If you have IT, flaunt it

It’s clear that consumers are ready for the digital economy, with lives lived on Facebook or Diablo 3 and people queuing for the latest tablet or mobile phone.

When they need to get some money, though, the question these consumers may have is whether their banks are ready for them.

The answer, according to global research agency Celent’s latest Bank Readiness Index (BRI), is that banks in major markets in Southeast Asia have a long way to go before they catch up with consumers living in the digital age.

While 90 percent of consumers in Celent’s survey — which covered people with online access and at least one bank account in Indonesia, Malaysia, the Philippines and Thailand — said they use Internet banking, their experience when they try to do banking on their PC or phone is far different from what they find on other consumer sites.

Software vendor SunGard commissioned the survey of 102 banks and 1,073 consumers in eight countries in Southeast Asia and the Middle East to determine the impact of the Internet, mobility and social networking on the consumer banking experience. It also covered banks’ readiness to meet consumers’ changing needs.

The MasterCard 2012 Mobile Payments Readiness Index told a similar story.

While people in the Philippines are “frequent users of mobile payments compared to other countries” and Thai consumers have “a particular enthusiasm for m-commerce”, a majority of consumers aren’t actually making payments with their mobile phones.

MasterCard said readiness is even lower in other parts of Southeast Asia. Consumer readiness for mobile payments in Malaysia is not as high as in other countries and consumers in Indonesia have not yet been persuaded of the value of mobile payments.

Consumers are used to going online to media sites where they can personalize their home page, shopping sites like Amazon which remember what they’ve purchased, and games where they can customize their avatar.

When they go to their bank’s Internet or mobile banking pages, on the other hand, the experience is far less friendly.

In consumer surveys last year, for example, Nielsen found that over half of Indonesians feel online banking has complicated menus and consumers in the Philippines have low levels of confidence in transacting online.

Consumers expect that they can personalize the websites they use, say SunGard vice-president Dean Young. For now, however, most banks simply give consumers what the bank wants rather than what the customer wants.

MasterCard’s head of mobile and e-commerce products Raj Dhamodharan says what while banks in Singapore mostly have apps on a couple of platforms and are leading the pack, he doesn’t see as many options at banks in other major markets in Southeast Asia.

If banks want to engage their customers — and even to keep them — they’re going to need to do more. Indeed, banks risk being left out if they don’t change.

Whereas banks used to be the main drivers of financial service innovations, the Bank for International Settlements said non-banks developed fully half of the new technology that drove retail payments innovations over the past year.

So what do banks need to do? Yong says it’s not enough simply to have a Facebook page, since banks don’t know whether followers actually have a relationship with them.

Instead, banks can succeed by validating customers’ Twitter accounts or Facebook pages and then fully leveraging social media for communications.

Even if Facebook isn’t secure enough for transactions, banks can start the conversation via social media and continue on a more secure channel, since customers are okay with transacting elsewhere once they know their bank is responding.

Then, Yong says, banks need to give customers the same experience whether they’re in a branch, on the phone or online, so customers have the same banking experience anywhere they are.

One example would be to enable customers to upload photos from Facebook so they can personalize beneficiaries and simply choose a photo when they want to send money. Educating security-conscious customers so they know they can trust their bank would help, too.

For regional banks, it’s not enough to do the same thing everywhere. While it might seem most countries would be similar, they’re actually quite different. While banks in Malaysia have lots of mobile apps, banks in Thailand use more social media and banks in the Philippines want to offer multi-channel customer service rather than just focusing on digital.

What Yong actually sees happening is something different from what banks need to do to gain a competitive edge. While banks talk about sales and service, he says “there’s not a lot of money behind it” to put in the technology to support the sales culture they’re working to build. Instead, they’re focusing on compliance.

And when they do work on service, they’re changing procedures or standards and not investing as much in technology.

Yet it’s the technology that can give banks a competitive edge. Dhamodharan says banks can start by getting people engaged on a platform they’re already using, like Facebook, and then move them on to other applications.

Yong says that providing financial advice through “personalized landing page and personal financial management” could also become a strong differentiator. Since a majority of consumers get financial advice from their bank rather than other sources, banks that provide better financial advice online can make sure their customers don’t go elsewhere.

As consumer usage of digital technology expands, banks have tremendous opportunities to leverage it to increase their customer base and reduce their costs.

As the BRI showed, however, there are still gaps in their offering and banks will need to move fast if they’re not to be left behind their competitors, their customers and also the non-banks that are increasingly fast innovators.