With the incoming threat of fintechs, banks know that digitising their services to compete is their primary concern, and they are actively funding IT to promote this: worldwide bank investments in IT are set to exceed $200 billion in 2016 according to Celent’s report. Yet, ‘For a sector that spends significantly more on technology than most other sectors in the world, it is the least innovative, so there is a paradox here,’ says Bill Michael, head of financial services in Europe at KPMG. As innovation remains lacklustre in the banking world, so customers are growing restless: In business banking. Only 25 percent of SMEs consider that their bank supports their business, and 10 to 20 percent of SMEs rated the overall standard of service they received from their banks as poor, according to a recent study conducted by the FCA and CMA. In consumer banking. 77 percent of worldwide banking consumers believe their bank’s performance falls short of their expectations according to FIS’s 2015 consumer banking index. Banks will need to innovate in order to keep up with emerging competition, but in 2016, the most pressing concern is the customer experience. An unhappy customer is a customer looking for alternatives, and they won’t hesitate to jump ship when a better service comes along. In fact, one in five bank customers surveyed by Accenture in 2014 said they would consider banking with PayPal if it offered a current account. To effectively combat this risk, the first essential steps in your digitisation journey must be focused on reshaping your bank to deliver a better customer experience, and restore your customer’s faith in banking. The following three digital enhancements will allow you to overhaul your customers’ experience, fend off the threat of competition and set your bank in a strong position to innovate and grow faster: 1. Modernised infrastructure Banks’ outdated core banking systems are a drain on precious resources. Maintaining these systems costs three quarters of banks IT budget, according to Celent’s research, eating up the funds available for digitisation and freezing technological advancement. Additionally, for banks burdened with legacy banking systems, creating new digital offerings is a lengthy process, complicated by the incompatibility and unreliability of outdated technology. And that’s without mentioning the reputation-damaging risks posed by legacy systems. Just look at the backlash that followed RBS’s system failure last year, as 600,000 payments failed to enter their customers’ accounts. If your bank wants to commit to giving customers the best possible service and competing at the forefront of digital banking, sooner or later your core banking system will have to be updated. Of course, it’s not as simple as flicking a switch for banks. Challenged by regulatory restraints, you need to make sure that your migration process doesn’t compromise your customers’ information or result in extended downtime for your services. In order to make your transition as smooth as possible, you need: An IT partner who you can trust, with a proven record of banking system migrations. Your team to buy into and commit to the process and work closely with your IT partner to make your migration a success. Many core banking system migrations of the last decade failed, simply because ‘Bank leaders, with plenty of other to-dos on their lists, often delegated the entire project’ to vendors that ‘lacked cultural context and often created architectures that didn’t fully mesh with business priorities’, according to McKinsey and Co. Build a business case and convince your team of the benefits of upgrading your core banking systems. If you can persuade your bank to take the step to update your IT infrastructure, you’ll not only make your systems more efficient and easier to maintain, but you’ll make the rest of your digitisation process easier because modern core banking systems are much easier to integrate with newer digital software and with consumer IT. 2. Optimised online and mobile banking Giving your customers consistent, remote access to your banking services wherever they are is no longer a choice, it’s become the backbone of most banks’ core offering. 80 percent of the UK banking population now use some form of online banking every month, according to Accenture’s 2014 survey. More than £1.7 billion is transferred each week using mobile phones or tablets through the major UK banks, says BBA’s 2014 report. Nonetheless, the customer service offered by your mobile banking tools can always be improved. The customer wants their service to be quick, and accessible anywhere, so all services that could be available remotely; should be available remotely. Additionally, ‘critics say that banks have only really succeeded in the digitisation of existing services. After all, we could previously make payments or check our balances, the process was simply more time consuming’, as BBA and Accenture point out in their 2014 report on banking digitisation. Your bank should aim to always stay one step ahead of your competitors. The most threatening upstart fintech businesses offer services which are either far easier to use than they are through online banking, or they offer services which simply aren’t available on any online banking platform. Counter this by making sure your services are convenient and universally available. Banks which aren’t always playing catch-up, and instead lead other banks by adding new systems to their online banking tools, will always stand out to customers when they’re comparing options. 3. Customer relationship management ‘Banks have one big advantage, which is that they have data about their customers, and to capitalise on that data they need to look at analytics,’ says Ben Robinson, chief strategy officer at Temenos. He’s right. Customer data is a precious commodity in some businesses, informing everything they do as they aim to deliver those customers with a service which best suits their needs. Yet, many banks fail to properly analyse their customer data. Banks already collect a huge amount of data, and if they made proper use of it they could tailor their customers’ experiences to create a far better service. But, far too many banks fail to do so. That’s like having the key to a door you don’t open. Your bank already has the data, now it’s time to make use of it. Customer Relationship Management (CRM) tools can tap into the information banks already have in their records - as well as providing new information - in order to overhaul their customer experience. The best of them offer: One complete view of your customers, prospects and opportunities, enabling your business relationship team to manage and engage with each customer in a more personalised way. Activity management, automatically giving your team with the best next actions to cross-sell and up-sell products which your customers are likely to want based on their information. Automation of business processes, making services such as loan applications faster and far easier for your employees and your customers. Social monitoring, allowing your marketing team to engage with customers and prospects, your customer service team to effectively deal with customer complaints and your development team to identify and respond to the public’s wants and needs. Secure mobile access to allow all members of your team uninterrupted access to the data they need to give your customers a better experience. But, whatever CRM tool your bank chooses, it will set your business firmly on the path to better customer satisfaction, ensuring you can repel the competition and accelerate to strong future growth. For more insights, download a free publication on digital banking. Microsoft shares its thoughts and views on the challenges facing banks today, the digital technologies that address these challenges and its vision for the Digital Bank: Download the free white paper For more information about Microsoft Dynamics CRM for financial services click here. We can connect you to partners who can help to build your business case and guide you through your migration processes.