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During the summer and autumn of 2020, I ran an online survey of banks and FinTech firms around their view of physical versus digital access to banking. Obviously, in 2020, digital access to accounts has come to the fore but what was interesting is that this had not been a priority before. 28% of the bankers who responded to the survey said that 2020 had massively changed their view of physical vs digital and 43% have permanently changed their strategy.
Put it another way: almost half of the banks globally who responded to the survey said that they had to pivot to digital in 2020.
That’s all well and good but then there’s a bigger question: what is the digital strategy?
It’s easy to talk up digital and say we’re doing it, but are you actually doing it? Digital is not a project and it’s not given to the CFO to do it. Digital is a cultural transformation process of the bank that involves everyone and everything, not just a Chief Digital Officer who is given a budget.
This has been obvious to me for a long time, but it becomes categorically clear as we move forward. In a specific example, I question how banks are moving to cloud computing. My first discussions of cloud computing in banking date back to the late 2000s and people then were concerned about security and risk. Sure, they should have been concerned probably but, a decade later, this technology has matured, and, thanks to the pandemic, banks are now committing to the cloud.
But they are committing to cloud-based services for non-strategic tasks to give employees access from home. The bigger question is how to commit to cloud-native services for strategic tasks to give customers access digitally.
This debate about cloud-based versus cloud-native will go on and on, but it is a very fine distinction. Cloud-native is projecting a business model built for the internet; cloud-based is developing a business model to evolve onto the internet. The two strategies are very different, as is digital-first versus digitally available.
This leads to a whole wealth of questions I would ask any management team about their digital transformation strategy, leading with:
Were your business products and services fit for purpose in the pandemic?
Is your business model designed for being born on the internet or are you trying to develop to the network?
Have you refreshed, restarted and redesigned for a lockdown world or are you just trying to muddle through?
I could go on, but I’m sure you get the idea. The idea is that the bank of the 21st century should begin with digital, the internet, networking and cloud. That should be its core design. Its design should be one where the bank is born on the internet, and all of its products, services, structures and models are designed that way.
Nine out of ten banks or more were designed another way. They were designed for the last century or even the one before, where physical access was key. It was a design focused upon access to banking through buildings and humans; today, the design is focused upon access to banking through software and servers.
I call it omniaccess. The core of 21st century banking is data and a consistent experience across devices and access. Omniaccess starts with a rationalised and consolidated core of customer data that can be analysed and accessed with intelligence, artificial and human. Unfortunately, most banks are talking omnichannel, which means layering cloud and digital on old legacy structures and dodging the requirement to rationalise and consolidate.
This friction between omniaccess and omnichannel will become a key debating ground for banks in the 2020s, as banks that understand omniaccess will win market share whilst banks that layer digital on top of old structures will lost market share.
This is the battleground and designing digital and data around customers are the weapons. Are you fit and ready or are you just muddling through?
Meantime, if you’re interested in my definition of omniaccess and why that is so important to digital transformation, download our free report here.
There’s also a live event – it’s free, just register on January 26 at 11:00 GMT / 12:00 CET, where I am joined by Dra Maria Joao Carioca, Member of the Board of Caixa and Dr. Edwin Van der Ouderaa, Senior Managing Director with Accenture to discuss these areas and more.
Related: Jamie Dimon Is Scared of FinTech