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COLLABORATION, AGILITY AND OPENNESS: HOW BANKS CAN SEED THE GROUND FOR TRANSFORMATIVE FINANCIAL SERVICES

FINANCIAL SERVICES

Sarah Maber, Managing Consultant at World Wide Technology (WWT).

The introduction of Open Banking and the Payment Services Directive 2 (PSD2) disrupted the financial services space, unlocking the potential for a wave of innovation, by opening up swathes of anonymised customer data to third parties. Banks now have the opportunity to collaborate in the creation of truly ground-breaking services. But they’re failing to seize it.

 

Learning from fintech

Open Banking and PSD2 could put banks at the forefront of a revolution in consumer financial services. New capabilities enabled by the legislation are already giving people control of their finances in ways previously impossible. Consider the ability to view the status of multiple financial services in one place, or to make quick and easy payments direct from your bank. Customer experiences such as these, and the further innovations that Open Banking enable, can support banks in expanding their customer bases, especially among the lucrative 24-35 demographic who are currently being courted so successfully by the fintechs.

This understanding that the “mobile generation” expect convenience, speed and transparency in digital financial services has seen mobile banking start-up Revolut acquire eight million customers to date. Indeed, to capitalise further, it has recently created an offering for children aged between 7 and 17, which provides the functionality of a bank account (a current account, a Visa card and transaction push notifications), but is delivered under the watchful eye of a parent or guardian, who can set up a regular allowance.

But while Open Banking and PSD2 offer the chance for banks to collaborate with these exciting fintech players, and bring their expertise and agility into organisations, they are mostly failing to take it. One reason is that banks differ so markedly from fintechs. They typically move more slowly and have such different cultures that competitive tensions are inevitable.

 

Building blocks for big tech

Technology giants such as Apple, Google, Alibaba and Facebook have also entered this sector through the launch of financial products such as Facebook’s Libra and Apple’s Card. These companies are innovating through an aggregator model, leveraging the capabilities of fintechs and banks to build new financial products and services.

In a rare sign of things to come, HSBC recently partnered with Chinese logistics firm Cainiao to offer rapid trade finance loans to online merchants through Alibaba’s Tmall platform[1]. HSBC uses third-party data on customer background, real-time inventory and operational status provided by Cainiao to approve the loans. This innovative partnership enables HSBC to get a greater share of its product into the market much more rapidly using an existing technology platform.

What is often misunderstood by the banks is that technology players don’t want to become banking operations. They prefer to offer the consumer-facing services for which they are so well known. Unfortunately, the majority of banks are unlikely to see the situation as HSBC does, viewing the moves of technology players as land grabs. This means many opportunities to expand their offerings through collaboration are being missed.

 

Thinking different

If they are to seize the opportunity presented by Open Banking and PSD2, banks need to change how they think and act. They need to shift mindset to realise that they are no longer perceived as the innovators of the financial services market, as consumers can gain access to the services they need from a far greater ecosystem of businesses. If banks want to prosper in this new reality, they must be more open, agile, flexible and collaborative.

One essential step to opening up collaboration is for banks to provide more APIs – and crucially, more useful ones. These are the tools upon which third parties can build the next generation of financial application and services, using the financial institution’s service backend and transactional capability as a foundation.

Consider SMEs, whose owners want automatic and simple integration between their software and their financial accounts. Banks have the opportunity to support that link between business accounting software and financial accounts by introducing the right API. The benefit to banks of developing an interface of this sort is that it’ll increase the probability that SMEs continue to bank with them.

The example above illustrates how APIs enable collaboration but can also foster much greater service innovation. Rather than seeing APIs as a tick-box exercise to satisfy the financial regulator, banks need to think of them as their opportunity to drive the collaboration and innovation necessary to retain and expand their customer bases.

 

Embracing agility

The financial products that will emerge from partnerships between banks, fintechs and the tech giants represent a lucrative opportunity for all stakeholders. To create them, each will need to be tolerant of different ways of working and open to new business models. Banks, in particular, must learn to embrace agility and collaborative thinking.

A good example of what could be achieved is UK-based Metro Bank’s recently forged partnership with Lending-as-a-Service (LaaS) provider ezbob. Ezbob applies AI to Metro Bank’s data to provide fast and secure access to finance, enabling Metro to deliver a seamless, web-based lending process to its business customers. Applications take minutes, and funds can be made available the same day.

As collaboration increases, it is very likely the culture of banks will move towards that of fintechs. Banks can never be start-ups, but they can be fleeter of foot and to embrace innovation more deeply, which, in turn, will seed the ground for a stronger ecosystem.

 

An exciting future

Open Banking and PSD2 will deliver services that consumers may not realise they want but will soon find they cannot bear to be without. The driving force behind Open Banking is the fact that customers are willing to hand over their data if they get tangible benefits in return. What has worked so well for the likes of Facebook and Google is also the case for financial services – and beyond Open Banking, this truth is underpinning a longer-term journey towards Open Finance.

Open Finance enables organisations beyond banks to provide the same level of access to data that PSD2 has provided for Open Banking. By facilitating easier switching between financial products and financial transfers, it could for example see the development of services that promote consumers’ financial health, automatically optimising the products they use to match their financial standing.

A new Open Finance regulation – the Pan European Pension Product – will also provide interesting opportunities. Its aim is to eliminate the barriers to customers moving their pension between European providers, finally elevating a very traditional service into the modern world.

Just as is the case with Open Banking, ambitious partnerships will need to be formed between relevant stakeholders to make services like these a reality. Ultimately, whatever is done must serve the needs of the customer. The organisations that evolve fastest to deliver the most painless and seamless ways to meet those needs will see the greatest success in future.

[1] https://www.finextra.com/newsarticle/35491/hsbc-to-use-third-party-data-to-approve-rapid-loans-for-alibaba-merchants

 

Banking

WHY BANKS NEED TO EMBRACE WELLBEING IN THE DIGITAL EXPERIENCE

Howard Pull, Head of Digital Transformation Strategy at MullenLowe Profero

 

The impact of the COVID-19 crisis on the economy has been huge. Over the past six months, youth unemployment figures have dropped, wages have stagnated and GDP has fallen by a record 20.4%. The drop in GDP is worse than the 2008 Financial Crisis, the Winter of Discontent and the Great Depression.

While the furlough scheme and other government measures have provided some much-needed financial support, the prevailing social and economic conditions have made money worries increasingly common. According to a recent survey from MullenLowe Profero, during the pandemic 40% of 18-25-year-olds are afraid to look at their bank account, with a further 40% stating that thinking about their money has a negative impact on their own personal wellbeing.

In response to these rising financial concerns from account holders, it is clear that banks need to help people – especially young people – feel more confident in managing their money. In particular, banks need to provide more educational support to their customers about how they can make the right financial decisions. This means designing tools and support services to enable more people to effectively manage their finances.

With 60% of consumers aged 18-25 believing that banks should help them have the capacity to absorb a financial shock, financial institutions also need to adapt their products and services to meet the needs of more uncertain account holders.

Adapting services, however, is easier said than done. The pandemic has radically shaped consumer behaviours and therefore the old rules no longer apply. For example, while consumers in the past may have preferred to discuss financial matters in person at a bank branch, risk of infection and the widespread use of digital tools has meant that the majority of young people want banks to provide wellbeing services online.

Digital experiences are also important to the future success of any bank. According to MullenLowe Profero’s report, digital experience is now the number one reason why young people choose a bank. Therefore, it is clear that banks during the pandemic and beyond need to reevaluate their operations and shape their personal wellbeing strategies around digital tools.

 

Community and Global Wellbeing

MullenLowe Profero’s report into financial wellbeing found that young people weren’t just concerned with their own personal wellbeing. They were also concerned about the importance of community and global wellbeing too. In fact, over half of 18-25-year-olds agree that the events of the last few months have made them seek out brands that do better for the world, with another 50% stating that the importance of a local community has increased during the pandemic.

Community wellbeing is concerned with the importance of local areas and the businesses and organisations that are based within them, whereas global wellbeing is concerned about the entire world. For banks, showing support for areas local to their branches and customers as well as issues affecting the globe such as the climate crisis is important to maintaining the trust and support of account holders.

Focussing banks on concerns around community and global wellbeing requires banks to assess their impact on the wider world. In other words, it forces banks to check who they support and where their money could be better placed. For example, young people want to be recognised for their positive behaviours. 56% of 18-25-year-olds want rewards and benefits for purchasing ethical and sustainable products and services.

The findings of the report found that young people across the board want financial institutions to reflect their values and to help them manage their finances. With COVID-19 continuing to wreak havoc on our day to day lives, banks can provide much-needed support by offering educational help as well as creating products and services that actively manage an account holder’s finances. They can also step in and provide support to the wider community and world by taking measures to reward ethical and sustainable behaviours.

 

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Banking

IMPROVING THE BANKING EXPERIENCE THROUGH INFORMATIVE AND ENGAGING VISUAL COMMUNICATIONS

Javier Lopez, General Manager Vertical Solutions, OKI Europe Ltd

 

Banks play an integral role in daily life. However, everyday opportunities such as attracting new customers into branches to open an account, or promoting new offers and services to existing customers, can be lengthy, expensive and cumbersome processes – especially when tailoring communications to the specific requirements of each branch, or differing customer needs.

Quickly creating and adapting in-branch visual communications to communicate and educate cost effectively while remaining on brand can be a challenge, especially for banks that have networks of branches and print their visual communications centrally or use third-party suppliers.

 

Building trust through signage

Visual communications can help build trust and satisfaction between you and your customers.  The ability to create and print personalised communications on demand can not only instil confidence in your brand, it can also offer the flexibility to quickly adapt to financial trends and fluctuations in interest rates. This is particularly important in today’s volatile market, so that you can keep your customers informed while remaining competitive.

Javier Lopez

Printing in-branch and on-demand is an immediate and cost-effective way for banks to communicate with customers. With the right printer on-site, branch staff can easily create and print signage and customer communications as well as everyday documentation to a professional quality as and when needed. This saves on the cost of third-party suppliers and eliminates lead times for essential signage.

The ability to print a comprehensive range of collaterals in-house including freestanding and hanging banners, posters, self-adhesive floor and window stickers, as well as personalised leaflets and direct mailers, can help keep customers informed about the latest services and offers. It can also be used to remind both customers and staff to adhere to social distancing guidelines. Furthermore, the same printer can be used for day-to-day documents such as personalised mortgage or loan offers.

 

A message that sticks

As the world adjusts to a new normality, OKI Europe Ltd recognises the challenges banks face when encouraging social distancing and has teamed up with Floralabels to offer free* social distancing media and artwork to create self-adhesive floor stickers that can be printed quickly and easily from an A3 colour printer such as the C800 Series.  Floor stickers can help ensure customers maintain safe distances while queuing at counters, kiosks and ATMs. The free stickers include self-adhesive floor circles (285 x 285mm) and rectangular floor banners in two sizes (215 x 900mm and 297 x 1,320 mm) with various designs and messaging options to choose from.

 

Achieving ROI with a do-it-all device

When it comes to printing in-branch, implementing a printer with unrivalled media flexibility will provide the best return-on-investment. Not only will the bank be saving on printing and delivery time and costs, it will also save on storage space or potential wastage as well as offering the flexibility to be more reactive to market trends in a timely manner.

OKI’s multi award-winning C800 Series A3 colour printer is designed to take up a minimal footprint and will supply everything from 1.3m metre hanging and freestanding banners to posters, self-adhesive floor stickers, window stickers, leaflets, flyers and much more on a diverse range of materials. Featuring OKI’s pioneering digital LED technology, the C800 Series delivers professional quality results, at high speed and on-demand.

Banks are vital to helping people and businesses prosper, supporting economic growth. Investing in cost-effective do-it-all devices that enable the fast rollout of eye-catching, professional quality collateral will help banks and their customers thrive.

 

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