People time: the hidden benefit to digital banking
Digital is a hot topic in financial services right now. Every bank that we’ve talked to across Europe, North America and Australia is passionate about the idea of moving online. And this resonates with what opinion formers have noted too, as we’ve seen in McKinsey’s recent report ‘The rise of the digital bank’, for example.
In our experience, nearly every bank views the journey towards digitization in a similar way. That means looking at how other industries have done it, like travel, then making every customer transaction available online. In the case of banks, that might be mortgage calculators, forms, product comparisons tools, and so on. Typically we then see one of two things happening:
- The bank counts up the cost of making everything digital and realises the price is prohibitive, generally because it involves integration with old legacy systems.
- The bank signs off on a colossal budget because it views the shift to digital as unavoidable, but fails to work out what the business case is, or what the payback will be.
It’s therefore refreshing to see the McKinsey report bring valuable focus and pragmatism to this topical area. In response to the problems we’ve seen above, the report suggests that banks do the following:
- Digitize the processes that will make the most difference to the business. Where are your staff using most of their time? It might be possible to save 80% of that time by digitizing 20% of your processes, for example, with a correspondingly lower project cost.
- Make sure that the constituent parts of the wider business case benefits, including potential cost savings, are well understood by key stakeholders
For me, however, the most interesting point in McKinsey’s piece is around making the most of the time that’s freed up for frontline staff, after customer activity has been taken online. We see small business owners crying out for the guidance, support and tools they need to run their businesses more efficiently and effectively. The extra time staff will gain could be used to address these needs and make solutions a reality rather than an unrealised promise.
And don’t be under any illusion that banks aren’t aware of this fact. In a conversation with a Small Business banking MD of one such enterprise, I discovered that he’s actively adding up the time that frontline staff will have (and how it can be used), once online account opening is delivered.
That’s what excites me about digitization. It’s the chance to improve the quality and breadth of service offered to small business customers, both through people and digital channels.
If you’d like to read the McKinsey report in full, you can find here http://www.mckinsey.com/insights/business_technology/the_rise_of_the_digital_bank