Banking, like many other sectors, has responded to rapid change and evolving customer needs by developing a digital strategy. Banks in South Africa are increasingly using new technologies, digital solutions, and data analytics to reimagine and enhance customer service and provide personalized offerings. Data increasingly holds the key to a positive customer experience – especially for banks prioritizing sustainability.
A growing body of research illustrates how widespread the shift to digital is. A recent report by Discovery Bank in partnership with BCG, the Future of Retail Banking, found that most South Africans are fully ready to do their banking digitally.
Nearly all customers – 86% – expressed a preference for conducting their day-to-day banking digitally, while approximately 60% said they would be comfortable with a completely digital full-spectrum banking offering. Over two-thirds, 69%, of South Africans believe that local banks will have transitioned to a fully digital banking experience by 2027. Other banks that cater for the less sophisticated customers who may be willing to use digital banking but have no access to mobile devices, computers/laptops or data will continue to need a physical presence. Where physical presence is required, their branch will need to have more self-service ports to give customers the digital experience and the ability to self-service.
For economies that may still have challenges with physical infrastructure, digital solutions can help overcome barriers to ensure all parts of society have access to services critical for their well-being and aspirations.
In this increasingly digital age, data holds the key to meeting customer needs more than ever before by personalizing products and services to a customer’s unique profile and behaviour. As data continues to grow in volume, velocity, and variety, retail banks need to safeguard and protect it, especially more sensitive customer information.
The good news is data can now be managed throughout its lifecycle so that it is better organized, more accessible, and secure. Key to effectively converting data to actionable insights securely is an organization-wide information lifecycle management framework that is comprehensive across how information is collected, used, stored, and then safely disposed of.
Embracing the sustainable future of banking
It is evident that the digital future of banking, underpinned by the power of data, is both inevitable and imminent. What is also inevitable is that the future of banking needs to be sustainable.
Research on organizational resilience, conducted by Economist Impact with C-Suite executives, found sustainability to be a top five business priority alongside areas such as digital transformation and cybersecurity. As businesses develop and communicate their sustainability credentials, those who embrace sustainable solutions will have the edge.
Sustainability is quickly becoming the next frontier of competitive advantage for banks and is a pillar for future growth. According to another BCG report, introducing environmental, social, and governance (ESG)-related products in core business lines could generate substantial revenue for retail banks globally and in South Africa. A 20% ESG-related share in new retail banking revenues in the next five years, for example, would result in a roughly 10% share of total retail banking revenues— approximately $300 billion—by 2025.
The Edelman Trust Barometer found that 88% of investors believe companies that prioritise ESG initiatives, including sustainability, represent better opportunities for long-term returns than companies that do not.
To fully unlock this value, retail banks will need to develop strong ESG goals. Many banks are already focusing on developing robust ESG targets. The BCG study showed nearly half of retail banks are primarily focused on environmental sustainability issues, such as reducing energy consumption in offices, and 60% are prioritizing governance issues, including managing critical risk incidents, building cyber-resilience, and developing predictive risk analytics to ensure improved preparedness and mitigation.
Additionally, banks will be able to build out new enablers such as green product offerings alongside their existing products. Data, along with developing AI tools, will be crucial to understanding the environmental and societal impacts of their behaviours, as well as having a clear governance structure and policies to provide confidence to customers that the organisation is fully transparent and accountable. A comprehensive set of tools will also need to be made available in order for customers to understand their individual impact, such as carbon footprint calculators.
Just as data lies at the heart of the ability to improve the customer experience and tailor banking products and services to fit customer needs, it also underpins strong ESG programmes. It not only enables accurate performance measurement, it creates opportunities to implement more sustainable information management practices within ESG programmes and the broader business.
Unlocking data and assets to drive sustainability
Asset Lifecycle Management (ALM) – the management of IT Assets and electronic media throughout their entire lifecycle – is critical to any data security framework in the digital age. Employing services like secure IT asset disposition, including remarketing, recycling, and media destruction, can help banks become more sustainable while ensuring data security.
With an increased focus on the circular economy and meeting ESG goals, choosing the right ALM partner is crucial in order to ensure that end-of-life IT assets are managed in a secure, compliant, and environmentally friendly manner.
A circular economy relies on the notion that retired IT equipment should be treated as valuable assets. By remarketing or redeploying decommissioned equipment, businesses can lower the total cost of ownership and extend the useful life of their IT assets. While products may come to the end of their lifecycle, their use does not have to. For those IT assets that can’t be given a productive second life, they can be diverted from the waste stream through recycling.
There are several benefits, both environmental and commercial, for banks to embed circular principles into their IT Asset Management practices. Ensuring secure and compliant disposal of all data, be it physical or digital, means that banks can keep to their social and environmental commitments and improve sustainability in the long-term. This, together with an ongoing investment in emerging technologies and digital solutions to continuously improve the customer experience, is the key to building digital, sustainable banking for the future.