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July 12, 2016updated 26 Sep 2016 7:35am

Responsible, relevant and thriving in banking

Banks need to put customers at the heart of their operations to thrive, and fintechs are presenting bigger and better ways for them to do that. By working closely together, collaborating and breaking down silos, each side can learn from the other and maximise the opportunity, writes Garvan Callan, Director of Customer, Digital and Innovation at the Bank of Ireland.

By Cbr Rolling Blog

Today, and for the foreseeable future, if we want to be taken seriously by the customer, and more importantly compete and win their business and loyalty, banking needs to be all about the digital experience, mobile and personalised through insights. Quoted at Sunday Business Post’s Banking & Financial Services summit in Dublin in April, research shows that 80% of millennials want to manage all their money in one place. Given that they all have smartphones, that means managing money from their mobile. Banks have got to take note, but more importantly respond.

At Bank of Ireland we put significant emphasis and value on keeping close to customers, alongside the wider community, learning from them, what they are doing, their wants and most importantly their needs. In 2013, pre-empting emergent trends, we commissioned a nationwide study of 25,000 people to learn more deeply about their lives, how they bank and what they want. Each week we continue to conduct interviews with over 1000 customers, ensuring we keep track of trends and the changes we are implementing, remaining relevant and responsive. We listen, we articulate the learnings and then apply those learnings to our products and services.

For example, people can’t always come into a branch, so we developed a video-conferencing service. On New Year’s Eve 2015 we sold our first mortgage via this video-conferencing. This is what people want, and expect, so we’re providing it. The couple live in Sydney, Australia, are about to move back to Ireland and buy a house in Ireland. Within 45 minutes of starting the conference, the mortgage was applied for and the customers knew what would come next – from 10,000 miles away, in an inverse time zone but it was comfortable and reassuring. Today the service is so popular – albeit with more local customers – we can’t get the advisers trained fast enough.

Delivering this type of desirable service is about process handling and platforms – banks must fulfil customer expectations in terms of product provision as well as service. It’s got to be both personal and relevant.

Here’s the rub: the cost and rate of failure for R&D to develop the technology required are prohibitive. Ben Robinson, Chief Marketing and Strategy officer at Temenos, says, "Finding and developing the right technology is expensive, with only three in ten investments by venture capital companies succeeding."

The answer is to partner with and nurture the startup fintech sector. These small and nimble companies often have great solutions for improving customer service. Most are Apps and APIs, which plug and play with the digital platforms that banks are increasingly adopting. However, with the multitude of fintech players, it’s proving challenging to identify those that solve a real problem.

Keeping an ear to the ground is imperative. Bank of Ireland goes further – we have created environments where fintechs can develop, showcase and even sell their wares. We offer free space for startups to encourage innovation and new ideas. We have established StartLab Galway, an incubator that includes mentoring for fintechs so we can harness local entrepreneurism so the economy can prosper, clients can benefit and if we’re lucky, we can resell these developments to our own customers.

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Already, we have incorporated these outputs into our current operating model such as deploying Irish startup XtremePush, a geolocation and ibeacon service. Late last year, we activated this ibeacon technology at Croke Park (Dublin), Europe’s third largest sports stadium, sending out a message offering free face painting in team colours in our nearby branch which opened through the weekend, garnering a huge response. Only in the last few weeks have we activated this service in Dublin airport, sending out a message to our mobile customers, offering them helpful and valuable hints to make their journey more enjoyable and safe.

Additionally we also held our first staff innovation hack – Gears48. Staff had 48 hours to develop their fintech ideas over a weekend. It’s "intrepreneurship". It is critical and as far as we’re concerned modern employers need to get behind similar projects. We’re not alone – Temenos’s Fusion incubator in Geneva and the annual Innovation Jam, helps bridge the gap between banks and fintechs; Level 39 in London provides space for fintechs to develop; the FinTech Innovation Lab is backed by a number of banks and offers 12-week programmes in London, New York and Hong Kong.

Temenos’ Ben Robinson believes these efforts are about long-term growth. "Innovation isn’t just about facing up to the new competition – it’s about delivering additional revenue. By supporting incubators, banks can spot, nurture, develop and mentor new ideas and be the first to reap the rewards". "It will put the banks back at the top of the game," he adds.

For me it’s actually quite simple. Bank of Ireland is a 233-year-old institution which holds its responsibility to the community in which we work, in the highest regard. This demands being in the vanguard of connectivity, entrepreneurship and therefore fintech. The cost of the R&D is prohibitive for the majority, so we must nurture the sector and use our size, experience and market knowledge to find solutions that add value for every participant.

The rate of change in banking is not going to slow down – if anything it will continue to accelerate. A bank can think defensively or think about the opportunity; surely it’s about thinking opportunistically to solve customer problems, creating great experiences, being mobile and relevant, and benefitting thereafter.

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