Digital operators are forcing banks to think innovatively

To deal with the competition, banks must make sure that they play a more active role in their customers’ lives,” says Ina Nyfløt at Accenture.

Klarna, Starbucks and Apple Pay. These are just a few of the companies that have in recent years joined battle with the banks for their customers' money. And developments are moving rapidly. The Accenture consultancy firm predicts that the banks will lose as much as one third of their traditional turnover to new operators by the year 2020.

"We live in a digital world where the boundaries between different industries are becoming vaguer. These new operators aren't fully fledged banks, but they are creating new channels between the bank and its customers, and are thus taking a piece of the revenue cake," says Ina Nyfløt, the person responsible for the banking sector at Accenture in Norway.

Availability is not enough

She believes that to beat off the competition, banks will quickly have to find new, digital business models. They must start to offer new services that not only relate to the actual transaction, but also help the customer before and after a purchase, for example, a concept that Accenture calls the "Everyday Bank".

"Banks must find solutions that make them more relevant. The banking customers of the future will have totally different demands for customer service. It's not enough just to be available, you have to be proactive and predict the customer's needs," says Ina Nyfløt.

Personalised offerings

She describes the Everyday Bank as a digital ecosystem in which the bank is at the centre of the customer's commercial life. With new, digital tools, transaction data can be used to create services that help the customer to keep track of his or her private finances and make decisions about what, where, how and when he or she can shop.

Even if no bank fully lives up to Accenture's description of the Everyday Bank at present, there are many examples of banks all around the world that are testing new services. iGaranti, Turkey's second biggest bank, has developed a mobile app that personalises all content.

"This app allows you to keep track of all your spending, including helping you to work out how much you'll have left in your account at the end of the month. If you visit a shopping mall, you can receive special offers on discounts on your favourite brands. iGaranti uses transaction data to offer services that are relevant to you specifically."

Important to act quickly

Ina Nyfløt believes that access to transaction data is the banks' biggest competitive advantage over new operators. At the same time, the banks have a large customer database, and there is a high level of confidence in the way the banks handle personal information.

"The banks have really great opportunities to own the customer relationship in future. But the benefits they have now may disappear in time, so the time to act is now. The winners will include those who are bold enough," she says.

Partnerships create new opportunities

Leif Trogen is Head of Banking Infrastructure at the Swedish Bankers' Association, which represents banks in Sweden. Just like Ina Nyfløt, he is convinced that banks must develop new services and identify new partnerships in order to deal with the competition.

"They must develop an innovative, broad-based approach. With the customer base and the transaction data that the banks possess, there are tremendous opportunities to develop solutions that are attractive and create added value for the customer. These may involve, for example, partnerships in e-commerce or with telecoms companies," he said.

How much progress have banks made when it comes to new solutions?

"It's difficult to say, but there are lots of embryos and some new solutions. One solution we're incredibly proud of in Sweden is Swish, a service to which most banks are affiliated that allows money to be transferred in real time between different people's bank accounts using mobile phones. The service was recently extended to include payments to businesses."

"When it comes to the infrastructure for payments, banks in Sweden and the rest of Europe are also being very proactive. Thanks to the EU's SEPA, the Single Euro Payments Area, payments are possible in euros on equal terms regardless of country."

What will banks be like in ten years?

"Banks can be compared to the circulatory system in the economy. They are needed in order that a society can function and develop. Historically, personal contact has been one of the most important features of the way banks do business. It won't be like that in future. Instead, digital communication will become more and more important, and this is where I believe we'll be seeing lots of new solutions to meet customers' demands and preferences."

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