Change is a constant in the banking world, and adaptation is essential to maximize business opportunities while mitigating risks. As real-time demand increases, customer expectations evolve and multiply, and service delivery shifts from the physical to the virtual environment. Data is the new currency and cutting-edge technologies like artificial intelligence are using it to drive better insights and innovative offerings. At the same time, financial criminals, who understand the power of data, are becoming data science experts and mathematicians behind ever-evolving threats and risks.
All of these trends have a major impact on the traditional banking model. Boundaries and roles are blurring as incumbent banks compete against traditional competitors, as well as new players outside the banking industry. Additionally, technology environments made up of disparate legacy systems are no longer enough. Banks are being pushed to implement more modern and composable infrastructures that make data collection, analysis and use much easier.
Response to change
Banks must not only remain competitive in today’s evolving banking market, but also position their businesses for long-term success. Adaptation is key to meeting this challenge. Banks that are able to successfully adapt their business models, operations and customer offerings in response to ongoing changes will be industry leaders today and tomorrow.
CGI’s Voice of Our Customers (VOC) study confirms the importance of adaptation. In 2023, we surveyed nearly 300 executives across business and IT functions across retail banking, corporate and transaction banking, and capital markets to learn about their trends, priorities and their main challenges. The most mentioned macroeconomic trends included technological and digital acceleration, changing social demographics, climate change, the shifting global economic order, and supply chain evolution. All of these trends are pushing banks to adapt and evolve their business models and activities in order to remain competitive.
But how can we better keep up with the pace of change? Major transformations generally don’t work because they are difficult, slow and expensive. Through our Voice of Our Customers study and our decades of experience with the world’s largest banks, we have learned that a more agile approach is needed. This method involves making frequent, incremental and flexible changes as regulatory and customer and business needs evolve. This is what we call tailored banking services.
Definition of suitable banking services
Adapted banking services focus on customer focus and agility. Using data, banks can better understand customer needs as they evolve and personalize their services accordingly. Technologies like artificial intelligence (AI), machine learning and data analytics make this approach possible. Using these technologies, banks can collect and analyze customer data and then use it to agilely deliver personalized offers, products and advice based on evolving customer expectations.
Adapted banking services also require a composable IT infrastructure. Many banks operate in siled, rigid environments made up of legacy systems that cannot communicate with each other. In such
environments, it is extremely difficult to mine data to generate insights that inform customer and business decisions. However, with a flexible infrastructure based on application programming interfaces (APIs) and standards, banks can quickly develop and implement innovative services, directly or through third-party partners, to meet demands. changing.
One of the main challenges is choosing and implementing the right technologies and infrastructure. The amount of choices available can be intimidating. For example, although AI is very popular right now, it is not the only solution. Simple automation may be sufficient in many cases. A business and technology partner can help banks choose the right technology solution and infrastructure based on their goals and needs.
It is also important to note that the right bank is better positioned to detect threats in real time by leveraging advanced analytics and machine learning, as well as transactional and behavioral data. Such a bank can also respond to cyberattacks more quickly and accurately with automated incident response procedures that provide predefined measures to limit damage and notify security teams.
Advantages of adapted banking services
The advantages of adapted banking services are numerous; here are some examples.
Personalized Customer Experience – Banks can differentiate themselves by providing a data-driven customer experience that evolves based on customer preferences. They can then receive what they want, when they want it and how they want it.
Real-time insights – Responsive banking services further enhance the customer experience with real-time insights. Banks can provide customers with real-time insights into their account balances, investment performance, cash flow forecasts and more, enabling them to make more informed decisions.
Agile product development – With the technologies behind tailored banking services, banks can develop and evolve their products and services in a highly agile manner.
Operational Efficiency – Data and automation, key elements of smart banking, help banks improve operational efficiency and reduce operating costs.
Improved Regulatory Compliance – Systems used in responsive banking provide secure, accurate and auditable records of transactions and customer interactions, helping banks better comply with evolving regulatios.
Upskilling and reskilling – The flexible nature of tailored banking services facilitates the automation of routine tasks. This automation allows banks to focus on upskilling and reskilling professionals to adapt to changing technical requirements and market conditions. This flexibility, combined with the scalability of adaptive systems, allows banks to improve employee retention, limit reliance on new hires, and increasingly hire as needed to recruit professionals with the right skills and essential capabilities.
Requirements for adapted banking services
Four fundamental strategies and initiatives are required to transform a bank into a fit-for-purpose bank.
Digital Transformation – Banks need digital solutions that can accelerate the digitalization of their processes and systems, make their businesses more efficient and support a digital environment anywhere, anytime.
Modernization – Through modernization, banks can increase efficiency, save money and become more agile by simplifying and standardizing their technology environments while introducing new IT service delivery models.
Connection – New technologies enable banks to diversify their activities in the open economy and create successful partner ecosystems.