It’s interesting to see that The Irish Times reported that the Bank of Ireland is planning to invest €500 million over the coming years to modernise its group IT infrastructure. Since the financial crisis of 2008 banks across Europe have been faced with the challenge of restoring balance sheets to meet the European Central Bank’s standards. This has involved not only working with customers to deleverage loans but by carrying out stringent cost cutting exercises, which often include branch closures and reductions in staffing levels.
According to a 2013 a report in the Irish Independent:
'Bank of Ireland came last in the study of 21 banks and Ulster Bank came second last. Bank of Ireland had a consumer satisfaction rating of just 41%, a full 50% lower than the leading bank. It performed particularly poorly in relation to customer service, regular communication, clarity of statements and branch availability'
The bank has therefore had to take steps to redress these challenges and identify technological solutions to solve them. Dubbed Project Omega, the programme they plan to implement over the next five years will aim to upgrade the bank’s systems to provide an enhanced customer service while also introducing efficiencies into the company’s operating model. This commitment shows that they realise that they must change to meet the new mobile digital reality of their customers’ lives
At the publication of their half-yearly results in July, Bank of Ireland said more than 59 per cent of personal and 83 per cent of small business loans were delivered either online or by phone in the six-month period, and it had 440,000 mobile customers.
The question remains: will this be a cosmetic digital strategy that glosses over existing banking practices or will it be a fully integrated digital strategy putting the customer first?
Future options could include:
- Automated KYC and client onboarding.
- The adoption of PSD2 to easily allow the movement of funds across different institutions and markets by the opening of client accounts.
- Introduce Peer to Peer lending that allows savers to identify who they lend to and borrowers to have fast approval.
- Robust digital platforms that are accessible, securely from all devices.
The risk they face by not doing this is that customers, who are already less loyal than the generations before, will look elsewhere. This is already happening with small business lending looking for alternative lenders.
In the UK, City Am reported 34% of business lending now comes from alternative finance sector and the likelihood is that the Irish market will follow suit
It is encouraging to see Bank of Ireland take a more innovative path. It is however too soon to evaluate the outcome of their initial activities.
Grow Advisors has been working closely with the banking sector across Europe and held high level meetings where the challenges facing the sector have been discussed.
There is however a growing realisation that the challenges are in fact opportunities.
The established banking system can still boast most of us as customers. While we may look more widely for finance for our businesses and personal borrowing our current accounts largely remain with established banks. What most customers would welcome would be be improved digital services, better access to products and services from other providers and reassurance that security is a priority. The traditional approach of propping up of legacy systems and the introduction of an app isn’t enough. Grow Advisors are well placed to advise of an integrated digital strategy that utilises the API ecosytem that exists in both Ireland across the world to ensure established banks can service their customers.
Grow Advisors, UK & Ireland
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Grow Advisors is proud to support the transition to digital finance around the world. Our team offers consulting and professional services on online asset and wealth management solutions, lending and p2p, crowd investing and fund raising around the world. We are uniquely placed to cover both planning and executional aspects of all our ideas.