Banks and Digital Disruption

Shifting “So-That” Transactions to High-Value Experiences
Commerce

With the digital transformation of transactional industries, interactions laden with friction and human interaction are made seamless; participatory experiences evolve to meet the needs of customers; and, in turn, new opportunities for value creation emerge.

Digital disruption is big and it’s here and the commercial relevance of banks hinges on how they decide to take it on.

The word “disruption” has in many ways become shorthand for discomfort, referencing the slow and deliberate response of seasoned professionals to look on, as a phenomenon with sweeping impact and ever-evolving nature closes in on them at full speed.

With a phenomenon so big and frightening, the first reaction is to focus on one seemingly manageable piece of the puzzle. In the context of a bank facing digital disruption, this piece is often technology — after all, there is a floor named Technology in their organization. By giving this force a recognizable shape, it seems easier to mitigate.

This, of course, misses the nuance. Digital challengers and traditional banks alike are providing customers with value, not just a technology or a bank account.

To build for the future, banks must focus on the customer. “Digital” is not technology. It is not an app. At SapientRazorfish, we know that disruption is not about providing better technologies, but better overall experiences, which drastically shifts the parties involved, the mindset attached and the value created in the process of digital transformation.

Consider the Yellow Pages. At one time not so long ago, we leafed through the pages of the large book that was delivered periodically to our homes. Going to dinner was the objective. Ultimately, this experience was digitized and it did not recreate the experience of flipping through pages. Rather, it solved for the need, evolving over time from looking for the phone number and directly dialing the restaurant from a different device, to directly dialing it from the same device, to eventually making a reservation without speaking to a human. New entrants with new technology removed the friction (and the Yellow Pages!) from the process.

Because banks, like the Yellow Pages, were most often set up in an analog world, they are facing a fundamental challenge to maximize efficiency, based on technology that is increasingly obsolete. Banks were created so that people can safeguard their wealth, because people need credit, because they have investable assets or need to hedge risk. Today, technology renders many of the steps of traditional banking redundant. This isn’t because the need itself has changed. On the contrary, the need has remained the same. What has changed is the way the need is met, cutting “the industry” out of the process.

To avoid obsolescence, there is only one option: focus on the customer and the needs that sparked the industry in the first place. When banks truly understand the customer journey, when they in fact organize their businesses around removing friction and adding delight into each step, their value-proposition becomes experience-based. In fact, the trust customers have put in the safekeeping of their assets and information will easily transfer to trust in a valuable and seamless experience.

Change won’t happen overnight. It’s never easy to determine one’s own relevance, present or future. But if banks get bogged down in questions of regulation, squeezed margins and disintermediation without considering the impact on the customer, they can too easily slip from a “so that” business to a “so what” business, while others around them reap the benefits of digital transformation.

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