Small players look to become small targets

In a panel discussion at yesterday's AB+F Retail Financial Services Forum, executives from three second-tier financial services that have undergone or in the process of running "transformation" projects considered the place of technology in meeting the challenge from so-called disruptors.

The wave of newcomers to Australia's banking sector - the so-called "disruptors", such as the nascent peer-to-peer lenders - share at least one characteristic: an understanding that consumer expectations are set by industries outside banking

And this perception by consumers of sluggish responsiveness to change rings true, even for the smaller players, as Paul Cahill, head of digital and direct at CUA noted.

However, he pointed out that it's as much to do with regulation as organisational inertia. Cahill said one aspect of the banking sector that surprised him when he moved to CUA from the telco sector two years ago, was to find that when any decisions on processes had be made, "there are a number of boxes that need to be ticked even if only a small percentage of the customer base is affected."

"We not just an industry providing a banking services; we are more than that," he said.

For instance if a customer loses their money through an online scam, the first place that will turn to is their bank not their Internet service provider.

Matt Baxby, group executive for retail banking at BOQ asserted that smaller banks have an advantage over the larger players in that they are closer to their customers - presumably that means new entrants will need to work harder to poach customers.

In BOQ's case, the complicating factor in moving to a digital banking model to protect its turf is that many of its customers are older and prefer personal relationships. "This leaves the role of digital as moving customers between points of personal interaction, so the digital strategy becomes segment focused," Baxby said,

ING Direct's executive director of distribution, Lisa Claes, asserted that her bank's strengths in the Australian market was its ability to harnessed "best of breed" rather than trying to use a DIY approach to build proprietary systems to meet every aspect of customers' expectations.

CUA's Cahill agreed, adding that other parts of the operation needed to become involved. "Having the risk function involved as part of the thought process, as you digitise your processes," he said.

"Digital transformation without bringing your workforce along on the journey is not a transformation," he said. And automating an existing bad process doesn't change the experience for the consumer."