The transition to cloud-based services will help banks better understand their customers and personalize the services they offer, according to a report released yesterday by Accenture. But the report says it will do the same for new online startups looking to disintermediate customers and transactions. Banks therefore need to make the transition as soon as possible, or suffer this disintermediation, the study predicts.
The cloud is making it easier than ever for customers to bypass banks when searching for financial services, the study finds. New cloud-based online financial applications like BankSimple are already growing in popularity and can offer disaggregated financial services that Accenture says can move information, advice and money in faster and more personalized ways. In emerging markets cloud-based P2P lending and crowd sourcing micro-loans are also picking up while cloud computing can support the mobile commerce and mobile operations of tech companies like Google and PayPal.
Banks could be relegated to a back-office role running bank accounts behind these new entrants, the report warns. At the same time the report notes that regulatory and market pressures on interest-based revenue like loans means that banks need to refocus on gaining revenue from fee-based services. But that would be much more difficult if banks become back-end operations for the new third-party financial services.
Banks can counter the third-party sites by leveraging social media and mobile networking to build a better understanding of their individual customers. This in turn, the report says, will enable banks to offer personalized bundled services to increase revenues.
Some banks are already investing in social media tools and strategies such as linking to customers' Facebook profiles and building online communities for customers to learn about financial services, Accenture notes. This will give banks access to customers' personal social profiles. Combined with data that banks already have concerning customers' transactions and behavior, this social data will allow banks to personalize service and product offers through analytics, the study says. Banks will soon be able to deliver these offers in real-time via a customer's most preferred channel. For instance, the report says mobile and location-based data will allow banks to make produce and service offers to customers searching for mortgage loans in a specific neighborhood, Accenture explains.
The key to raising fee revenues will be bundling services personalized for the customer from the bank's data and analytics. Banks will be able to move to a could-based product engine that combines cloud-based products and services in personalized bundles, the study says. Banks will also be able to provide digital storage "safes" in the cloud bundled with tax preparation and wealth management services. And Accenture says that further opportunities exist cloud-enabled digital wallets carrying services on smartphones, if agreements are made with telephone providers.