Connect with us

Banking

ARE CHALLENGER BANKS REALLY UP TO THE CHALLENGE?

CHALLENGER BANKS

Neil Murphy, Global VP, ABBYY

 

We know that traditional banks are behind the times when it comes to customer experience – that’s news to no one. Customers are flocking to digital-first challenger banks, and bricks and mortar banks are scrambling to play catch up. But with Accenture finding that customer sign-ups to digital banks fell slightly in the second half of 2019, all is not won for the challengers yet. They need to keep customer experience at their core.

That said, six million new customers globally in the second half of 2019 is no mean feat. Engaging and onboarding all these new customers is a challenge in itself but doing this while keeping existing customers happy could cause a huge headache. No matter how hi-tech the front end is, if they haven’t got the back-end processes in order, neo-banks could crumble under the pressure.

Identifying bottlenecks, finding insights from customer data, ensuring customer service agents follow set processes, preventing inefficiencies from impacting customer experience… the pressure is on. Without AI and intelligent automation tools to help banks get hold of their processes, customers could be left in queues, struggle to get new cards or new account details, or be unable to onboard at all. All the reasons they came to a challenger in the first place could be left in the dust. So how can technology ensure this doesn’t happen?

 

The balancing act

Today’s consumers live fast-paced lives and the services they use reflect this. They want technology that provides them with a digital experience that makes their lives easier – helping to make decisions faster and achieve more from the day.

CHALLENGER BANKS

Neil Murphy

Challenger banks are in a great position to deliver on this. Through disruptive tech-savvy solutions, challenger banks have been able to capture the opportunity to deliver value-adding financial services and onboard new consumers. It is important banks take customer onboarding seriously. This is the first chance for them to establish a good relationship with customers. Moreover, onboarding is not just an opportunity for challenger banks to showcase themselves as the alternative option or to deliver good customer experience – but also to gain insights for future opportunities and services.

To win new customers and keep existing ones, banks need to focus on innovation. Whether it is account opening, loan applications, payment processing, or any of the thousands of other possible processes, technology is the missing link for the banks falling behind.

 

Delivering data-driven insights

We know that customers want the fastest, easiest and most convenient option when it comes to banking. The trend has shifted from online banking to using mobile apps to split bills with their friends, paying for online goods through a touch of their finger, and even asking voice assistants to check how much they spent at the weekend. A key component to a bank’s success in the digital economy is therefore the data they accumulate about customers, and finding intelligent ways of processing it.

Challenger banks have the distinct advantage of being agile and customer-centric, but legacy banks potentially have the upper hand here – due to the sheer volume of data they hold, and their history of being a trusted brand.

By capturing meaningful insights, neo-banks can create audience segmentation and deliver innovative, customised products in a way that appeals to customers. Process analytics can help to deliver insights from data that already exists within a financial organisation. With process intelligence technology, leaders can see a complete view of their operation and easily discover their bottlenecks. These insights from the back-end processes can then be fed to the front-end, and thus to customers.

But this isn’t a one-time deal. Banks need to be on their game and constantly learn about changing consumer needs and behaviours. A clear understanding of their internal processes is critical to identify inefficiencies that may be impacting the customer experience. In this, neobanks are working hard to stay ahead of the game.

 

Putting the right infrastructure in place

It’s not just about making use of the data you have to drive the customer experience. The customer journey itself is even more important. The financial industry is extremely process-driven, but due to the volume and complexity of many of these processes, banks often struggle with properly tracking and subsequently optimising them.

To better serve their customers, banks need to be able to identify the bottlenecks and blind spots in every engagement with customers. Process intelligence can do this, giving banks the tools to analyse less structured processes, identify opportunities for improvement, and increase both the speed and accuracy of executing said processes.

For example, a customer who loses their card shouldn’t have to go through a gruelling battle of wills, keying in numbers, and being put on hold just to have their account frozen. They should be able to do this digitally, and in a matter of minutes. This would massively alleviate customer anxiety. What’s more, it shouldn’t take days for the account to be up and running again. Customers are used to painstaking delays and layers of process with their banks – but it shouldn’t be this way.

Banks that are slow to adapt and embark on implementing these changes will simply not survive. In a climate where businesses are working hard to ensure customer experiences remain a priority, banks need to liken themselves to digitally native organisations. This means adopting new technology innovations and strategies in order to support their customer’s needs and reduce the risk of falling behind. The difference between maintaining existing infrastructures and embracing digital transformation has never been more stark – especially in customers’ eyes.

 

Rising up to the challenge

The rapid growth of neo-banks shows they have great consumer appeal, forcing their competitors to adapt and innovate, which can only be good for customers. Developments in data analytics means the best banks now have an all-around view on customers, to help them rise to the challenge. But they aren’t rising far enough without the technologies that will overhaul their processes from the ground up.

Offering traditional financial services is no longer an option. Banks need to remember that they no longer have a loyal customer base. One long phone call or letter to an old address, or a series of issues navigating an app or online banking portal might be all it takes for customers to switch. And with legacy banks starting to wake up to the world of innovation, this might not always be the challenger from now on.

 

Banking

HOW BANKING IS USING AI TO PROCESS CUSTOMER FEEDBACK

By Dan Somers, CEO of Warwick Analytics

 

More banks are turning to practical AI to rapidly analyse customer conversations for sentiment and emotional intent to get the insight and automation they need to transform their customer service and operations.

Here we look at 5 ways in which banks are using AI to process their customer feedback more effectively:

 

Processing incoming queries more efficiently

AI can remove the need for manual review of each incoming query and enables banks to handle them effectively from the outset.

The analytics can facilitate a much smoother omni-channel experience for the customer by: identifying which channels your customers are best suited to – and which work best for specific types of interaction; understanding the causes of channel failure and what drives customers to switch; and reducing customer effort by delivering service in the customer’s preferred channel first-time.

As a recent example, at one bank we were able to reduce the maximum time to respond to a customer from 3 weeks to 5 days. The solution used AI and machine learning to automatically analyse and prioritise all customer emails in near real time and routed high-priority cases to a dedicated work queue for fast action.

 

Automatically identifying customer intent and emotion

When different people are voicing different issues, they will use different words and sentiments. Vital data is often missed with traditional models and manual processes. For example a customer at a bank might say ‘by the time they called back, the bank was closed’. The keyword would be flagged as ‘closed’, when in fact the main issue was the call back. There are also other limitations with using just keywords such as sarcasm, context, comparatives and local dialect/slang. The alternative is to analyse text data using ‘concepts’ instead of ‘keywords’. This can be done effectively with AI.

 

Fast tracking customer complaints and issues

With AI you can send complaints straight to the relevant team for a faster resolution. We’ve helped banks reduce resolution time by up to 3 days which really boosts customer retention.

Dealing with specific complaints manually involves using more and more case handlers. Routing complaints automatically and prioritising by issue and category is also difficult due to the nature of complaints i.e. unsolicited, long and sometimes multi-topical. As a result, manual classification is often impossible within an acceptable time frame for the unhappy customer.

Using the latest AI however, banks are now automatically classifying unstructured data to provide an early warning of issues that need resolving fastest. This can lead to better and quicker outcomes at a much lower cost.

 

Spotting vulnerable customers early

Under the Financial Conduct Authority (FCA) front-line staff need to be able to spot different types of vulnerability in customers and support them accordingly. However, the volume of communication is just too much to carry this out manually.

The latest in AI speech transcription and text analytics is able to automatically detect hints at vulnerability from conversations with customers. The conversations are automatically analysed by to detect emotionally-driven comments that indicate vulnerability such as a basic lack of understanding, likelihood of a disability and circumstances. These vulnerabilities are flagged to the relevant members of staff for action. Regulated firms can also accurately understand the drivers behind the vulnerabilities so products, services and communications can be reviewed accordingly.

 

Banks using AI during Co-vid 19

During Co-vid 19 many banks have customer service agents working from home and/or in strict shifts. There has been a move from voice to webchat for many to cope with these changes which brings its own challenges and opportunities. Post-C19, many of these situations are expected to stay in place or at least not revert 100% back.

AI is helping to serve customers better focusing on taking cost out whilst keeping CSat up and channel switching down by improving chat optimisation, email, complaint handling and chatbot supervision.

 

Case study: Improving customer loyalty

A major UK bank was looking to improve its customer loyalty. It was already using the latest

analytical tools including social listening, sentiment analysis and a large data science team

but they were experiencing limitations and not making enough progress. They were also interested to see what online feedback their main competitors were receiving.

 

A number of key recommendations for the bank were identified using AI analysis:

  • A 10% increase in CSat (c. £200m pa revenue) from operational improvement
  • Comparable best-in-class churn e.g. Nationwide is 25% lower
  • Online and mobile banking is a key issue, and is causing direct churn
  • Drivers of churn are mostly customer service, branch closures, marketing offers, interest rates and vulnerability issues
  • Early warning can help predict churn tactically and intercept likely churners
  • 28% of Tweets and potentially all non-voice queries can be automated. This could be a £20m pa saving
  • Business banking, current accounts and ancillary services have the highest churn, and insurance the highest negative advocacy
  • Mortgages, current accounts, savings and overdrafts cause the most attritional set-up
  • There are distinct patterns and opportunities to adjust customer services resources to reduce churn and costs

With AI, this level of insight can be set up in a matter of days, delivered in near real time and without the need for a data scientist to maintain the model.

 

Continue Reading

Banking

WHY BANKS NEED TO EMBRACE OPEN SOURCE COMMUNITIES

Nikolai Stankau, Director Business Development, EMEA Financial Services at Red Hat, the world’s largest enterprise open source solutions provider.

 

Banks and financial services have long been benefiting from using open source software, which is code that is developed in a decentralised and collaborative way. Open source software is cost-effective, flexible, is developed rapidly, and tends to have more longevity than its proprietary peers because it is developed by communities rather than a single author or company.  According to Red Hat’s own research, 93% of IT leaders in financial services state that enterprise open source is important to their organisation.

Alongside adopting open source products, which many banks already do, there’s opportunity for these organisations to have a greater influence in the development of industry software, by engaging in ‘upstream’ open source community projects.

 

The advantages of engaging in upstream communities

In open source projects, code is developed as a shared process by a community of thinkers and developers anywhere in the world. Collaborating directly with these communities – what’s known as ‘upstream’ participation – can give banks a major competitive advantage on their journey to innovate. From there, software can either be downloaded at no cost, or consumed via a trusted open source vendor that secures and stabilises the software to make it suitable for an enterprise to use. This is also known as the ‘downstream’.

A company that contributes its developers’ time and resources to an open source community gets rewarded with the output of hundreds of developers working on the same code. This leads to a magnification effect, by virtue of the fact you’re expanding your team many times over while also benefiting from a much more diverse pool of talent. The result is that organisations can be captains of the product development process and work together with the community to design features and functionalities that meet their needs and keep up with customer demands.

An added benefit for banks engaging in these communities is it provides a great access point for sourcing new talent, as well as helping to retain existing talent. Developers are attracted to organisations that engage in upstream development because it allows them to be at the forefront of open source innovation and new community-led initiatives.

It’s common for multiple organisations in the industry to come together and collaborate on a project, which can drive significant benefits for the community as a whole. A good example is Fintech Open Source Foundation (FINOS), which is a community set up by banks to promote industry collaboration, by delivering software that addresses common industry challenges and drives faster innovation. The concept had its origins in Symphony, a open sourced messaging and collaboration tool that was adapted and improved upon by developers from other banks, ultimately helping the company to become a major business valued at around $1.4bn.

 

Where to join forces versus compete

Although the benefits of engaging in upstream communities are manifold, some organisations have concerns around intellectual property as well as the productivity of developers contributing to open source projects rather than exclusively working on the bank’s own proprietary software. To this latter point – in reality, the development of new solutions and features built inhouse often requires many months, whereas product ideas shared in a community setting can be executed in much shorter time frames. As the saying goes, many hands make light work.

Regarding the essential consideration of IP and competitiveness: a lot of where banks can differentiate is at the application layer; in the services they develop and offer, rather than at the underlying operating system or middleware foundations – these tend to be common and standard, and are what empowers organizations to get to market as fast as possible. Thus the greatest opportunity for banks lies in platforms such as Linux-based Kubernetes, which is now the industry standard for container orchestration and one of the most important technologies used in the financial services industry. Kubernetes attracts many contributors from diverse organisations all over the world.

Some IT leaders also recognise structural roadblocks: transitioning an organisation to new ways of thinking and operating is a process that isn’t achieved overnight. Not all banks have the legal or tech mechanisms in place to be able to share their code externally, and company policies can prevent their employees from engaging in open source communities. In a heavily regulated industry, it takes time for some organisations to create the necessary changes before they can harness the potential of upstream communities.

 

The future is open

As the software ecosystem expands, and in the face of accelerated digital transformation driven by the ‘new normal’ of the COVID-19 pandemic, banks and financial services have the opportunity to evaluate how they can get involved in open source. There are many ways to do this: they can invest financially in communities, provide technical leadership and resources, or contribute code. With organisations under more pressure than ever to gain a competitive advantage, playing a role in open source communities will help them create better products, speed up time to market and position themselves at the forefront of financial innovation.

 

Continue Reading

Magazine

Partner Events

Trending

Business22 hours ago

WHY AUTOMATING CAN FUTURE PROOF YOUR BUSINESS

By Ryan Demaray, Managing Director SMB EMEA at SAP Concur   Every business has administration duties that can be considered...

News22 hours ago

VIBEPAY SETS SIGHTS ON GROWTH WITH INTEGRATION OF MORE UK BANKS AND NEW BUSINESS ACCOUNTS

VibePay is continuing on its ambitious path of growth, with the integration of more UK banks and payment providers via...

Banking22 hours ago

HOW BANKING IS USING AI TO PROCESS CUSTOMER FEEDBACK

By Dan Somers, CEO of Warwick Analytics   More banks are turning to practical AI to rapidly analyse customer conversations...

News22 hours ago

BOARD REPORT HIGHLIGHTS COMPLEX DECISION-MAKING PROCESS ACROSS BANKING AND FINANCE SECTOR

‘The State Of Decision-Making’ report from Board, reveals business decisions made in silos without modern planning tools A third (33%)...

Business22 hours ago

COULD GRAPH TECHNOLOGY BE A POWERFUL WEAPON AGAINST CORONAVIRUS FRAUD?

Crisis funds and loans put in place to help support businesses during the health emergency have become a prime target...

News23 hours ago

THOUGHT MACHINE JOINS THE BANKING INDUSTRY ARCHITECTURE NETWORK (BIAN)

Thought Machine, the cloud native core banking technology firm which builds Vault, today announces it has joined the Banking Industry Architecture...

Wealth Management4 days ago

DON’T RISK IT ALL WITH NON-COMPLIANCE

By Paul Sleath, CEO at PEO Worldwide   Did you know non-compliance costs more than twice the cost of maintaining or...

News5 days ago

BANKIA TRANSFORMS THE CUSTOMER AND EMPLOYEE EXPERIENCE WITH BIANKA BY IPSOFT

Developed with cognitive artificial intelligence, IPsoft’s conversational agent can carry out transactional tasks, perform different roles in customer service and...

Finance5 days ago

FIDUCIARY MANAGEMENT

by Devan Nathwani, FIA and Investment Strategist at Secor Asset Management   Defined Benefit pension schemes are one of the most significant institutional...

Business5 days ago

TOUCH-FREE AUTHENTICATION FOR ALL: WHY WE NEED A SAFER PAYMENT METHOD IN THE ‘NEW NORMAL’

David Orme, SVP, Sales & Marketing, IDEX Biometrics ASA   Ever since March, when the World Health Organization encouraged people to...

Banking5 days ago

WHY BANKS NEED TO EMBRACE OPEN SOURCE COMMUNITIES

Nikolai Stankau, Director Business Development, EMEA Financial Services at Red Hat, the world’s largest enterprise open source solutions provider.  ...

FINANCIAL MARKET FINANCIAL MARKET
Wealth Management5 days ago

FOR PE TO SNAP UP “GOOD” COMPANIES, THEY MAY NEED TO WADE INTO “BAD” ECONOMIES

By  Martin Soderberg, Partner at SPEAR Capital   There’s no shortage of global challenges for investors currently, especially for those...

Business6 days ago

THE BASICS OF BUSINESS FINANCE

When you’re starting your business, you’ve got a lot to be thinking about. You need to find affordable suppliers, market...

Business6 days ago

HOW THE IMPORTANCE OF E-COMMERCE PLATFORMS GREW DURING THE PANDEMIC

Never in history has the world relied more on the internet than during this Covid-19 pandemic. With governments imposing lockdowns...

Business6 days ago

UNBANKED AND UNCONNECTED: SUPPORTING FINANCIAL INCLUSION BEYOND DIGITAL

Darren Capehorn, Director, Icon Solutions   Many of us take it for granted, but accessing basic financial services is fundamental...

Banking1 week ago

MORE THAN REGULATION – HOW PSD2 WILL BE A KEY DRIVING FORCE FOR AN OPEN BANKING FUTURE

Ralf Ohlhausen, Executive Advisor, at PPRO   Whilst initially seen as simply a regulation exercise, the second Payment Service Directive,...

Top 101 week ago

TIME TO THINK OUTSIDE OF THE BLACK BOX

Mike Brockman, CEO, ThingCo   If you have the unbridled joy of parenting a teenager you’ll probably know what telematics...

Banking1 week ago

BANKING’S SECOND WAVE OF TRANSFORMATION: INTEGRATING THE CLOUD-ENABLED FUTURE BANK

Keith Pearson, Head of Financial Services EMEA, ServiceNow   The last six months have seen significant changes to the financial services landscape, with operational resilience, economic recovery, cost reduction and an...

News1 week ago

RISK AND INVESTMENT SPECIALIST, CARDANO, TAKES TO DOCUMENT AND EMAIL MANAGEMENT IN THE CLOUD WITH ASCERTUS AS IMPLEMENTATION PARTNER

Ascertus also providing document comparison tool, compareDocs    Cardano, a privately-owned, purpose-built risk and investment specialist, has chosen Ascertus Limited as its implementation...

Wealth Management2 weeks ago

HOW SALARY SLIPS HELP YOU UNDERSTAND TAX DEDUCTIONS ON YOUR SALARY

A salary slip is defined as a document that is provided by your employer which contains the breakdown of your...

Trending