Digital banking: e-commerce without returns

Low transaction costs and a traditionally strong IT focus can lay the groundwork for banks to play a pioneering role in e-commerce. But despite this, the digital maturity of the banking industry remains below average. It is high time for banks to catch up!

The e-commerce of the financial industry, digital banking, differs in one important respect from online interactions concerning consumer goods: transaction costs are significantly lower. “After all, the biggest cost factor in e-commerce is logistics,” says Nicolay Merkt, Digital Head of the Düsseldorf textile company Peek & Cloppenburg. Merkt concisely responded to the question about the share of returns in the online business: “Around 50 percent – a value customary in the industry”. It still pays off for the chain store operator, which like banks pursues a hybrid business model with its branches – thanks in most part to the “magical world of logistics”, Merkt explains, “where very favourable package prices have been negotiated in particular by the large online retailers. However, as these are not sufficient for the shippers, the prices will inevitably increase”.

Lifeblood Information technology

In contrast to other industries, banks should not be overly concerned about this cost pressure. In addition, information technology is the “lifeblood of the banks”, as Ralf Keuper, banking environment consultant and blogger, points out: “In banks, information technology is primarily used for production. In a sense, information technology and manufacturing technology coincide here”, he says. As early as 2000, a textbook quoted by the author stated: “The production process of a bank therefore essentially consists of the processing of information. Even a bank product, as a result of the manufacturing process, is nothing but information. The quality of the information supplied and the ease of access to this information differentiate the bank from its competitors.”

Digital maturity below average

In this respect, it would be the task of every bank to offer its customers digital and mobile banking with an excellent customer experience. The industry would have to play a pioneering role, but the reality is different: In a study on the digital maturity of various industries, banks only rank fifth out of seven! While the topic “Mobile” is enough for third place, the “Digital Product Experience” places them third to last, and in the category “E-Commerce” banks rank even lower!

Apps for excellent customer experiences

At FinovateEurope, more than 60 providers showed a large specialist audience how financial institutions could inspire their customers. We are proud that our simulation app TimeWarp was voted “Best of Show” product. This recognition marks the third time in which we could convince in this context with our innovative solutions. Now we are doing everything we can to ignite the spark of enthusiasm for an excellent user experience, and deliver an e-commerce service that is worthy of the banking sector.

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