Retail banking set to evolve rapidly in South Africa, consulting firm explained Boston Consulting Group (BCG) said in a recent report on the banking industry.
The covid-19 pandemic has dramatically changed the way consumers view and engage with their banks.Another BCG report produced in partnership with Discovery Bankdetailed how about 80% of South African customers prefer to conduct their day-to-day banking digitally.
As the importance of digital services to customers appears to be more emphasized than ever, traditional banks may find it difficult to keep up with the services of new challenger banks.
like time bankDiscovery Bank, and bank zero Consumers in the region are turning to new types of personalized banking that are better suited to today’s world.
“Retail banks are in a competitive starting position but need to adapt. They benefit from high levels of customer trust, strong brand recognition and skilled staff. can play an important role in the customer relationship of Tisbert Creamers, Managing Director and Partner of The Boston Consulting Group. “But without change, incumbents face isolation from customer touchpoints, losing access to customers and valuable data in the process.”
Compete or cooperate?
BCG report It also suggests that traditional banks may find it difficult to reposition themselves to meet new digital expectations. Migrating from the legacy systems some banks currently have in place can take time and a significant investment.
New challenger bank options may be poised to offer digital options, but traditional banks still hold large customer bases. may be suitable for cooperating with other banks.
Frederick BootetBCG Managing Director and Partner commented on the different strengths each option offers. Boutet explains: Incumbents can leverage data from their vast and stable customer base to better understand and meet customer needs. Challenger is agile and able to develop his digital propositions tailored to a specific customer’s journey. “
The report also likens the consumer experience of South Africa’s financial system and limited level of financial inclusion to the starting point for the Chinese market.messaging, social media, mobile payment apps WeChat Evidence that fintech is causing chaos in the Chinese market. WeChat and similar alternatives take advantage of high mobile phone and internet penetration to cover the limitations of customers’ banking experience.
This example highlights that if traditional banks fail to evolve adequately to meet customer requirements, digital financial services may begin to steal customers and threaten their existence.
How can banks adjust accordingly?
BCG’s report suggests that traditional banks must take advantage of existing positions. They have been around and serving their customers longer than their competitors, which is why they are generally much more trusted.
Banks also have access to far more data that, if used properly, can help them understand their customers’ greatest needs. The report explains that “the South African banking industry is ahead of other industries” when it comes to data analytics.
One possible solution is the use of AI models based on customer data. Such models enable banks to anticipate customer needs before they actually occur. If predictive models work efficiently, traditional banks can return to the forefront of the South African banking industry.