Connect with us

Banking

ANALYTICS AND THE BANKING CUSTOMER EXPERIENCE

James Buckley, Vice President and Director for Europe, Infosys Finacle

Following in Amazon’s footsteps, enterprises from every industry are using insights from analytics to improve the customer experience. The push marketing of old has been replaced by a market-of-one approach, where businesses ascertain a customer’s needs and try to fulfill them using micro segmentation and data-driven insights for contextual and timely intervention. In addition to customer-specific insights, businesses can offer recommendations and pitch solutions based on data and preferences of other customers with similar buying habits, needs, and interests. For the digital customers of the millennial generation in particular, this Amazonified experience hits the sweet spot.

In financial services, the closest parallel is the experience provided by Personal Financial Management (PFM) solutions. From primitively classifying account transactions into buckets, PFM has come a long way, and current solutions use comparative insights based on consumer history, attitude and behavior extensively to provide personalized financial advice.

James Buckley

Another important analytics use case in financial services is the systemic digitisation of customer experience. Here, analytics helps to improve sales and target the right proposition to the right customer at the right time.  But more importantly, it provides intelligence to ensure that the customer can be positively contained within the digital experience planned, without needing to drop into costly interaction channels.

Increasingly, financial service organisations are turning to analytics to prevent digital churn, directing the customer into higher contact channels only when the bank wants to interact. Analytics is playing a huge role in reducing customer attrition; this is highly desirable for the bank since retaining an existing customer takes far less money and effort than finding and onboarding a new one.

Banks are going the same way as telecom companies which replaced their high street operations in Europe and the United States with an online presence that relied on digital distribution and self-service. Take the example of Telefonica and Tesco Mobile in the UK – both have large teams working with active analytics software to specifically mitigate customer churn and contain costs.

Onboarding has a huge bearing on the quality of banking experience and is a key focus area for banks looking to benefit from the convergence of analytics, artificial intelligence and automation for improving experiences. Together, these technologies are helping reduce the onboarding time significantly – to below three minutes – by digitising and automating the entire process, from document collection to customer authentication. Caveat: while this is driving down the dropout rate during onboarding for the most part, it may also backfire if there is friction in the process.

On the flip side, using analytics to improve experience has become more complicated in the last two years, after the General Data Protection Regulation (GDPR) came into effect. Financial service enterprises, which could freely aggregate “anonymised” information, must now seek explicit agreement from customers on how and where to use their data. In such circumstances – where a customer may accept or reject a data sharing agreement depending on context – banks will find it more difficult to build a systemic data analytics and aggregation platform that standardises data aggregation across customers. In the absence of a standardised analytics approach, banks may be forced to add layers of intelligence to understand what they can and cannot access to build a customer profile.

It is clear customers use different financial service providers for different needs – credit card, mortgage, insurance, investment and so on – which means that even so-called “primary” banks don’t have complete customer data to create an aggregated view. This limits their ability to harness the full potential of analytics. On the other hand, because banks, especially in Europe and the United Kingdom, are becoming more open and ecosystem-driven, they can harness external data and third-party relationships to advance their entry into the customer journey to the point of primary need (when they’re still looking for a house or car, for example).

Banks are looking to increase their relevance by providing lifestage platforms. One such West European bank is servicing the needs of an ageing population by developing a platform for end-to-end healthcare requirements of the elderly. By joining up pharmacies, hospitals, healthcare centres, and specialist gerontology facilities together with transport, the platform is a one-stop-shop serving all the needs of an individual.

This type of “life stage banking” will mature in the next five to ten years as banks try to remain relevant to consumers. In fact, banks don’t have a choice because there are hordes of non-bank providers, from FinTech and BigTech, bringing both disruption and disintermediation. To escape that fate, banks must gather deep insights into customer need, behaviour and context and respond with highly personalised, customer-centric propositions sourced from the best providers in the ecosystem. Analytics will not only play a big role in supplying these insights but also in identifying the best-fit products and services available in the market.

In the case of corporate customers, banks can also leverage analytics to inform next best actions, or to compare and contrast alternative funding and liquidity options, such as overdraft, short-term loan or sweep to tide over a shortfall for example. Five to seven years from now, analytics and AI will not only automate most banking operations, but also have the potential to automate switching between different financial service providers, making the relevance of value added services ever greater and leading to commoditisation of manufacturing in financial services.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Banking

HOW IDENTITY IS SECURELY UNLOCKING THE SME BANKING MARKET

By Mike Kiser, senior identity strategist at SailPoint

 

Have an identification card in your wallet? With a selfie and a few short minutes, you could have access to a business bank account.

Small and medium enterprises (SMEs) have long been the fuel that drives the global economy, representing around 90% of businesses and more than 50% of employment worldwide. Over the last few years, a range of financial services and platforms have arisen over the last few years to support the banking needs of these organisations. They are often digital natives and are innovating to meet the needs of their clientele.

This innovation provides great ease-of-use and rapid access to credit but also demands a careful consideration of their assumed security approach. The aforementioned scanning of an identity and a quick photo to establish a bank account demonstrates the rising importance of identity in both the consumer and enterprise arenas.

The blurring of the lines between personal and corporate identities (in this case, an individual acting on behalf of a small business) is still in its infancy. Combined with the ubiquity of mobile devices, individuals will tire of maintaining different accounts, different personas, different lives for each activity. Usability will demand that identity be reusable, portable, and secure.

This has massive implications for enterprises and the financial institutions that serve them if they seek to prevent cyber-attacks; thankfully, the same element that presents the security challenge also offers the solution: identity.

 

A New Vantagepoint 

Just as individuals desire a single identity to unify their interaction with disparate parts of the world, organisations can use identity to grant them a single, holistic view of an individual (attributes, access, and behaviour) rather than seeing only a fragment at a time. This is particularly important for these new financial institutions—much of their technology stack is cloud-based, which often leads to splintered security approaches. An identity-based approach must be cloud-aware, and able to distil these complex environments into simple and easily governed infrastructure.

This collectivisation also allows security to use identities in the aggregate: to see what groups of similar individuals exist, what access these groups have, and what their usage of this access typically is. All of this contributes to the establishment of what normal is, whether it’s attributes, access, or behaviour. Once the “normal” is established, then the outliers—the potential threats—may be quickly triaged.

 

Adaptability: The New Imperative 

The recent wave of change has demonstrated that financial institutions and organisations must be ready to adapt quickly to shifts in the environment. Portions of IT staff and services have been furloughed, and adjustments to new realities are essential. An identity approach that learns from the evolution of changes in the previously established areas of normality can grant enterprises the ability to see what is coming next and invest appropriately. Much like a view from an elevated position grants the ability to see beyond the normal horizon, basing a security strategy on identity makes it inherently adaptable.

 

Identity: Innovation and Security Intertwined 

Identity, then, is a foundational consideration for financial institutions seeking to provide services for the perennially important small and medium enterprise sector. By eradicating barriers to entry that have historically kept financial organisations and enterprises apart, it is driving rapid adoption and a growing market for innovative banking. At the same time, it shows the path forward to securing those new services in a pre-emptive, adaptable way.

Now if you’ll pardon me, I must go open a bank account for my next start-up—from my mobile.

 

Continue Reading

Banking

OPEN BANKING: ARE CONSUMERS KEEPING AN OPEN MIND?

Last September, the European Union’s regulatory requirement for banks to open up their payment accounts via application programming interfaces (APIs) came into effect. Since then, open banking has taken centre stage within European retail banking and payments. In this blog, Elina Mattila, Executive Director at Mobey Forum, shares insight into how emerging consumer attitudes may impact open banking services in the coming months.

It has been over six months since the revised Payment Services Directive (PSD2) came into full effect and with it, required banks to allow third party providers to access payment initiation and account information. While the regulation was designed to facilitate open banking, the market demand was uncertain. Would we, as consumers, choose to embrace the new services enabled by open banking? And if so, under which conditions?

To understand consumer attitudes, Mobey Forum and Aite Group partnered on a pan-European study to determine the appetite for open banking services amongst 1000 consumers in Finland, France, Germany, Spain, and the United Kingdom. The study, launched in November 2019, revealed many important consumer trends and attitudes, including key priorities and potential barriers for adoption.

 

Consumer appetite for change

The consumer benefits of open banking are largely perceived to be compelling, yet this counts for little if the providers of those services are not deemed trustworthy. This is an observation reflected in the study, which highlighted consumer confidence in service providers as critical to open banking adoption. People want clear visibility of who is managing their finances, and the overwhelming majority (88%) would prefer their primary source of open banking services to be their main bank, as opposed to other banks or third-party providers (TPPs).

Consumers also indicated high levels of trust in their current bank of choice, reflected by 77% preferring to use a financial product comparison service offered by their main bank. By enabling customers to compare the pricing and conditions of a range of financial products on the market, they feel more comfortable that banks have their best interests at heart. This is a welcome trend, and one which should be celebrated in the aftermath of the 2008 financial crisis. For the banking industry to have rebuilt trust levels in this way bodes well for consumer adoption of future innovations.

With a trusted provider, one third of consumers were then either ‘very interested’ or ‘extremely interested’ in integrating open banking services into their financial routine. This applied to specific use cases: account information services (32%), pay by bank (33%), purchase financing (25%), product comparison (35%) and identity check services (35%). Unsurprisingly, consumer willingness to adopt these services relies heavily on providers continuing to prove that they can be trustworthy stewards of personal data.

 

Consumer concerns

For those unwilling to adopt open banking, concerns largely focused on reservations around security and privacy. As open banking becomes more sophisticated, it will be interesting to analyse the nuances around how consumers engage with third parties. Established brands are perhaps more likely to be trusted by consumers than lesser-known online retailers. For this reason, consumers may hesitate to engage newer companies than brands they are already familiar with. In an industry as varied as finance, this creates additional intrigue in the ongoing battle for market share between the newer ‘challenger’ banks and the older, more established European banks.

Consumers might, however, be willing to deprioritise trust and, instead, favour convenience and usability. When questioned over their willingness to adopt a new payment method, for example, 91% of respondents indicated that they could be tempted to switch either by financial incentives or the promise of greater convenience.

 

The path forward

While open banking is still in the relatively early stages of development, it has made significant progress in a very short period of time. Not only is it allowing consumers to share financial data with authorised providers as they wish, but it is set to spark more competition and innovation within the market.

From a business perspective, open banking is expected to create lucrative new revenue streams, particularly for companies which are able to innovate quickly and react to consumer demand. It is prompting consumers to reconsider how they manage their finances and – most excitingly – it’s not even close to reaching its full potential. It should bring a whole new era of service partnerships between banks and TPPs, which will enable a new generation of innovative financial services.

For the industry to truly fulfil its potential, it is vital that stakeholders are able to explore new business models, innovations and changing customer expectations for open banking in a commercially neutral environment. Mobey Forum’s open banking expert group provides exactly this, and we look forward to supporting our members as they shape the future of digital financial services.

 

Where to find out more

The opportunity for open banking is explored in more detail in a report by Mobey Forum and Aite Group, entitled Open Banking: Open Minds? Consumer Appetites for New Banking Services. It provides banks and other financial services stakeholders with a market view on consumer appetites toward new open banking services and explores the possible roadblocks to consumer adoption. It is also discussed in a podcast featuring key representatives from Interac, Erste Group Bank and Strands Finance.

Continue Reading

Magazine

Partner Events

Trending

Finance1 day ago

AI: CUSTOMER FACING EMPLOYEES’ BEST FRIEND IN THE FINANCIAL SERVICES INDUSTRY

By Ryan Lester, Senior Director, Customer Experience Technologies at LogMeIn   We’ve all heard the old saying “money talks.” Well...

Banking1 day ago

HOW IDENTITY IS SECURELY UNLOCKING THE SME BANKING MARKET

By Mike Kiser, senior identity strategist at SailPoint   Have an identification card in your wallet? With a selfie and a...

Business2 days ago

FIVE REASONS WHY YOUR BUSINESS’ PROCUREMENT TEAM SHOULD BE USING A CONTRACT MANAGEMENT SYSTEM

By Daniel Ball, business development director at Wax Digital   Even in today’s digital-first environment some businesses are still storing...

Videos2 days ago

EXEGER – CHANGING THE PERCEPTION OF POWER

   

News2 days ago

FINASTRA GLOBAL SURVEY SHOWS APPETITE FOR OPEN BANKING PICKING UP PACE WORLDWIDE

86% of global banks surveyed are looking to use open APIs to enable Open Banking capabilities in the next 12...

Wealth Management2 days ago

STOCK MARKET ANALYSTS DISCUSS HOW TO INVEST DURING A RECESSION

Online tool looks back at how world markets recovered after the last recession in 2008 Analysts take learnings from previous...

TRUSTS TRUSTS
Business2 days ago

PROTECTING YOURSELF AGAINST A RECESSION

James Turner, Director at Turner Little   The coronavirus outbreak has spread to businesses, leaving many around the world counting...

News2 days ago

LIBERTY BANK REINFORCES ITS FRAUD STRATEGY TO FURTHER PROTECT ITS CUSTOMERS

Liberty Bank, the third largest bank in the Georgia, has reinforced its fraud strategy to address the rising volume of...

News2 days ago

COMMERCIAL FINANCE SPECIALIST IGF NAVIGATES THE LOCKDOWN

Leading independent commercial finance specialist, Independent Growth Finance (IGF), entered the lockdown after a record-breaking financial year came to an end in March. In April, it was accredited by...

News2 days ago

COVID-19 WILL BE THE TIPPING POINT FOR DIGITAL TRANSFORMATION IN PROCUREMENT

Seven in ten organisations in the UK say the global pandemic has increased the need for procurement to digitally transform...

News4 days ago

TRIO OF NEW REGIONAL DIRECTORS HEAD UP TIGERWIT’S GLOBAL EXPANSION

Following the release of their record revenue for the last financial year, award-winning online trading platform, TigerWit, has strengthened their...

Wealth Management4 days ago

SECURING THE EVIDENCE FOR VAT AND TAX

Filippa Jörnstedt, Senior Regulatory Counsel at Sovos   Businesses are almost entirely digital in their nature. With sophisticated technology now...

Finance4 days ago

TIPS TO PROTECT YOUR CASHFLOW DURING THE COVID-19 PANDEMIC

By Rita Cool, Certified Financial Planner at Alexander Forbes Financial Planning Consultants   The full impact of the COVID-19 pandemic is...

News4 days ago

RETAILERS WHO OPEN THEIR DOORS WILL NEED EXTRA HELP

With thousands of retail stores given the green light to open in the next few weeks the government needs to...

News4 days ago

LEADING BANK IN TURKEY USES ONESPAN’S MOBILE APP SECURITY SOLUTION TO HANDLE DOUBLING OF DEMAND FROM COVID-19

OneSpan’s scalability helps DenizBank protect millions of mobile banking users as the coronavirus pandemic drives massive increase in hacking attacks...

News4 days ago

KASKO PARTNERS WITH VIVIUM TO LAUNCH FULLY DIGITAL BIKE INSURANCE IN BELGIUM

Vivium, a member of the P&V Group, turned to the InsurTech provider to build an omni-channel and bilingual insurance product,...

News4 days ago

THE STRATEGIC ALLIANCE BETWEEN MINSAIT AND AURIGA WILL PROVIDE AN INNOVATIVE OMNICHANNEL PLATFORM FOR A SUPERIOR BANKING EXPERIENCE

Minsait, an Indra company, and Auriga have reached a strategic agreement that will strengthen their position in the digital transformation...

News4 days ago

INFORMAL PUBLIC TRANSPORT: FRONT-LINE MOBILITY HEROES

By Devin de Vries, CEO, Where Is My Transport    Every week, 5 billion commuters in emerging markets have no...

Finance7 days ago

FIXING THE FLAWS IN FINANCIAL SERVICES’ DATA MANAGEMENT

Simon Cole, CEO at Automated Intelligence, a cloud-based data compliance and governance solutions provider to the financial services sector, warns FS...

Business1 week ago

FROM MANUAL TO MACHINE LEARNING: HOW TO APPROACH THE RECONCILIATION ‘PROBLEM’

By Christian Nentwich, CEO at Duco   At the start of 2020, before the global coronavirus pandemic changed the world,...

Trending