Retail banks are increasingly seeking to digitise their products and services in a bid to keep up to pace with the ever-evolving financial landscape.
Ngozi Megwa, Senior VP of Global Retail Banking at Mastercard, delivered a keynote on day one of Money 20/20 Europe, revealing some of the challenges that retail banks are facing in the modern age.
While many financial institutions are aiming to update their legacy systems, access to data has become pivotal in this bid to digitally transform their bank, as well as being able to obtain and harness it.
Megwa outlined some key macroeconomic problems currently plaguing the retail banking sector, while asking the Money 20/20 audience to share their views on what are the five most important facets to growing a retail bank in today’s financial climate.
The audience has its say
Higher funding costs, lower loan base potential, on top of consumer loan challenges, are some of the questions retail banks have been asking themselves, stated Megwa.
Mastercard surveyed 100 global banks to attain their views on what the most pressing challenges for them are. However, Megwa directed the audience to a QR code that enabled people to select what they deem to be the top five most prevalent challenges.
The most important challenge the audience selected was the need for updated and secure cybersecurity measures. The emerging threat of AI-related fraud has payment firms on high alert, doubling down on recruitment to find best-in-class talent to address these issues.
The second and third most selected challenges were customer engagement and loyalty, and technology-lead innovation, respectively.
Customer trust is always regarded as having utmost importance in the payments space with loyalty not far behind. Ensuring you offer the right payment methods equipped with efficient customer service only adds to a customer’s loyalty.
This loyalty also bleeds into the fourth selected challenge, regulatory readiness. Being regulatory compliant is almost a requirement for any retail bank to continue to scale.
The fifth and final voted challenge was the need for a digitally-driven transformation. Retail banks do not want to be left behind in this current digital age, and by adding up-to-date services that are trending in the market, it only serves to show consumers that you are maintaining not just what the market needs, but also the customer.
What did the experts say?
Companies mostly aligned their beliefs on current day challenges with the audience.
Megwa revealed that cybersecurity, customer loyalty and technology driven transformation remain front and centre of companies’ minds too.
Where companies differed from the audience was the attention placed upon data platforms, as well as data access and analytics.
The birth of Open Banking in 2017 has rapidly enabled a plethora of financial institutions to obtain financial data a lot more efficiently. However, questions have arised from the sector in regards to other types of data, particularly stemming from fraud.
Information sharing has always been a facet of the fight against fraud that could be more streamlined and by withholding data, financial institutions will not gain the knowledge and expertise in being able to protect its customers.
Megwa harkened back to her opening comments, placing a focus on retail banks’ need to streamline its systems and update its ability to obtain, store and harness data because otherwise, they may get left behind.