How Today's Corporate Banks Can Break Down 5 Barriers to Innovation
Fortunately, what’s driving the biggest changes—and thus, the competitiveness—in banking is also the best solution for fueling innovation: technology. In this article, we’ll discuss some of the challenges to innovation in this industry and how they can be overcome.
Not Knowing the Right Technologies to Adopt
While technology is a big boon across various industries, it can also present a challenge. In banking, in particular, technological developments like artificial intelligence, blockchain, and the Internet of Things (IoT) can make matters both easier and more complicated.
The best thing to do here is to understand what each technology can do for your bank. Research is key, as is asking for advice from the experts. If you already have a product in mind, say a corporate banking cloud solution, the company likely has consultants who can help you out. With their help, you can choose the best features and learn about how these can optimize your business.
The key here is to only use the technological solutions that are right for you. Don’t subscribe to a service or acquire a product just because you feel like you need to upgrade to a new tech. This can cost your organization a lot of time and money, which can set back your plans for innovation.
Poor Customer Relationship Management and Customer Retention Programs
One of the most challenging aspects of corporate banking is relationship management. This is because, over time, the demands and expectations of customers tend to change. In addition, to address the needs of clients, relationship managers typically need to access various systems to view relevant information about the customers.
If these systems aren’t well-organized and seamlessly integrated, relationship managers may end up missing a crucial piece of information. This can cause delays in service delivery, which can lead to frustration on the client’s end. An adjacent concern to relationship management is customer retention. If you do badly in the former, then you’ll likely do poorly in the latter as well.
As such, it’s imperative to look for solutions that will address multiple facets of these two crucial business processes. If you can address your customers’ needs and preferences, then it will be easier for your organization to develop innovative programs and achieve a competitive edge.
Aside from acquiring appropriate banking software and updating your legacy systems, you may also want to consider investing in a chatbot solution. With chat bots, you can provide 24/7 customer service and ensure active engagement. Set up your solution such that it will use accessible, easy-to-understand language and provide practical and realistic answers to frequently asked questions. And speaking of FAQs, study your bank’s historical data to verify common concerns so that these can be covered by your chatbot’s programming.
Inefficient Data Storage and Use
The banking industry has become more and more data-intensive over the years. This is further compounded by digitalization, which means information exchange happens much more quickly. This can result in troubles with regard to data storage, curation, and retrieval, especially if you’re still using legacy systems that rely on data silos.
To make things more efficient and secure, it’s best to migrate to cloud-based banking solutions. While physical servers remain reliable, the costs of maintaining siloed physical storage spaces will increase exponentially as you collect more data. On the other hand, cloud-based solutions can help your organization become more agile with the use of virtual and variable service levels of storage.
Since the 2008 global financial crisis, regulatory compliance in banking has become more challenging. More than ever, it’s become increasingly necessary to keep pace with changes in regulatory guidelines as the consequences for non-compliance can be severe. However, it’s also true that this endeavor can take up a lot of resources due to the need for data collection and correlation. This can ultimately hamper your innovation efforts.
To overcome this barrier, it’s best to look for a software or system that will help you collect and analyze data in the most efficient manner possible. Whether it’s for know your customer (KYC), customer due diligence, or sanctions screening procedures, such a system will enable you to abide by standards that are designed to protect your institution, your customers, and the industry as a whole from financial crimes. Such technological solutions can also help standardize processes, minimize risks, and monitor trends. All of these can enable your bank to keep up with the latest changes in industry policies and regulatory requirements.
Balancing Innovation with Security
Last but certainly not least, one of the biggest roadblocks to corporate banking innovation is balancing tech transformation with security. You can’t simply launch an innovation initiative without protecting your data and maintaining its integrity. The challenge, of course, is that innovation requires you to take risks; meanwhile, security all but demands that you reduce risks.
For many, the priority will always be security. After all, as previously mentioned, banking generates and deals with large volumes of data. All of these need to be kept secure, so increasing the budget for system-wide security will always be a wise idea. From here, you can think of innovation initiatives that likewise focus heavily on data security and integrity.
It can be daunting to think about the above-mentioned and many more innovation barriers in corporate banking. However, with the correct investment in technological solutions, research, and training, these obstacles won’t be as challenging as they seem.