Putting the Customers First in Digital Banking

By Jim Cavanaugh

Singapore’s digital banking license race shines new light on the importance of digital customer experience.

Earlier this year, the race for five digital banking licenses in Singapore saw a breakthrough, as 14 digital banking applicants – out of an initial 21 – were shortlisted by the Monetary Authority of Singapore (MAS). The heat is now higher than ever as these remaining 14 hopefuls refine their digital product offerings and market propositions to be both compelling and in line with the expectations that MAS has set.

This group contains an eclectic mix of organizations, many of whom do not have roots in the financial services or banking sectors. Publicly-known bids include those from wealth management tech supplier iFast, gaming group Razer – which seeks to establish the world’s first youth bank to leverage its audience of youths and millennials – and a consortium consisting of ride-hailing firm Grab and telco SingTel, both of which have expanded beyond their core offerings into mobile wallets and financial services.

Certain to shake up the established order in the Singapore banking sector, this battle will be fascinating, although the extent to which it is a revolutionary shift remains to be seen. S&P Global Ratings, for one, seems confident that Singapore’s existing big three banks are more than capable of co-existing with fintechs and tech rivals, with their willingness to adapt digital solutions and collaborate with fintech players. However, the issuance of digital banking licenses will see the first digital-only banks setting up in Singapore, and how they will challenge the status quo is yet to be seen. This is still a never-before-seen phenomenon in Asia.

One area that we can be certain about is that irrespective of the organizations involved, digital customer experience will underpin future success or failure. For Singapore’s established banks and for the recipients of these five additional licenses, a relentless focus on digital customer experience will be essential. But as organizations continue to invest in agile models that heavily rely on complex multi-cloud environments, distributed services, and microservices, the ability to achieve a holistic view of user behavior has never been harder.

How will Singapore’s banks – new and old – adjust to these technology challenges while keeping focus on their customers?

Banking on digital experience perfection

According to a report by my company, AppDynamics – The App Attention Index – people are far less tolerant of problems with digital services than they were just two years ago, and they’re now far more likely to take decisive action – deleting apps, turning to the competition, and sharing their negative experiences far and wide.

Today, application loyalty is the new brand loyalty, meaning that consumers are loyal to the brands that deliver digital experience perfection. 84% of those surveyed said they had experienced problems with digital services in the last year, meaning performance issues are occurring across all types of digital services, on a daily basis.

In the same report, 70% of consumers said they want digital experiences to be more personalized than those that happen face-to-face. Furthermore, 50% stated that they would be willing to pay more for an organization’s product or service if its digital services were better than a competitor’s.

In short, as the reliance on digital services has become more pronounced, so too have people’s expectations of these services soared sky-high.

The pandemic is accelerating change

Such widespread reliance on digital services may not be quite as advanced when it comes to Singapore’s citizens and their banking habits. Data shows that while just 2% of Singapore’s 6 million residents are unbanked, 40% of Singapore residents are described as underbanked, i.e. not as well-served as consumers living in other developed nations, lacking access to services such as credit cards, or long-term savings products, proving that there are yet customers who could be better served.

Maintaining market stability and striking a balance with innovation has been a key regulatory tenet in Singapore to limit excessive market disruption, but it may also have inadvertently caused a slowdown on innovation. However, the COVID-19 pandemic has expedited change in banking as in other aspects of daily life. An S&P Global report – Tech Disruption In Retail Banking – finds that record numbers of digital banking transactions are taking place during the COVID-19 outbreak.

This shouldn’t be surprising. In just a few short months, the pandemic has fundamentally changed the way most enterprise organizations operate and deliver services and products. As the consequences of the pandemic took hold, businesses shifted overnight to an almost entirely digital world, and IT departments grappled with surging demand and the very real urgency of accelerating digital transformation strategies.

81% of technologists believe that COVID-19 has created the biggest technology pressure their organizations have ever experienced, according to the Agents of Transformation Report 2020, but COVID-19 has also re-defined what is possible for IT teams to achieve. Since the outbreak, 71% of technologists from the same survey say they have implemented digital transformation projects in weeks, rather than the months or years it would have taken before the pandemic.

Gaining visibility across the customer journey

As new entrants to the banking sector battle for their place, they should remember that consumer behavior and market conditions do not stand still. Digital customer experience was already important pre-pandemic, but it is now considered a business priority by 88% of technologists.

But there remains a problem: 80% say that they have been held up by a lack of visibility and insight into the performance of their technology stack when trying to deliver quality customer experiences during the pandemic.

In recent years, application environments have exploded in complexity with multi-cloud, microservices, and other technologies added into the mix alongside on-premises infrastructure. While these technology advancements enable faster innovation, they reduce visibility across technology stacks and increase operational complexity.

It has become more challenging for IT teams to obtain a holistic view of their customers’ journeys. Without the data they need, it is time-consuming and costly to react quickly to application issues and resolve them ahead of time.

Banks – new and old – need monitoring solutions that provide deep, cross-domain visibility and insights with the ability to automate actions, reduce the amount of time-consuming IT tasks, and enable teams to drive innovation. Furthermore, they need to understand exactly how application code drives user experiences and impacts the bottom line. The correct tools can track business transactions from user clicks, through to code, to infrastructure and databases, and finally, third-country services.

The time is now to embrace change

Change is coming for Singaporean banks. More choice, more innovative services, and more flexibility will undoubtedly lead to changes in consumer behavior.

While this places more pressure on banks and their IT teams, it is also an unparalleled opportunity to delight customers and cement their loyalty. A relentless focus on digital customer experience and a proactive approach to performance monitoring has never been more important.

About the Author

Jim Cavanaugh is APJ Vice President at AppDynamics, a Cisco company. AppDynamics, a part of Cisco, is the world’s #1 Application Performance Monitoring (APM) solution and AIOps platform. AppDynamics is a full-stack, business centric AIOps platform that enables technologists to prevent digital performance issues by monitoring cloud-native technologies and traditional infrastructure to understand exactly how application code drives user experiences and impacts the bottom line for businesses. AppDynamics has been recognized by Gartner as a leader in APM for the last eight years and was positioned highest in ‘ability to execute’ in Gartner’s 2020 Magic Quadrant Report for APM.

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