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TRANSFORMING THE DIGITAL BANKING EXPERIENCE

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Digital

David Poole, Head of Financial Services at digital consultancy Publicis Sapient

Prognosticators have been pointing to 2020 as a touchstone for change. What can we expect? 

For the better part of the decade, business prognosticdigitaators focused on predicting the state of play for their industries in 2020, even naming the exercise a “20/20 vision.”

Now, as we are at the beginning of that new decade, many of those predictions remain unrealised as banks face unexpected shifts and new competition. Only hindsight is 20/20.

A great banking experience no longer means having a great, well-staffed branch. In fact, customers may never visit the branch, as they have an increasing choice of digital banking solutions. The banks that will thrive in this new decade and beyond, will win on digital experience – less how it looks than how it feels.

The recipe in 2020 for a successful banking experience is LEAD – Make it Light and Ethical, including simpler, transparent pricing and fewer payment options, and more Accessible with a combination of voice and touch. Make it Dataful, using customer data for insightful experiences anticipating behaviour and built around customer life goals.

Here is more on each of these trends:

 

Pricing strategy

Unlike a Netflix bill or the simplicity of Amazon Prime, most consumers struggle to say what they’re charged for a checking account, ATM withdrawal, loans, advice, trades, and portfolio management. The costs are spread across multiple providers, and fees are confusing and constantly changing. In 2020, banks will experiment with simpler pricing and product bundles, determining how much customers will pay, for what, and how to make it easy to understand.

 

Simpler payment options  

The rapid pace of payment innovation has resulted in a proliferation of new ways to pay– making the point-of-sale cluttered with logos that confuse customers. Fortunately, we’re going to see things start to get simpler. We’ve seen the first instances of a combined click-to-pay button with the EMV SRC logo, live now on a few sites with more to come in 2020, replacing Masterpass and Visa Checkout. Expect fewer buttons, fewer steps in the process with increased adoption of stored payment within the browser, and fewer separate apps, replaced with effective one-stop services.

An example of a light experience will be paying with PayPal, where they’ll build in the couponing service; the frustrating task of finding a valid coupon is now built into checkout. Expect more mergers and acquisitions – like PayPal acquiring Honey – to offer one-stop convenience. These lighter, accessible experiences will ensure payments are relegated to the background, and the emphasis can shift instead to using customer data to add value before and after the transaction, adapting the experience to the way the customer wants it and is most comfortable with.

 

Graphical voice assistance

This year, banks will get voice lessons. Alexa skills from banks have yet to reach farther than novelty and niche, with voice-only interfaces remaining inherently limited for finances. When you add a touchscreen to view and interact with, the more complex tasks – like paying a bill or managing your portfolio, become possible.

Scenarios and the accompanying financial data can be visualized, cutting through long voice menus, while decisions can be simply articulated using voice. The sensitivity to hearing and conversing about private finances is replaced with sensitive data on the screen, while uncontroversial commands can be voiced. Voice-enabled screens like Amazon Echo can support these combinatory skills, yet so can smartphones. 2020 will be the year when mobile banking apps better combine touch with voice.

 

Anticipatory Banking i.e. Life Goals

A decade ago, omnichannel banking was a hot trend, applying what worked in retail to make it seamless to bank across channels and shift from pushing product to addressing needs.

Ten years later, banks are still working to deliver omnichannel, and it represents a moving target since there are now more channels, and customer expect more complex needs to be met. This started as a translation exercise. You say “car”—we say “car loan.” You say “new home”—we say “30-year fixed rate mortgage.” This new taxonomy suggested a customer-first approach, yet in reality was thinly disguised product marketing.

Now, the trend will de-emphasize point solutions in favour of life events and customer goals. When a customer’s goal is “I want to get married,” the financial services required are less defined and prompt individual consultation and advice. In an April 2019 announcement of Bank of America Life Plan, the bank promised a fall release to use these sorts of goals to orchestrate services across the lines of business through Erica and the app. Recent beta tests reveal basic goal creation, and similar to the two-year lag with Erica between the PR and release, banks are finding these shifts take longer than anticipated to get right.

What will set 2020 apart is the maturation of voice, chat and AI to tie the loose ends together and serve them up through improved apps and virtual assistants like Erica.

 

Banking

WHY THE TIME IS NOW TO BANK BEYOND BORDERS

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by Lili Metodieva, MD of Monneo

 

As our world becomes more interconnected, so too does the need for banking systems to follow suit. In the past, businesses and individuals were often restricted to banking in a single country, but the rise of borderless banking is enabling both to benefit from greater financial freedoms. In this article, we will examine why this trend is so important and explain how Fintech companies are helping to make it possible.

 

What is borderless banking?

Simply put, borderless banking refers to any bank account, which allows users to spend, send and receive money across different countries and currencies, without incurring heavy fees. The concept has become increasingly popular in recent years, with more people now working in cross-border job roles and with many businesses requiring capital in a different currency than that of their country of origin.

For customers, borderless banking is making cross-border financial transactions more efficient and cost-effective. Through its rise, businesses and individuals can gain easier access to international streams of capital, which is crucial in this current moment of economic uncertainty. In fact, 74% of companies say cross-border payments have helped their business to survive [1].

 

Where do IBANs come in?

International Banking Account Numbers (IBAN) play a crucial role in facilitating borderless banking. The globally recognised system enables cross-border transactions to happen safely, by providing each international bank account with its own unique 36-digit alphanumerical code. On account of this code, financial institutions can quickly identify where funds are coming from, as well as where they’re going to.

More recently, providers such as us have been able to deliver Virtual IBANs (vIBAN). Working alongside a network of well-established European and International banks, we’re able to offer businesses a single platform interface that consolidates the management of all IBAN accounts. In turn, our multi-currency service makes conducting global financial transactions incredibly straightforward.

 

How has Brexit affected borderless banking?

The COVID-19 pandemic has accelerated the growth of borderless banking and services related to it, but other developments, such as Brexit are beginning to stand in its way. Most notably, the drawn-out withdrawal process has seeded a growing reluctance amongst risk averse, larger organisations to settle transactions using UK bank accounts or IBANs, due to unfounded concerns around regulatory complexity.

Despite leaving the EU, the UK remains a member of the Single Euro Payments Area (SEPA), so it’s unclear why these concerns around British IBAN accounts exist. Regardless, this unfortunate development must be addressed quickly as it has the potential to adversely affect the livelihood of businesses and individuals at a time of critical need.

 

What does the future hold for borderless banking?

There’s clear demand for borderless banking and borderless payments, but the discrimination of certain IBAN accounts represents a major obstacle, which could stand in the way of their widescale adoption. Moving forward, there needs to be a push towards borderless IBANs, which will make international financial transactions more reliable. At the end of the day, this is what IBANs were originally created for, so it’s important the current problems are rectified quickly.

To ensure this can happen, the industry needs protection and clarity from regulators. Likewise, it’s now time for membership organisations to stand up on behalf of the sector and lobby for the financial inclusion of businesses.

If the confusion regarding UK IBAN accounts can be sorted in a timely manner, businesses across the nation, as well as those further afield can look forward to a future of more streamlined and effective financial services. With this support, the diverse sector can deliver further access to innovative financial services and products, which improve outcomes for businesses and consumers alike.

As a sector, Fintech has the potential to provide vital assistance to the wider economy, particularly in an era of increased cross-border business. At Monneo, we’re committed to being part of that change and as a part of organisations like ‘Accept my IBAN’, are working towards reporting and ending IBAN discrimination.

[1] – https://www.mastercard.com/news/research-reports/2021/borderless-payments-report/

 

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Banking

IT’S TIME FOR BANKS TO SIT THEIR CUSTOMERS DOWN AND TALK OPEN BANKING

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Eugene Danilkis, CEO at Mambu

 

We are living in an experience economy, and banking is no different. Customers need innovative payment and finance management solutions. New entrants are edging into the landscape and challenging existing players. This should mean users have a better view of their finances and the tools they need to manage their money – but banks are failing to deliver.

Personal finances are a complex beast, emotional pulls are strong, and the worry of financial security is always on the mind. It’s the job of banks to be the shoulders customers can lean on and trust.

Open banking was supposed to take this to the next level, enabling banks to deliver personalised products and services based on improved data sharing and customer insights. But three years on, adoption remains sluggish. So, why is open banking failing to live up to its promise?

 

A missed opportunity

Open banking was introduced to the UK in 2018, but consumers are still mired in confusion as to what it means and how it helps them. According to Mambu’s global open banking survey, 61% of consumers say they’ve never used open banking, despite more than 8 in 10 using one or more mobile banking apps.

Eugene Danilkis

This is a problem for banks and consumers alike. Lack of understanding around the technology is hindering its adoption, despite this being in the best interests of both. By enabling the secure sharing of financial information, open banking creates an improved customer experience. Not only does this minimise friction and make online payments faster and easier, but allows for personalised services and greater automation, enabling customers to take advantage of tools like budgeting apps.

For banks, open banking is an opportunity to build innovative new products that will improve the customer journey, helping them retain accounts and acquire new ones. By collaborating with third parties, banks can hyper-target customers and build services that address specific user needs, increasing customer satisfaction and in turn brand loyalty.

It’s true there’s been a recent spike in open banking users. According to Juniper Research global, open banking users rose from 18 million in 2018 to 40 million in 2021. But this can be traced to the necessities of a pandemic rather than any sudden clarity in communications.

 

Putting customers at the heart of communication

Mambu’s research shows more than half of consumers (52%) have never heard of open banking. COVID-19 may have increased the uptake of the technology, but it hasn’t increased understanding among users.

So, what can banks do to encourage consumers to embrace open banking? Fundamentally, they must better educate their customers in terms they understand. This means talking to them like human beings, using clear and transparent language to simply explain the personal benefits open banking brings and why it’s really just smart banking.

The understanding gap between technology and terminology shows that consumer demand is there, but better communication is needed. Making sure consumers truly understand the tools they’re using, the control they now have over their finances and how open banking improves the customer experience is vital to dispersing the current fog of confusion. It’s the benefits of this technology that banks need to hone in on: customers ultimately care about what open banking can do for them and how it’s going to make their lives easier.

Centering the customer and their needs in this way will allow banks to fully realise open banking’s potential. The technology has already given them the opportunity to develop valuable services for customers that help build brand loyalty. But the industry has failed to put the customer at the heart of their communications and processes, and show them how much better banking can be.

 

Building trust

Key to reversing this trend is addressing consumer concerns around data privacy and financial safety. Yes, banks need to prioritise simplicity and clarity in messaging, but this isn’t an excuse to shy away from important conversations. Just because there’s an understanding gap around open banking doesn’t mean consumers aren’t switched on about tech and financial issues.

Mambu’s survey found nearly three in five customers have concerns about privacy and security in relation to open banking. So, it’s vital that banks provide reassurance and relevant information about data sharing from the outset if they’re to assuage these fears.

The industry can also encourage greater adoption by developing and improving open banking interfaces. Banks are the gatekeepers to how easily end-users can authorise certain actions, manage third-party access and navigate different open banking functions. If the interface is user-friendly, customers will have a better experience of the technology and be more likely to use and recommend these services.

 

Time to get talking

Customer communication is holding the industry back.. The ability of open banking to transform financial services is a concept that industry players are well-versed in. But the feeling isn’t mutual for customers.

Banks are failing to capitalise on the open banking opportunity by engaging with new and existing customers about what the technology can do for them. Debunking  common myths can open the door to increased growth and trust for banks, as they seek to open up new revenue streams post pandemic..

Make no mistake, open banking isn’t going away. But customers will if banks don’t get talking.

 

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