Atmosphere Inspires is our regular curation of news and views from the digital sphere; the lead stories that are affecting you and your business. In this edition we’re looking at how digital transformation is disrupting and evolving the banking sector.
Lloyds Banking Group has announced an investment of more than £3bn to drive forward a three year new digital strategy. The proposals will aim to keep Lloyds inline with their competition, and efficient technology is at the heart of the transformation. Following a number of recent job losses, Lloyds plans to invest heavily in existing employees and will increase training budgets by 50%. Any emerging digital strategy should be people centric, and it's smart to invest in a highly skilled, proficient workforce to see it through.
Virgin Money has spent £38.3 million last year on developing its own digital challenger bank to compete with newer banks such as Monzo and Revolut (see story on Revolut further down!). The amount spent was disclosed only last week and demonstrates that banks are spending serious money on going digital. Interestingly, Virgin Money teamed up with startup 10x whose ethos is to make banking more diverse, open and fair, a concept which supports a growing culture for greater consumer transparency and trust.
As we've been seeing, a growing number of British retail banks are introducing money management apps, mainly in order to keep up with ever evolving competition. Customer expectations are also likely to play a key role in the sudden increase for convenient and safe ways of managing money. It's fascinating to see that familiar, established banks (HSBC, Lloyds) are now finding themselves under pressure from digital newbies such as Monzo (established early 2015): it's a clear reflection of the digital direction in which businesses are headed.
We've previously touched on financial technology firm Revolut (launched 2015) in our Edition 002: they've been putting pressure on established banks with their digital offerings and capabilities. It's obviously been working out for well for them as last week they became the first digital bank in Britain to break even on a monthly basis. Unlike it's competitors, the British bank operates across Europe, and has recently launched a cryptocurrency feature. The banking world is a tough market, so this fast paced success only highlights the vast opportunities available for these emerging fintech companies.
A must read for the banking sector here which looks at some of the facts and figures behind the finance startups posing a threat to the big banks. Fintechs are also likely to thrive on the introduction of the newly enforced open banking rules which aim to make money available more easily and efficiently. We expect that the digital transformation of the UK banking sector is an indicator to other industries that digital startups offering innovative technology will be competitors worth watching.
And as a change to banking news, Google is testing out a robot who will chat with your friends for you. Developed to support fast paced lives, the AI system will be able to work out what the incoming message is saying and suggest a one tap response, or automatically check your calendar. Whilst the technology capabilities here are undoubtedly impressive, we wonder whether technology which loses the "personal" touch will eventually send people searching for more meaningful interactions.