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The recent and prominent failings within the sector have embedded deep feelings of mistrust for retail banking and insurance companies among the public. Consumers in turn have altered their habits, leading to the explosion of new digital banking challengers to storied institutions.

As financial institutions face greater regulatory pressure and the need to ensure full accountability, customers are simultaneously engaging with banks and their finances in a manner that provides them with more control and transparency. Savvy emerging digital rivals spotted this opening and quickly seized the opportunity to gain market share and attract next generation customers through a customer-centric approach.

The status quo is no longer fit for purpose. With the growth of the sector virtually flat for financial services institutions, it is imperative to increase bottom-line performance by addressing long-standing operational challenges.

Reducing costs pressure across the organisation

Applying digitisation across the entire operation (front and back)

Bringing customers to the core of the experience

How do you begin alleviating cost pressures in a hectic environment where addressing vulnerabilities carries additional financial risk?

Financial institutions’ profit margins are being hit hard from multiple directions: flat interest rates putting margins under extreme pressure, expensive costs of compliance, and pressure on non-interest paying services.

While being compliant and reactive to all challenges is a key priority, compliance overlaid with operations expenses come with a cost burden, especially at times of flat or declining revenue. 

Though retailing banks and insurance companies take their places in different parts of the financial sector, they have each been hit with additional capital and expense requirements, whether that is around particular lines of business that have been negatively impacted by the pandemic, meeting regulatory compliance or needing to upgrade technology due to accelerated digital habits of customers during the global pandemic.

Targeted optimisation

To fully mobilise your organisation to navigate today's unprecedented environment, a focus on driving optimisation in targeted areas is needed, bringing improved cost positions through tailored process improvement. 

This must be supported by a comprehensive accountability process that is fully mapped and takes into account goal-setting and performance metrics. 

How can retail banks become truly digital and effectively capture customer insights?

With pressure from purely digital rivals emerging and customers increasingly eschewing brick-and-mortar banking and cash usage, time is of the essence.

The need to digitise retail banks has been a long-running concern. This was brought into sharp focus by the pandemic and the resulting necessity of rapid adoption of digital habits among all types of consumers. Thrust into action, banks wishing to move further into the digital space may have a deep IT mindset but cannot engage legacy aspects of the bank.

For this reason, many banks have the dual challenge of upgrading and reactively digitising their businesses, knowing that their massive legacy systems may hold back their development. Additionally, many organisations fail to achieve agility because they view agile as a ‘box to be ticked’ versus a part of a mapped-out digital roadmap, linked to transformation.

Digital-only rivals in retail banking are rapidly emerging. For the moment, they are struggling to attract customers at a sufficient scale. However, this could quickly, as a digital-only approach, stand to be a greater value proposition for the younger generation looking to open their first account.

A more digital future

Major retail banks attempting to move further into digital should be asking:

  • How do I build on this scenario?
  • How do I grow digital usage?
  • Do I discard older IT systems altogether and target a more digital future?

No matter the scale of the challenge, the overhaul of digital offerings must never lose sight of prioritising customer needs.

How do you make your customers’ experience simpler, easier and faster?

While emerging digital banking offerings are providing competition in the form of slick branding and significant marketing campaigns, switching from trusted financial services providers is never a snap decision.

Major retail banks should breathe a sigh of relief for this loyalty, while conscious that customer loyalty is not guaranteed. A transparent, innovative approach to customer experience is the best approach to acquisition and retention. For customers, often such a method is actively promised by financial institutions in their words, but not followed through in their deeds.

Focusing on your customers — knowing and understanding their habits, tracking their satisfaction, providing regular engagement — is the first step towards building a relationship that will in time grow your share of the customer wallet. In turn, effective engagement turns a loyal customer into an active promoter – one who is instrumental in helping you acquire new clients.

Deliver and exceed

Financial institutions need to carve a new path that is customer-centric and acknowledges the need to first earn trust and deliver on promises of innovation. This path represents a new way for banking institutions to patently monitor their operations and ensure they are always transparent in their dealings with customers moving forward.

By combining process accountability and digital transformation, there is ample opportunity to deliver and exceed customer expectations.

The resulting approach must be wide-ranging and a permanent, flexible part of the organisation: a change of culture, rather than a simple shifting of priorities.

Tim Morse

Some may cite regulation and industry probes or mismanagement in times of crisis, but there is no simple explanation for what has shattered customer trust in financial institutions. We think that should allow pause, and for us to collectively understand our role in putting the pieces back together. The reboot of financial services plays a critical role in rebuilding the economy, and that in turn, rebuilds communities.

Tim Morse

Director

Our optimisation model, one that is designed to create a lasting impact through people, is proven across industries and can benefit financial services at a time when it is most needed. We believe it is time for the key players in financial services to redefine their future.

Applying a laser-focused value lens to each component of your operations, we work collaboratively to rewire and future-proof your organisation to support the culture of change needed to meet the challenges ahead by:

• Releasing latent opportunity of the organisation

• Identifying areas for cost reduction

• Sharpening the operating model

• Realigning processes and ensuring single-point accountability

Our global team of financial services experts have years of experience in helping clients navigate these business challenges to deliver:

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15-30% improvement to customer satisfaction

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5-15% uplift in revenue

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10-30% cost reduction

Client success stories

Success

Performance turnaround at a leading provider of global outsourcing services, delivering $100m EBIT improvement in 15 months

Estimated AU$70-75bn in balances and AU$6-8bn in revenues for consumer lending market with further growth potential

600% return on investment through a Customer Record Management transformation

Meet our Financial Services leadership

Innocent Dutiro

Innocent Dutiro

Director

Africa

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Patrycja Stasina

Patrycja Stasina

Partner

Australia and New Zealand

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