Banking services of the future – Teslas or T-Model Fords?

28-02-17 15:45 | Digital banking | The Digital Hub

“The customer is God.” Such was the philosophy of the founder of Management Events, Olli Muurainen.

After working in his team in the early 2000s, I learned that since it is customers who pay our salaries, they have to be served like kings. This approach should be applied in every organisation, but it’s not always done. 

The banking race of the future will be run in services, as the product-oriented approach finally bows out of the financial sector too. We use these services on our mobile phones because we expect daily services to be at our fingertips 24/7. 

Banks’ strategies in a state of flux

In the digital era, if your logo isn’t displayed on the home screen of your customers’ smartphones, then you won’t exist. If this doesn’t interest you, you’ll soon be looking for new challenges. Nokia can teach us a thing or two. First they made rubber boots. Then phones. Then applications. Now, they are in the infrastructure business. Banks have similar paths ahead. If we create our own services, we have to match up to the best of the best in terms of user experience. If we create our services with partners, we must be able to attract the best ones. I’m very happy with Nordea’s recent strategy decisions – we will build our services in-house but also in cooperation with the best partners.

We want to drive a Tesla, not a T-model Ford

Ever since the Internet was reinvented as a service channel, all industries have had their turn on the starting blocks in digital services development. Right now, it’s the financial sector’s turn. What happened to entertainment and telecom operators is now happening to us. But, how come banks are only on the starting blocks? After all, online banking was set up years ago. The reason is that it’s taken too long for us to engage in a genuinely digital gear. Customers have been waiting for this impatiently, as services like Netflix, Uber, Wolt, Tinder, Spotify, Tesla and AirBNB have paved the way in digitalisation. We want to drive a Tesla, not a T-model Ford.

Regulation is a vehicle for new services

European banks are preparing for the requirements imposed by changing EU legislation. Once the Payment Services Directive 2 (PSD2) and the new General Data Protection Regulation (GDPR) take effect, plenty of new service providers will enter the market to compete for the logo slots on our customers’ home screens. Banks will be required to open service interfaces to their backend systems, and new services will step in through this door.

I personally know many Fintech entrepreneurs excitedly waiting for this moment. Regulation will also make it possible to build various symbiotic and more open ecosystems alongside the old banking infrastructure. The market will grow, leaving all smart players with more to share. I have often compared this open environment to a forest. If you tend to your forest well, it will have enough room for trees, undergrowth – even mushrooms – and all the forest creatures.

In the best scenarios, I see Nordea as a caretaker whose duty is to make sure that its forest is a place where everyone feels safe and has room to grow. 

Nice apps will only get you so far

My own background in financial sector startups gives me a lot of perspective. That’s why I consider it very positive that banks are now being truly challenged to provide better service to their customers. We’re not talking about building nice new apps but about a chain of events with multidimensional consequences. These events will allow us to follow changes in the organisational culture, in our values, in management and in HR strategies and service processes.

A final word: while speakers at financial sector seminars of the early 2010s found it safe to hide behind the factors that set banks apart from other businesses, such as cumbersome legislation and IT challenges, no banker in the 2020s will speak of these matters even at the workplace coffee machine, if he or she wants to be taken seriously. This, in turn, promises better services for all of us.

Digitalisation is here – are you ready?

/ Jussi Muurikainen, responsible for developing the digital offering for corporate customers at Nordea. He's a decathlete of the digital era and has been involved in numerous Fintech startups as a founder, advisor and shareholder.

You can follow Jussi Muurikainen on Twitter @jupander

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