Banking: "If you set out to digitise, you need to think mobile"

By June 07, 2013
Philippe Torres

Most industries have grasped the need to digitise their processes in order to develop their business model and respond better to customer needs and expectations. In banking, as elsewhere, mobile has become the epicentre of this transformation.

Interview with Philippe Torrès, L’Atelier’s Head of Consulting and Digital Strategy, at the launch event for ‘Hello bank!’, the new -determinedly mobile and social- digital bank that BNP Paribas launched on 16 May in Belgium and Germany.

L'Atelier: We use the expression “digital transformation” to describe changes a company needs to make when moving to digital. But what does that mean for the financial sector?

Philippe Torres: It’s true that the world has been moving towards digital for several decades now. Since 2010, this transformation has been spreading across all sectors, especially in mass market retail but also the automotive industry, the health sector and particularly in financial services. I think these days everyone has grasped the fact that ‘going digital’ applies to all companies and all sectors, and this includes financial services -banking, insurance, and all the other products and services of a bank. In fact we’ve been talking about digitising banks for several years now, especially since the first online banks were set up in the late 1990s.

L'Atelier: But things seem to be speeding up now...

Philippe Torres: Yes, and in large part due to mobile. For a long time growth in Internet usage was essentially on fixed line computers. Today over three quarters of the world’s population has access to a portable phone -that’s over five billion people- and nowadays all growth in Internet usage is first and foremost via mobile. Here’s an interesting statistic: Google has announced that the Android platform now numbers over a billion users worldwide. This means that Google users represent half of all Internet users worldwide, and Google is just as dominant on mobile as on fixed-line devices. Another fact: in 2012, mobile Internet use caught up with fixed Internet use. Add to this the increasingly widespread use of smartphones and tablets, plus the arrival of 4G, you can see that soon it won’t be enough just to be on Internet. If you want to digitise your company or your financial or banking services, you need to think fundamentally in terms of mobile.

L'Atelier: What does the shift to mobile mean in practice for firms who want to go digital?

Philippe Torres: Companies, especially those with distribution networks, need to keep two things in mind. Long term, they need to be able to offer their customers services -let’s take the example of banking services- which they can access 24/7, and their physical points of sale must also be digitised so that customers can use digital at all times, including at the point of sale. Secondly, if I have a site offering mobile services, if I’m provide account information, payment services, etc, on smartphones and tablets, my customer must be able to use the service anywhere, including inside or near a branch. The good news is that mobile platforms allow you to do that as a matter of course, so you should be able to get there little by little.

What you have to bear in mind is that we’re building bridges between various channels in order to move steadily towards a single channel. And a mobile platform presumes that we can do this! De facto, a retail organisation, banking or not, taking the initiative to go into mobile services, has to answer this question: what happens when a customer arrives at the counter with the app in his/her hand? You must ensure basic integration between the physical and mobile online sides. So either the firm must equip its staff with mobile devices like the ones its customers have, or it needs to create a fixed-line information system that mirrors what the customer has on his/her phone.

L'Atelier: But doesn’t the issue of security make some of these trends harder to implement?

Philippe Torres: That is the key issue, yes, but with digital we’re on a forced march. On one side we’re under pressure from the general public, analysts, suppliers, our competitors, plus strong lobbying from digital providers; they are all pushing us to go in that direction. In general, firms are going the digital route, and they’re making progress, but they know that at a given moment they with be faced with the security question. The task facing all these companies -and banks in particular since risk control is central to our business- is to go the digital route while staying in control of the risk factor. This is probably why the general public feel that banks are not progressing as fast as some other sectors, but this is only to be expected. There is after all a general consensus that in the not too distant future the world’s greatest problem will be cyber security in the widest sense. This isn’t a problem for a company like Google, of course, as its main goal is to grow and sell advertising!

L'Atelier: And in doing so put pressure on other companies...

Philippe Torres: Absolutely! Google and Apple pushed the mass media to metamorphose at too fast a pace, before they really had a business model for that. They know they can create value, and some have done it already but, at the present time, i.e. nearly twenty years since the digital revolution began in the mass media, they’re still destroying more value than they’re creating. Obviously that’s something which the banking and financial sectors have no desire to do.

L'Atelier: So how can that be avoided?

Philippe Torres: By not letting ourselves be overrun by the digital ‘barbarians at the gates’! You need to play the game according to your own rules, whatever sector we’re talking about.

Here’s an example which illustrates this. It’s about Google and the Google Car, which drives itself automatically. The advertising message basically tells the US driver who spends around fifteen hours a week at the wheel of a car, that from now on s/he’ll have this amount of time to look at digital information and to do other things instead of driving. That may be true as far as the driving actions are concerned, but Google isn’t concerning itself about the road safety aspect. So what should automobile manufacturers be doing to counter this? Some don’t know what to do. Others, Volvo for instance, have incorporated this feature into their own market. Volvo has developed a ‘road train’ system whereby the first truck in the convoy has a human driver, but the following -up to eight- vehicles can either be driverless or have drivers who don’t have to drive, as their trucks are synchronised with the first one in the train. So that’s how Volvo has incorporated an idea from the ‘digital barbarians’ into its own business.

L'Atelier: So what must firms do to begin the digitisation process and create new opportunities?

Philippe Torres: Each company needs to follow its own learning curve by experimenting. When you start to think about the subject with your usual reflexes and those of your particular industry intact, you can move further towards a new business model and even come up with entirely unthought-of approaches. In the Volvo example, there’s an opportunity for the company to increase customer satisfaction while embedding enhanced service into its offering. For banking and the financial services sector this means mobile payments and also services linked to the various businesses of the bank, coupled with risk management and security -from the electronic purse to the electronic safe, insurance and all the range of banking products, including loans.

So it’s really a matter of understanding where the ‘digital leaders’ are driving us, and then coming up with a strategy that will enable you to be part of this movement without making too many compromises as regards your own processes, your own mission. Get this right and there are many opportunities out there!

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