Asian Consumer Banking in 2020: 4 Trends to Watch

Consumer banking is being disrupted and transformed, and here are the four trends that finance professionals should keep track to leverage opportunities in this sector in Asia.

Technology has shifted the ground beneath consumer banking, as illustrated by the growing number of customers moving from transacting at physical branches to online. We will see further changes in the next few years as the trend towards digital continues. Traditional methods of payments, bank services and customer interactions are quickly becoming obsolete, and so building a career in the consumer bank will require a different set of skills.

While working with industry leaders to develop a forward looking skills framework for consumer banking, the Institute of Banking and Finance has identified four key areas that consumer bankers must have on their radar.

Data Analytics and Decision Science

Banks are awash in big data. With a trove of information on spending habits and wealth management, data analytics presents banks with a unique opportunity to create a more personal and seamless customer experience.

Getting big data right pays off. A survey of banks by Efma and Nomura Research Institute showed that retail banks who effectively used big data increased their revenue by 25 per cent, and reduced costs by the same amount.

The other side of the data coin is the field of decision science. Emerging from a collection of other disciplines including mathematics, business, technology and behavioural sciences, decision science can be considered as the human face of data. Informed by artificial intelligence and machine learning, computers can do a human-like level of thinking to help weigh up risks and rewards.

The combination of data analytics and decision science can enable banks to align their products with the future needs of customers and respond with services in real time. For example, by analysing customers’ transaction data, spending patterns and insurance plans, OCBC is able to better understand their behaviours and spending habits. This has also helped the bank develop successful products such as Frank, a youth banking solution.

Cybersecurity

A recent report by antivirus software developer Kaspersky Lab showed that the cost of a single hacking incident was close to US$1 million for banks and financial firms. However, the impact of hacking on reputation and the erosion of trust could result in much worse – significant loss of business if confidential data was leaked, or worse if customer accounts were directly hacked.

For instance, distributed denial-of-service (DDoS) attacks such as the Wannacry cyberattack in May had security experts and bank executives on their toes after another group threatened South Korean banks. In June, the Petya attack in the US and Europe once again reminded security experts of the dangers of ransomware.

Singapore’s financial services sector is likely to remain a top target for cybercriminals, which means that the demand for cybersecurity expertise in financial services will only continue to grow. According to a 2017 PwC survey, spending on IT security in the industry has increased 11 per cent over the past year. Considering such trends, along with the planned introduction of the Cyber Security Bill, skill sets and capabilities in cybersecurity will remain crucial, if not more significant, to consumer banks.

UX

Another key trend in consumer banking is the move to a customer-centric understanding of the banking journey, beyond just trying to cut costs and sell products. It is not just about banks digitalising their banking services. It is about empathising with customers, and understanding their needs, frustrations and aspirations, and using that as a basis to eliminate pain points and provide practical solutions.

Designing solutions in the context of an evolving customer demographic can be a challenge. Often, this means getting the design right by balancing competing features. Clunky sign-in procedures are unpopular, but must be balanced against the best practices for security. While banks have started to bring in designers outside of finance for out-of-the-box thinking, bankers also need to know how to start applying such concepts in designing products and services delivery to their customers.

Digital communication

Digital communication and social media marketing have become more important, with a recent report revealing that 7 out of 10 Singaporeans are active social media users. No longer just a place to connect, banks are using social media platforms to deliver banking more effectively to their customers. Apart from using third-party social channels, such as Facebook Messenger and WeChat, to provide instant access between the bank and their customers, some banks are also developing their own communication tools. For instance, UBS has partnered with Singapore-based technology firm FinChat to develop a solution that enables secured social chat communication between its clients and advisors.

Professionals working in consumer banking are at the coalface of a thriving digital transformation. Banking professionals need to develop new skills to engage their audiences, build trust and understand the digital journey to realise these opportunities.