Banks have spent much of the last few years battling macroeconomic, geopolitical and regulatory headwinds, but the time has come for them to focus on improving customer experience through innovation, a financial services consultant said Tuesday.
The move is critical for banks globally to sustain growth over the longer term after experiencing weak and eroding profits in 2016, said Jan Bellens, global emerging markets and Asia Pacific leader for banking and capital markets at EY.
"We have a very uncertain environment, we also have a lack of investments that needs to happen in customer-facing technologies in innovation, which has lacked in the past. Banks have been busy with controls and compliance, risk and regulatory agenda. They've invested a lot in upgrading their core banking system, their compliance system, but they've forgot a little on the customer experience," he said on CNBC's "Street Signs".
Serving customers better include protecting them from data, privacy and cyber security threats, using big data to understand customer needs better and incentivizing frontline staff to improve their service standards, according to EY's Global Banking Outlook 2017 report that was released last month.
It also noted that banks still have a competitive advantage over fintech players as customers prefer them for products such as primary checking accounts and mortgages. However, that advantage may be diminishing as fintech players become more competitive.
Bellens said banks recognize the need to improve their growth prospects through innovation, but they face major challenges in recruiting the right talent while juggling the need to keep costs in check.
"I think now is the time that they put aside more investments, but this is not only about investments, it's also about having the right talent … the best developers, the best designers – are they with the banks? Not really, they might not be with them," Bellens said.
"Banks, particularly in Asia, have the top priority to get the right talent, but they are at the same time cutting costs … I think there'll be a big shift in what working in a bank looks like, what the future of talent looks like, what the future of work looks like in many of the financial centers," he added.