Banks need to step up tech for mobile users, report

Banks worldwide are at risk of incurring costly consequences to their operations if they don't move away from legacy systems and get in step with digital advancements.
In fact, recent research by McKinsey & Company revealed that banks in the U.S. and Japan have between $1 billion and $45 billion in profits at risk by 2020 depending on the extent of digital disruption.
The impact for emerging-market banks is being felt hardest in India and China, where these institutions lag digital-commerce firms which have moved quickly into banking, the report said.
The McKinsey researchers explained that in the near future they expect to see huge tech companies inserting themselves "between banks and their customers, capturing the vital customer relationship and presenting an existential threat."
The advice they offer includes moving past traditional restructuring schemes and refreshing the bank using new technological capabilities, as well as new organizational structures. "Any new business model that banks design will likely require new technology and data skills, a different form of organization to support the frenetic pace of innovation, and shared vision and values across the organization to motivate, support, and enable this profound transformation," the report found.
The positive news from the report is that banks and financial institutions in the U.S. may be best positioned, among developed countries, to face the challenge, in part owing to the new presidential administration's pledge for less regulations.
But, the fact of the matter is that despite these prognostications, banks need to upgrade their technology to meet the demands of an increasingly digital economy, says Anil Jain, SVP and head of North American operations at global IT and business solutions provider Syntel. Being dependent on legacy systems will position banks to be left behind in the new age of digital, particularly as consumers, as well as enterprises, increasingly migrate to using mobile to conduct business with their banks.
In an environment where many customers would rather use their smartphones or computer tablets for their banking needs, banks must implement the right balance between human and digital interactions with their customers, Jain said.
"Traditional banks and other financial institutions are facing the same challenge today as other industry sectors: trying to best answer the question of how to successfully integrate digital technologies into their operations, in order to retain a competitive advantage and enrich the customer experience," he said.
The competition is heating up for fintech companies – technology used in banking and financial services – and a number of bank operations have already evolved to integrate digital developments, says Jain. But, he added, others are lagging in providing "the latest innovative technologies to their clients.”
The challenge for these institutions is the shift in the manner consumers and businesses are conducting their banking, particularly via the use of digital devices. This consumer migration away from entering bank branches and interacting with a teller to conducting business online is resulting in many banks laying off staff to reduce their costs. Some are redirecting budgets to meet the demand for digital transactions.
The shift to digital banking, Jain points out, is largely owing to the habits of members of the Millennial generation who have grown up in an age of instantaneous communication. He cites a recent Salesforce survey that reported that more than one quarter of Millennial-aged bank customers are completely reliant on mobile banking apps. The numbers indicate that of those surveyed, three-quarters are "at least somewhat reliant" on a mobile banking app for some financial transactions. In fact, an overwhelming number (82 percent) said it's beneficial for banks to offer mobile banking for some tasks.
"In order to ensure survival in a rapidly changing business environment, it is essential that banks' core operating systems are able to evolve to meet changing consumer expectations and the new realities of the digital age,” said Jain.
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Banks need to step up tech for mobile users, report

Banks worldwide are at risk of incurring costly consequences to their operations if they don't move away from legacy systems and get i...