Although the banking and financial sector is recovering from its downturn in the last decade, they now face new challenges. Their challenges range from new customer relationships with banks to energy management in banks. Read on to catch up.
General Banking Challenges
Let us first get into the situation and look at some of the challenges facing the banking sector on a daily basis:
1. New Bank Customer Behaviours
If you work in the banking sector, you will have already heard about millennials, the generations born after the 80s that reached maturity from the year 2000. The challenge for the banking sector is to adapt to a population that doesn’t remember a world without the Internet or without a mobile phone in their hand.
It also changes the way we communicate: new customers have social networks as a meeting point.
And, of course, it changes what they want the bank to communicate to them. For example, they care about whether the bank is efficient and sustainable.
25% of the population in the UK belongs to the millennial generation – specifically 17 million people. In addition, it is estimated that by 2025 millennials will account for more than 70% of the workforce in the developed world, a figure which should be taken into account when planning long-term strategies.
2. The Tech Challenge: from Fintech to Blockchain without forgetting Bitcoin
Here you have already 3 challenges in 1.
Fintech companies (abbreviation of “financial technology”) have given rise to the birth of a new sector in itself. They benefit from technologies such as:
- Artificial Intelligence (AI)
- Machine Learning
- Digitalisation of processes that banks performed slowly and analogically.
Do you know that the banking sector is still in 40% of its digitalisation process?
Bitcoin has been another strong technological boost in the banking sector. The financial sector has seen the birth of a speculative market from zero with virtual currencies
What is the relationship between cryptocurrency and banks? Of course, the key is in customer service: Should the bank accept Bitcoin as a saving or payment method, etc? And as a source of income in ATMs or currency for the e-wallet?
Despite how juicy such a volatile and speculative market may seem for a bank, it has its challenges. These are technological, specialisation and, of course, security.
Many voices in the banking sector renounced Bitcoin after the scandals of the massive cyber attack in South Korea . Another example of a security challenge is the case of the UK, where losses due to online banking fraud in 2015 reached a total annual value of 133.5 million pounds.
Finally, we should mention blockchain. It may be a before and after for your bank in two ways:
- The leader in security. If banks manage to implement blockchain systems for monetary operations, we may never again see news like that of Mexican cyber attacks.
- The second in terms of competition: Will a self-managed co-financing network for citizens based on blockchain technology be the bank of the future?
It can also be applied in other areas of banking work, streamlining the contracts and interactions carried out between the client and the bank, automating the transaction of the contracts and executing them as agreed.
Now that you already know the general challenges, let’s get into the energy management challenges for banking.
7 Energy Management Challenges in Banking
It is estimated that the energy expenditure for the annual banking and financial sector worldwide exceeds 10 billion pounds.
These are the main energy challenges that you will face if you want to reduce consumption in your bank in a real way and become a sustainable entity:
1. Energy dependence by digitisation of the sector
The energy dependence of current technologies, which are fundamental for the digitisation of the banking sector and its survival. Digital and electronic technology on which banking services and products basically depend are unable to function without energy.
2. Monthly energy purchase planning with volatile prices
The volatility of energy prices, which have a tendency to increase, are impossible to control or predict accurately without having the right tools.
Those responsible for energy management must make their monthly assessment and planning of the energy purchases they will need for the following month, and this must then be accepted by managers so that the final price can be closed with the utility company.
Here are two key ideas that those responsible for energy in the banking and financial sector must adopt:
- Achieve fast and timely managerial approval. To achieve this, it is necessary to provide specific numerical data in a simple and visual way.
- Get a competitive price from the utility companies to achieve the lowest possible cost. Here the key is to make a correct analysis of the data that the market gives us and make the purchase decision at the right time – prices can increase up to three times if you don’t act fast.
3. Identification of the saving potential of each building
The identification of the energy saving potential of each of the buildings owned by a bank. It must be taken into account that banking entities belong to the group of companies identified as multi-location, where each building is like “a tailored suit”.
These singularities by type of building, geographical area and activity will affect energy consumption, and for the energy manager, the challenge is knowing how to identify them in order to discover the saving potential of each building.
Banks, savings banks and financial services companies have branches and central offices that are located in different geographical areas. In addition, each of these buildings is dedicated to different activities and will have different types of equipment installed according to their particularities.
4. Implementation of predictive maintenance in the facilities
Maintenance of facilities: Proper maintenance of the facilities is vital for saving costs. Banks that have a good maintenance plan for their buildings and facilities ensure energy savings and improvements in energy efficiency.
The challenge for the banking sector is to implement methodologies that better accompany energy management such as predictive maintenance, which is based on the measurement and monitoring of the condition of the facilities. If they succeed, they will achieve high energy costs savings.
For example, the PRÓTYPO Project lead by DEXMA aims to build a tool that helps energy management based on the predictive maintenance methodology.
In addition, proper maintenance of the facilities and offices will ensure the comfort of employees and customers.
Finally, the digitisation of the processes that maintenance requires is part of the challenge.
5. Regulation in energy consumption and sustainability
Legal requirements and regulation of energy consumption to promote Sustainability: both national and international laws (European rules and regulations on climate change) demand a reduction in Co2 and appropriate management of our energy resources. These rules are mandatory for all sectors, so like any other sector, the banking sector must comply with them. For example, Spain and other European countries must comply with the European Energy Efficiency Directive
6. Analysis of a large amount of energy data
The need to analyse a huge volume of energy data (Big Energy Data) from thousands of locations. Although the banking industry has experience working with Big Data on a financial level, dealing with Big Data from energy data is not precisely its speciality. If the banks manage to apply the advanced analysis technologies for large volumes of data, they will reduce their operational costs while guaranteeing the security and reliability of the data (this article by Juan Carlos Fernández, one of our data scientists, tells you why the quality of the energy data is so important).
7. Sustainability ranking as a reference for investors
The emergence of rankings and sustainability indexes as a key reference for investors. One example would be the Dow Jones Sustainability Index (DJSI): an index that rates companies worldwide with respect to each other, based on social, environmental and economic criteria.
This index selects the 320 companies with the greatest social responsibility from among the 2,500 largest companies in the world.
34 British companies appear in the 2018 edition including banks such as Barclays PLC and Royal Bank of Scotland Group PLC.
The banking sector has realised the importance of paying attention to non-financial issues such as sustainability and efficient energy management.
As you can see, banks face both energy and non-energy challenges today. If you want to learn how to intelligence manage your bank’s energy and overcome these challenges, this specialised guide in energy management for banks will help you. Click below to download: