Banks are not prepared for the digital age – need to embrace mobile and social banking

17 Oct 2012

Given the pressures the financial crisis has had on the banking sector, banks have been slow to embrace the digital innovation customers now expect, PwC warned the Irish Banking Federation Conference yesterday.

Ciarán Kelly, financial services partner, PwC, said digital banking is set to become the primary relationship channel for personal and SME banking customers by 2015.

As consumers continue to embrace social media for brand evaluation and purchase options, the banking sector is increasingly recognising that this channel will play a significant role in defending its existing customer base from non-traditional competition sources.

Kelly said payment providers are invading the space of traditional banks. The escalation of mobile is changing the way consumers think about payments. Mobile payment providers are acting as a catalyst for change in the retail banking space.

Consumers expect a digital experience

He said traditional banks have a job to do to keep up with digital transaction and payment providers who are invading their space. Banks may need to partner with technology, mobile and other non-traditional banking providers in order to deliver the digital experience customers now expect.

“Social media is changing customer relationships and is an irreversible cultural change. Customers are using alternative payment providers and this is becoming one of the biggest threats to banking in terms of the potential loss of access to customers and market share. Banks need to improve their digital offering fast if they are to hold onto their existing customers and attract the next generation,” he said.

Kelly added there is a real need for banks to embrace digital transactions.

“Banks need to align their business model to take advantage. They need to consider their strategy, their culture and ensure that they have the right skills. Banks need to consider strategic acquisitions or partnerships with digital innovators to secure their long-term position and market share.

“The banks that provide a differentiated digital experience, with advice and relationship management elements tailored to the individual customer, will secure more profitable relationships with their customers,” Kelly told the Banking Federation.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years