NZ Banks: Digital transformation is no longer a luxury, it’s a necessity

If there’s ever been a time when digital transformation was important, it’s now. The COVID-19 pandemic has resulted in a number of significant changes in customer behaviour and expectations, particularly in the banking sphere. We recently spoke with Datamine Consulting Director Matt Owen, who has been involved in the banking sphere for over ten years, to see what his thoughts are on the importance of digital transformation as we move forward. Watch the video below, or scroll to read a transcript of the entire interview.

Question: The COVID-19 lockdown forced many businesses to go digital if they wanted to continue operating. How has that affected NZ banks?

Answer: "I don’t actually think lockdown has affected NZ banks too much. From speaking to senior people inside banks, their data showed that there were fewer people logging on, as well as a decrease in uptake of new online banking users. From the other conversations I had, there was a situation where call centres were set up to support the likes of the elderly, which they were utilising instead of online banking for the first time. Data from credit bureau Centrix also suggests that credit card, home loan, personal finance and personal loan applications were tracking down during this period, so fewer people were applying for credit – this means the big winners were the Buy Now Pay Later platforms like Afterpay and Laybuy, who saw jumps of up to 30-40% in weekly new customer uptake. A lot of people were buying things online, and that meant that instead of using credit cards and such, people were taking advantage of interest free platforms."

Question: We’re in tough economic times, and more are on the way. How can NZ banks be driving digital transformation and innovation during a recession?

Answer: "Banks are seen as trusted guardians, as there’s such a huge array of data they have from us all as individuals. I’d say that banks have an opportunity to personalise the experience of online banking more than they do currently – they have the ability to make the experience for me logging on to look very different from you logging on, dependent perhaps on our circumstance, age or preferences. This kind of personalisation can greatly change the experience.

Empathy will be so important as we move forward. Good customers go through hardship, and they become good customers again. It’s not necessarily going to be about pushing the product moving forward, but for the bank to understand the challenges they’re going through, whether that’s families or small businesses. In the long term, the support they provide will offer a customer for life – it’s short-term focus for long-term gain.

Banks also need to start with the customer experience, across multiple customers, and work backwards from that:

What does good look like for many different customers?
What technology plugs into that experience?
What are the relevant datasets needed?
What modelling of the data is required
What analytics is going to add value?

From doing that, they will be able to reach and meet those needs.

There’s going to be a shift in talent moving forward and a real focus on human-centred design. Rather than working ‘technology-first’, banks need to focus on understanding the problem and engage with really business-savvy technical people looking to get the best outcome. A component of this is the need for speed and agility. In the past, there’s been maybe been one new release or update per quarter, but now there will be a need for regular updates and a more agile approach.

Banking experts like Jamie Warder, Head of Digital Banking at Key Bank, suggest that banks should be partnering with the likes of Fintechs, specialist data analytics companies and technology businesses as we go forward. Really leveraging that expertise internally will help grow capability within the organisation."

Question: What will be the markers of a successful bank moving forward?

Answer: "Over a Trillion dollars has been spent on digital within banking in the last three years, which is a huge amount of money. That’s going to continue to accelerate as we move forward with the likes of open banking, which is already huge within the US and Europe. To me the best examples of online banking, whether for everyday use or for digital onboarding, are where the platform simplifies the user experience and reduces the number of clicks you’re making. This just makes the person’s life so much easier."

Keen to learn more about how we partner with NZ banks for acceleration and digital transformation? Get in touch with the team for a chat below.