Why tech partnerships are key to banks’ survival (Part 1)

That the retail banking landscape is undergoing one of its most profound changes in recent memory is no longer breaking news. The proliferation of digital, the deepening penetration of fintech and open banking, and the increasing customer demand for innovative services have combined to create an environment that is unrecognisable from that of only a decade ago.

Inevitably, this digital-driven evolution and democratisation of banking has delivered the hardest blow to the established high street banks who’ve watched as swathes of their market share has been annexed by a variety of new players.

However, there is still plenty of life in the established banks. With heritage and customer trust largely intact, by engineering some clever manoeuvres, the process of clawing back territory can begin. And, as ever, it is a focus on the customer where it will start.

Looking beyond what customers say they want

In recent research conducted by Retail Banker International (RBI) for the Association of British Insurers (ABI), it was found that respondents claimed to want dashboards with interactive design features like sliders for managing their pensions. Yet, concept testing found that respondents would still only use these dashboards to view their pension amounts rather than engage with them to make meaningful changes.

It is in this newly termed ‘say-need-gap’, that specialist technology firms could hold the answer. Attractive and responsive front-end interfaces may get customers through the digital front door, but to keep them inside, banks need technology experts to design propositions that add real value and motivate behaviours that allow customers to achieve their financial and life goals. In other words, it’s the back-end where the magic needs to happen.

It's all about partnerships

Ultimately, despite the radical improvements many high street banks have made to their digital offerings, they are not tech firms. Developing and finessing innovative, customer-centric solutions is not their core strength and, arguably, nor should it be. They are the custodians of our money and keeping it safe and accessible should always be their primary objective.

It is for this reason that partnering with technology firms whose primary objective is developing and finessing innovative, customer-centric solutions must become a key strategic move for the established banks.

For example, in recent years we have seen a growing appetite among retail consumers to engage in investing and wealth management endeavours. Whereas the banks have struggled to facilitate this, new online and app-based entrants, like Trading 212, have even had to pause onboarding new customers due to the scale of demand. In part this is because they simply placed user wants and needs firmly at the centre.

Bringing in technology partners to support critical infrastructure parts of these kinds of propositions      has the potential to bring banks back into the game in a serious way.

Further benefits

Investment in the right partnerships with technology firms is the easiest, quickest, and most dependable way banks can go to market with the products and services customers want and do so boasting full compliance.

In the second instalment of this two-part article, we’ll look at an additional and critical benefit such partnerships could bring and why it is the one that might yet be the most important for their long-term survival,