Around the world, banking customers express similar frustrations: they believe the value they receive from their banks is declining, at a time when their trust in those banks already has eroded.
What’s more, according to a Cisco survey of 7,200 banking customers in 12 countries, four out of five customers would trust a non-bank, such as a technology company or retailer, to handle their banking needs. Some of those disruptive competitors are succeeding where banks fail: by engaging customers with convenient transactions and value-added services.
The Cisco study found that Internet of Everything (IoE)-enabled services can help restore the value customers expect from banking institutions. IoE — the networked connection of people, process, data and things — makes it possible for banks to offer a more relevant, engaging, and convenient experience for customers.
Of the $19 trillion in global economic value Cisco estimates IoE can create over the next decade, 7 percent ($1.3 trillion) is accounted for in the finance market and could be addressed with concepts included in this survey.
The digitization of business and society is happening at a rapid pace and people are looking for improved, digital services that make life easier. Banks need to embrace this pace of change and deliver relevant services or risk becoming obsolete in a market where other providers are stepping in to fill the gaps.
Bottom line, respondents want better services for advice and mobility. They showed strong interest in five possible IoE-enabled services related to these two categories: virtual financial advice, virtual mortgage advice, automated advice, branch recognition and mobile payments.
Seventy-five percent of global respondents said they would move their money to another provider to access one or more of the five IoE-enabled services. However, in emerging markets, respondents are twice as likely to move their money as in developed markets.
Cisco’s economic research shows a revenue-upside and profit-increase opportunity for banks in all 12 countries surveyed. The upside is higher in emerging economies, with a 15 percent profit-increase opportunity in China, 11 percent in Mexico and India, and 7 percent in Brazil (based on a bank with annual revenue of $5 billion). It is still significant in developed economies as well, with profit upside potential of 5 percent for a $5 billion German bank, and nearly 6 percent for an equivalent French bank.
Already, some forward-looking banks, such as Allied Irish Bank (AIB) and U.K.-based Nationwide Building, are beginning to capture the value of IoE-enabled concepts.
AIB, for example, has demonstrated how banks can blend the physical and virtual with its LAB (Learn About Banking) pilot. The service “delivers an engaging experience for our customers at a time that suits them,” said Fergal Coburn, head of channel development and strategy (Direct Channels) at AIB.
Virtual mortgage advice has been a success at Nationwide Building. By connecting customers with mortgage experts remotely, advice is now available anytime, anywhere. To the surprise of some executives at the company, customer satisfaction with virtual meetings has eclipsed face-to-face meetings.
These are two examples and there is ample opportunity for all banks to leverage the IoE-driven solutions highlighted in Cisco’s study.
The payoff for banks will be engaged customers, increased efficiency, and new profits — in emerging and developed markets alike.