Banks which fail to adapt to digital change could face going bankrupt as they are disrupted by more agile competitors, according to Santander's head of UK banking.
With banks facing increased competition - from the wave of challenger banks awaiting regulatory approval and start-ups positioning themselves in areas such as payments and money transfers - the big lenders could face the same fate as those which have already seen their industries transformed by digital technologies.
"When someone suggested that digital technology could replace a camera, Kodak's response was 'yes it could, but it will cost $35,000 to make so no one will buy it'. Now you can almost get one free with a tank of petrol," said Santander's Steve Pateman, speaking at the 'Future of Retail Banking' event in London today.
"So they were wrong, and the reality is that if we don't change the way we operate for our customers and our businesses then we will be like Kodak."
He said that for banks to succeed they will need to invest in digital technologies to improve customer service, including upgrading CRM systems to join information across organisational siloes and across channels such as telephone, branch and mobile. This means taking the lead from the customer service levels of companies outside the financial sector.
"We have to find a way to combine technology with our understanding of our customers - which is not something banks have been particularly good at," Pateman said.
"That is the type of understanding Amazon or other non-financial providers have. They tailor their communications to you about the things you buy, and the things you see. They think intelligently about how they interact with customers, while we do not."
However, Pateman said that the bank is investing in technology to provide more tailored services to their customers. This means utilising the masses of data already available to the bank, as well as information from new channels such as mobile.
He pointed to a recent partnership with software provider Cardlytics, which analyses customer transactions data to provide personalised offers based on past purchases, as one example of this.
"The information customers are asking for is different - they want to know what their balances are but also how much money they spent in the supermarket last month, or what their balance might be at the end of the month," said Pateman.
"They expect many different things from the data we hold and generally don't share with them, but we could."
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