The area banks still lag on in digitisation

  • By Christine St Anne

While banks now confront the balancing act of investing for the future or saving on costs one area still remains ripe for digitisation.

Accenture Australia and New Zealand banking lead Alex Trott acknowledges that post COVID-19, banks are now forced to rethink their innovation spend budgets.

With that, comes decisions around whether to invest in the future or “put the shutters up a little,” and try and save on costs.

Trott has been working with the firm’s banking clients in helping them navigate the challenges of the health pandemic.

Off the back of greater demand for ecommerce as a result of the new environment and a shift to remote working, Trott sees an accelerated level of digitalisation across all sectors and that digital maturity and digital resilience will ultimately determine who emerges stronger in a post-COVID world.

“In my view, banks are taking different approaches. Some banks are taking the opportunity to invest in new capabilities so that they can emerge from the crisis in a stronger position.

“While other banks will be focused on costs. There will be a diverse approach to how the industry will approach their innovation strategies,” Trott said.

Evidence to date suggest that the big banks have adopted a greater focus on cost mitigation although for National Australia Bank, the focus has been on driving technology to simplify the business.

In the smaller end of the spectrum BankVic recently announced its decision to overhaul a portion of its platform to provide better digital banking services to its members.

Trott sees two main areas that banks will remain committed to on the innovation front. Obviously digital banking remains a key priority, but another important area is around business banking.

“We talk a lot about retail banking but one of the biggest areas for digitization is businesses banking. Most banks will acknowledge that this part of their business was more digital particularly as they went into this pandemic,” Trott said.

Indeed, the big four were criticized by the government for being too slow to respond to helping small businesses access the job-keeper payment which resulted in the majors setting up dedicated hotlines and staff to respond to the challenges.

Many banks have not had to employ Business Continuity Plans. Investing in areas like the cloud will help with improving resilience

Some small players are providing the market with solutions. Recently Banjo Loans announced an online platform that will drive faster approvals. The business is hoping to white label this offering to banks.

“Digitization will spread much more across the organization. Not just for retail apps but into small business lending and even into corporate banking. There will be a broad application of new and expanded digital capabilities,” Trott said.

Another critical area for banks amid the economic challenges is one of resilience including business and technology resilience. Here cloud technology will be critical.

“A number of banks are probably thinking they need to be more invested in technologies like the cloud. It is an unprecedented situation.

“Many banks have not had to employ Business Continuity Plans. Investing in areas like the cloud will help with improving resilience.”

For Trott, the health pandemic and subsequent economic challenges will mean that organisations of the future that are going to be successful will have be fully digital and very resilient.

However, there is also a broader theme in play, that of citizenship.

Much has already been discussed around the important role that banks have played as being on ‘Team Australia’.

“It’s a very interesting line been adopted by the government in highlighting the moral duty of banks versus mandating the sector to take action,” Trott said.

To date, collectively the big banks have at least 643,000 loans deferred on their books.

ANZ CEO Shayne Elliott and Commonwealth Bank CEO Matt Comyn both said they will be actively engaging with their customers in helping and assisting them move from their deferred repayments.

Trott highlights recent views by Comyn who said that a stronger Australia would mean a stronger Commonwealth Bank.

“Banks are now acting the rhetoric in supporting the community, supporting small businesses and supporting Australia.”