New Opportunities for Classic Businesses
Digitalization in banking
Digitalization is a challenge for many German banks. Customers have information and offers from the competition just a few inches away on their smartphones. How should banks position themselves when customers increasingly carry out their banking activities without direct contact with branches?
For most Germans (53 percent), online banking has been commonplace for a long time – just like mobile banking. Meanwhile, 47 percent of Germans reach for their smartphone when they carry out banking transactions. With these figures, the Germans don’t even come out on top in Europe: In Norway, 91 percent of people use online banking and in the Netherlands, 61 percent rely on mobile banking, according to current figures of the Statistical Office of the European Union. European bank customers are using digital channels more and more frequently for their banking activities, while personal contact with an advisor in branches is becoming less important. The competition for German banks is growing: on the one hand, from direct banks which rely on a business model without a network of branches, and on the other hand from FinTechs offering digital alternatives to classic banking services. They handle bank transfers, arrange loans and take care of financial management and wealth creation. This competition is not restricted by international borders and transfers digital data effortlessly from one country to another.
An offer for on- and offline banking
Many financial institutions still cannot offer their customers a functioning solution that merges online and offline banking. With this merging, information that a potential customer enters into the search field when looking online for a finance offer could be forwarded directly to a bank advisor – with advantages for both parties. These integrated offers could be the decisive competitive advantage for classic financial institutions: “For a digitalization strategy, it’s not a question of motivating more and more customers to carry out more and more banking activities online,” says Dirk Vater, partner and Head of Practice Group Banking at the Frankfurt management consultancy firm Bain. “It’s much more about the fact that it will allow customers in the future to decide when, where and how they contact their institute. Bank branches are and will remain an important option.” This analysis also underpins a closer look at the offers of FinTech companies. They currently do not offer their customers competent, personal advice from employees, which is vital, especially for complex themes and products.
Performance modules for omnichannel solutions
On the other hand, account opening is a good example of the opportunities that digitalization offers traditional financial institutes. This is because the previously cumbersome process can now be completed digitally, in a simple and customer-friendly way. Before, customers in Germany needed to either visit a branch in person or use the Postident method to identify themselves. The Federal Financial Supervisory Authority (BaFin) in Germany has been allowing remote identification via a video broadcast since March 2014. Customers can now identify themselves via VideoIdent from Arvato CRM Solutions directly over their web browser with specially trained employees in the service center – independent of opening hours, directly from their breakfast table and by smartphone, tablet and PC.
Switching accounts was also considered a great effort before: numerous direct debits and payment partners had to be reliably informed. The account switching service Kontowechsel24 takes on this task today. All parties involved benefit from this: Consumers are systematically led through the payment partners to be informed, and the payment service providers obtain a process that is compliant with the specifications of the Payment Accounts Act in Germany. Should the new customer wish to receive advice after switching accounts, they can be put in contact with a bank advisor in the branch via video chat. In this way, an intelligent omnichannel offer combines the advantages of the digital world with the competencies of the branches, giving them the opportunity to digitalize classic financial institutes. They just need to be used. The effort to do so is tiny.
Author: Editorial team Future. Customer.