Digitalisation in the banking and insurance sector
Interview with Volker Weimer of Kissling Personalberatung GmbH
Volker Weimer has held management positions in the IT industry for more than 20 years, over 10 of which were spent as an executive at publicly traded companies as well as a managing director of medium-sized subsidiaries. His wealth of experience and focus are on the banking and insurance market. He currently works for Kissling Personalberatung GmbH, where he has been a partner since 2019 and CEO since August 2021. As an experienced, forward-looking strategist with exceptional implementation skills, he is a valuable partner and consultant to the consultancy’s customers. His management experience equips him to analyse the most important key positions in a company and fill them in a goal-oriented manner. He also provides support to customers in matters related to strategic corporate direction, going public and M&A processes.
What industry-specific issues are currently at the fore in the banking sector?
Volker Weimer: The banking sector has been facing major challenges for a long time now. Regulatory requirements have been increasing since before the financial crisis in 2008, and this resulted in escalating costs. At the same time, interest rates dropped lower than they had ever been before, putting even more pressure on costs. To counteract this cost pressure, branches were closed, commission business pushed and, last but not least, negative interest demanded for customer deposits. This puts a strain on the customer relationship and reinforces the loss of loyalty customers have to their bank. On the other hand, the low interest rates give a big boost to the (construction) ﬁnancing volume, which drives real estate prices up.
What is happening in digitalisation and automation within corporate communication in the banking and insurance sector?
Volker Weimer: Earnings pressure on the one hand and vanishing customer loyalty on the other are major challenges for the banks. Digitalisation can help in both cases. Better systems make it possible to shift an increasing number of processes and tasks from the bank to the customer. Self-service and customer onboarding are just a couple of examples. However, this also increases the risk of alienating the customer even more. This is particularly true when the systems are set up and in place, but are anything but user-friendly. The buzzwords “fast, easy and convenient” are usually hollow ones in such situations. The user journey everyone talks about is full of tripping hazards. However, one has to give the banks credit and keep in mind that the regulators do not make things easy for them either. The constraints of compliance with legal requirements frequently produce strange effects. An attempt is made to digitalise a process, but the customer still receives a stack of paper by post that requires their signature. In some cases, awareness and/or imagination is lacking.
As an example, Volker Weimer cited:
“Recently, I received a letter from the bank where I have my accounts informing me that the terms and conditions of use had changed. I was requested to confirm with my signature that I had received and read this document. It told me that I could email the letter to the bank. The same envelope also held a paper copy of the terms and conditions of use. An entire book. A link would have been sufficient. After all, I am sure that 90% of recipients do not read the document. This shows that in many cases, digitalisation is not thought through to the end. Document handling is a major stumbling block in the digitalisation of customer processes. Succeeding here will require creative solutions for making these processes vastly faster and easier. In general, all banks are busy digitalising consulting and sales to an ever-increasing extent in order to increase efficiency in the sales process and product sales in particular. The major challenge in doing so is not to lose customer loyalty.”
This is precisely where I see the future challenges of this industry and current pain points in the workflow that have to be solved in the future.
What’s your assessment of the future of the banking and insurance sector? What is the trend?
Volker Weimer: Despite the fact that at the core, the banking business has been digital for a very long time, we are only at the start of a dynamic development. The systems are getting better all the time. AI and blockchain are expected to unleash undreamed-of potential. The exciting question is who has the energy to turn this development into an advantage. The challenge will lie in the integration/replacement of the existing systems. Insiders know that individual core systems are already very old and can adapt to these changes only with difficulty. The orchestration of the individual applications will be critical in order to not be forced into major “Big Bang”-style migrations, but to be able to make the change in manageable steps. Here, too, technological development will make a positive contribution.
Thank you Volker for this interesting interview!