Chris Middleton explains why a new report from Accenture, compiled before the coronavirus crisis, makes interesting reading as a result. What are the real lessons?

Rising customer expectations, disruptive competitors, new technologies, and increased regulation are just some of the pressures forcing commercial banks to rethink and evolve their business models, says a new report from Accenture.

Those with investments in digital and data platforms, together with the right ambition, tools, and partners, are well positioned to be the frontrunners in a technology-fuelled market, in which new customers favour low-friction digital services (as previously reported on Transform Finance).

The report was compiled before the coronavirus placed severe strain on global markets, on every type of business and service, and, most importantly, on citizens struggling to make ends meet.

The gulf between the pre-virus era and recent events can be seen in the introduction. “We see 2020 as the year commercial banks went from digitisation to digital by building on these investments and truly unlocking the power of their data.” But the authors cannot be blamed for that.

The Ireland-headquartered consulting firm has identified six megatrends in its report. These will influence the market – once the shock to global systems has passed and business resumes, perhaps.

Those six megatrends are:

  1. Beyond the digital foundation

Commercial banks are moving beyond their investments in operational and customer relationship management (CRM) platforms, reinventing their analog processes to become truly digital players.

  1. The ‘empowered banker’

Relationship managers (RMs) are engaging their clients with enhanced insights. As a result, they are poised to grow both revenues and customer satisfaction.

  1. Intelligent automation for commercial banking

Smart partnering will lighten human workload processes. By highlighting the value of ecosystems, and combining data, analytics, and machine learning/AI, the most progressive innovators will prevail.

  1. Relevant AI in a post-digital world

Opportunities for the technology are expanding faster than banks’ adoption. Leaders are increasingly implementing AI and predictive analytics, growing their businesses with real-time decisions at higher returns.

  1. Unloading legacy baggage

Digital decoupling and microservices “allow innovation to take flight”, says the report. Legacy systems can be reliable, but stall change efforts. Innovation will kick-start migration towards full digital transformation.

  1. Integrated with the digital ecosystem

Banks that spurn partnerships will struggle to keep up with their competitors. Data and integration options in Open Banking enable a rich ecosystem to help banks differentiate products and provide customer-centric services.

From the front office to onboarding and loan origination, banks thought they would automatically realise end-to-end digital transformation simply by growing technology at business challenges, adds the report.

“While banks have made tremendous progress in digitising their foundations, the best is yet to come. We see 2020 as the year commercial banks move from digitised to digital by building on these investments and unleashing the power of rich data.

“Whether it’s placing AI- and analytics-driven insights at RMs’ fingertips to improve customer interactions and increase CRM adoption, or digital decoupling and choosing the right FinTech partners, in 2020 banks will build on these investments to leverage the power of digital.

“If that’s not enough, banks are still solving for the LIBOR transition and many are on the cusp of a loan servicing transformation related to the AFS Level III mandate – all during a potential wave of M&A activity. 2020 will be an exciting year.”

However, the reality of the business environment in 2020 is now likely to be very difficult for many, and banks will have to play an active and selfless role in helping their customers survive and make ends meet.

Being able to judge the market sensitively will be essential. There is widespread anger that the financial services market was bailed out to the tune of $1 trillion or more in the wake of the last recession. A traumatised and alarmed public will demand one thing: that the banks now pay some of that back.

That will be the real ‘accent on the future’, to borrow the meaning of Accenture’s name. As an Ireland- (and formerly Bermuda-) headquartered company, tax contributions to society will also be on customers’ radar.

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