How next-gen tech will let Australia’s customer-owned banks survive and thrive

Australia’s customer-owned (also known as mutual) banks are incredibly diverse and powerful, with more than 60 mutual banks and credit unions servicing over five million customers. Despite the sector’s size, it is facing a critical period as digital banking takes hold and consumer expectations evolve.

Globally, there has been a significant increase in demand for the personalised products and services that digital banking can offer, with consumers now coming to expect the speed, convenience, and security that digital banking enables to be built into all bank offerings.

With new digital-only banks now competing alongside digital spin-offs of the big banks, it’s vital that customer-owned banks have a clear strategy for digital transformation in place today.

Mutual banks leading the way

The latest Roy Morgan Consumer Confidence report shows that Australian customers of mutual banks are significantly more satisfied than customers of major banks, with 94 per cent of building society customers and 90.9 per cent of credit union customers “satisfied”, compared with 77.4 per cent of customers of the major banks. These high satisfaction ratings are a direct result of the customer-centric approach that these smaller banks take and bode well for the future of the sector.

However, without a clear digital transformation strategy in place, they risk losing their place on the top of the customer satisfaction table as customers switch banks for the digital products and services they want.

Legacy technology on borrowed time

Most of today’s customer-owned banks are running on decades-old legacy technology which is expensive to maintain and very cumbersome to change. Launching new products can take months (or years) and any updates can involve significant downtime for customers.

While some processes may already be digitised, like online applications or customer-facing apps, most customer-owned banks do not yet have a streamlined tech-enabled end-to-end process.

This is something these banks need to be aware of, as the hyper-personalisation that customers have now come to expect can only be enabled by agile cloud banking technology that leverages open APIs to bring together best in breed financial and customer experience solutions. 

Unless there is an appetite to embrace new technology and leverage digital platforms to launch innovative new products, customer-owned banks will soon face regulatory and compliance challenges on all fronts and will also be left with significant gaps in the customer experience. It’s vital that the tech stack can support real-time decisions and transaction capabilities while being sufficiently agile and flexible to respond to changing consumer demands and market conditions.

While transitioning to a new technology platform is obviously going to incur expense up front, it’s important to consider the long-term benefits –in terms of cost, reputation, and continued customer satisfaction – of an effective digital transformation strategy.

Embracing next-generation technologies like cloud, artificial intelligence, machine learning and data analytics will enable customer-owned banks to not only survive, but thrive in the new digital era.

Paul Apolony is General Manager Australia and New Zealand, Mambu.

Leave a Reply