of consumer protection… [and] to act to deliver good outcomes for customers”. While largely unnoticed by most people in Britain, the rules have huge implications for the country’s banks. Customers now must come first. Their priorities must be their bank’s priorities.
However, the GCC is already adopting this so-called “Customer Duty” ethos. Every digital and neo bank that bursts onto the scene–from the bona fide newcomer to the incumbent subsidiary–has built a value proposition on the same customer-centric pillars found in FSA’s guidelines. However, it is worth pointing out that GCC governments have a strong history of consumer protections, including personal data protection. It is not unreasonable to speculate that Customer Duty could be a target for future mandates.
In the dust
In the meantime, regional banks that have yet to move in the Customer Duty direction risk being left in the dust of others who, rather than waiting for regulation, have set out to delight customers simply because it is good for business. We are now in a race towards relevance that waits for no brand. Banks must revisit every aspect of their operations to avoid spinning off the track. Product and service portfolios, communications channels and the customer experience are, of course, critical. But so are many back-office elements like governance, accountability, reporting, pricing, distribution, recruitment and staff training. That is a lot to get right when one is in a race against time to do so.
Even in nations where Customer Duty is not yet the law of the land, it will likely become the law of the jungle. To ensure that one is the benefactor of churn rather than the victim, one must go beyond security, anti-fraud, and 100% uptime to ensure that the human element is not a mere bolt-on but runs through every touchpoint, policy, and workflow. This is what neo-banks do. But as we have seen, neo-banks will soon be able to drop the “neo” because the prefix is superfluous when you are the only game in town.
Call of Duty
If you are a legacy GCC bank that has yet to embrace the neo/Customer Duty way of doing things, I hope you now understand why other legacy brands have made the move. The key to customer-centricity is, of course, digital services underpinned by real-time data. Customer Duty-driven organisations have abandoned scheduled batch processing in favour of real-time streaming, which has allowed them to transform customer experiences. Data streaming is essential to providing in-the-moment consumer convenience. Modern banking transactions bounce data back and forth, securely, between edge device and host. The bank analyses the data within the same timeframe, allowing it to perform security checks using biometrics, multi-factor authentication (MFA), and location data while making product recommendations based on the context of the action – for example, the offer of a loan while shopping for TVs or furniture.
With the right consent from the customer (we must remember the GCC’s laws on data protection), vendors of other brands could collaborate with banks to present relevant, personalised bank products at the most relevant point. For the furniture brand, the incentive is clear. The offer of the loan could push a reticent consumer over the line to a sale. The bank, meanwhile, could capture business if the consumer was considering using a credit card issued by a rival.
Such integration of a brand into the everyday lives of its customers is a long-term proposition that requires investment in systems infrastructure that can grow to fit future developments. The ability to handle data in real-time (data streaming) is the sine qua non of Customer Duty, which can now be considered a global trend. To integrate itself into a consumer’s daily life, a brand must consider the consumer’s daily life. It must live and breathe data streaming to live and breathe Customer Duty.
