The COVID-19 pandemic has left Australia in an environment of low interest rates and reduced stability in earnings caused by government-imposed lockdowns, strategic business changes such as operations, budget cuts and redundancies that affect daily operations and budgets and employment, as well as changes in economic trends; these trends majorly affecting sectors including travel, finance, brick and mortar retail and hospitality, with flow-on effects within the broader economy.

With competition emanating not only from fintechs but also leading technology companies, it has become extremely difficult to grow or even maintain margins. The banks have the advantage that they have the customer base, however the advancement in technology is reducing the barriers to offer different financial products by fintechs and technology companies. We have already seen the proliferation of a variety of players in the payments space offering digital wallets, merchant services, payments rails, for example. PayPal, Square, Stripe, etc. The same is happening within the credit space with buy now pay later firms popping up, technology companies like Apple offering cards and even retailers offering their own credit facilities, thereby eating into the margins of the banks. Even Google has plans to introduce checking and savings accounts in tie-ups with banks. Smaller banks, at times are further disadvantaged especially in terms of funding available to invest in technology and innovation.

Covid-19 has significantly transformed our lifestyle on multiple fronts. From the way we do our professional work, go about our daily responsibilities to planning or managing finances, we all have been pushed to adopt digital technologies. ATM cash withdrawals and footfall at physical bank branches are down, whereas e-commerce and contactless payments have increased significantly. A recent article in the Sydney Morning Herald, pointed out that the ATM usage in recent months has plunged by about 40% in volume compared with last year, while branch traffic fell about 50% from February to April. Contactless payments, in contrast, are up about 65% in value. Australians are showing a greater preference for contactless payments during the Covid-19 pandemic, according to debit card provider Eftpos which is claiming 400% growth of its mobile payments business.

All banks and financial institutions have a Digital Banking platform these days. But does yours just cover the basics? Or have you realised the fast-growing importance of this channel for your customers and your bank’s future?Increasingly, it’s the channel your existing customers choose to interact with you in. And as the digital native generation reaches adulthood and the workforce, it will be the only channel they’ll use – to research, apply and use their banking products and services.

It’s time to change your perspective – it’s no longer ‘digital banking’. It’s ‘banking in a digital world’. And to take your rightful place in this digital world, your Digital Banking strategy needs to tick all the boxes. Customers call the shots in the digital age. Their expectations are higher and they’re less willing to accept anything but the best. When it comes to digital banking, simply giving customers a way to transact and transfer isn’t going to cut it. Customers want to fully self-service and take control of their own financial management.

The Open Banking deadline is nearing for Data Holders, the major banks have already complied with product reference data, whereas non-major ADIs including non-major banks, building societies and credit unions, are well set to comply with these requirements by Oct 1^st, 2020. While the compliance timelines for disclosure to accredited data recipients is still a few quarters away (phase-1 for major banks is Oct 2020 and for non-major banks/ADIs/ building society/credit unions is Feb 2021), the financial institutions have also started to define their strategy around being a Data Recipient. We are seeing a varied set of approaches to the Open Banking Consumer Data Right (CDR) compliance requirements. While the smaller financial institutions have primarily focused on compliance aspects, the mid-large tier organisations have taken a strategic approach to prepare themselves for a new world, where the customer and banking data can be potentially accessible to all financial institutions based on customer consent.