What banks must do to overcome fintechs threat

Financial technology firms (Fintechs) pose a threat to traditional banks because they offer more convenience and better user experience according to a new report by KPMG, a professional services firm.

Consequently, banks must offer an experience that is more customer-oriented and digital. Beyond adopting innovative technologies, retail banks need to ensure full integration with back-office systems, functions, and processes, KPMG said, adding that the current digital era offers enormous opportunities for innovation.

Accordingly, retail banks must choose to comply – develop in-house processes and standards to a level that is compliant with jurisdictional needs and industry trends.

They must also compete – invest in strategic enablers both in-house and externally including internal data usage, and they must innovate – build strategic partnerships including with non-financial service-related parties.

They need to focus on an on-boarding model that prioritises customer centricity, data insights, and agility while maintaining security and transparency.

KPMG on Tuesday released the 2021 Digital Channels Scorecard for leading retail banks in Africa via a Zoom virtual meeting. The details of the Digital Channels Scorecard are highlighted in a Thought Leadership publication launched the same day.

The KPMG Digital Channels Scorecard publication unveils in-depth insights on the state of user experience at 26 leading retail banks across Africa.

The publication offers perspectives on how well the featured banks deliver on customer preferences, user experience, and adoption of emerging technologies such as AI and Robotics, to drive better engagement and experience differentiation.

According to the report, this is the age of the consumer.

Changing consumer expectations, increasing competition from non-bank players, emerging technologies, and an evolving political and regulatory landscape have all converged to form an inflection point that is redefining the future of enterprises.

“As organisations respond, we are beginning to see patterns that differentiate digital leaders from others; patterns that take root in the experience consumers have across the digital touch-points with which they interact. We are seeing an acceleration of growth, enhanced engagement, and stickiness with the players that have intentionally invested in user experience,” notes Boye Ademola, partner, and lead, digital transformation, KPMG.

“It is in this light that we have performed a series of user journey-centered assessments culminating in the Digital Channels Scorecard for leading retail banks in Africa,” he says.

The Scorecard provides an industry perspective of how banks across the continent deliver the experience demanded by a new generation of consumers, many of whom are digital natives. It measures the quality of user experience (UX) as customers traverse a range of journeys to access products and services on four distinct digital channels—Mobile banking, Internet banking, USSD, and Chatbot.

The Scorecard covers 12 anchor journeys grouped into five thematic areas: Digital Onboarding, Payments and Transfers, Self-Service, Lending, and Customer Care.

Read also: Can Africa become tomorrow’s Fintech market?

“We observed that digital leaders are intentional about personalised services, 24/7 reliability and availability of the digital channels, and real-time customer care. They have a relentless focus on simplifying user journeys, can on-board customers end-to-end on most channels, and empower customers through robust Self-Service programmes.

“Late starters are still grappling with convoluted and disjointed user journeys, inability to on-board customers digitally end-to-end, unstable channels and unresponsive contact centres,” Ademola states.

“Customers no longer view their experiences in an industry silo. They expect banks to focus on creating experiences that are functional, responsive, intuitive, and delightful. As Fintechs and Neo-banks begin to scale on the continent, the window of opportunity to attain experience maturity levels demanded by today’s customers may be closing faster than imagined for retail banks.

“To attain these experience maturity levels, retail banks will need to be more intentional with product design, journey optimisation, data analytics and building resilient digital channels,” he says.