Sean Devaney, Vice President of Banking and Financial Markets at CGI UK

The adoption of Variable Recurring Payments (VRP) for Sweeping – ­the automatic transfer of money between a customer’s accounts – is set to take off in 2022. An evolution of Open Banking, VRP has the potential to move the uses of Open Banking beyond the gathering and aggregation of account information and delivery of one-off payments into a much broader set of use cases.

It’s something many of us in the industry have been working toward, but what can businesses and consumers expect from the VRP rollout ahead of its industry launch later this year? How can we encourage consumers and users to buy into it and what will it mean for the future?

The real-world benefits of VRPs for consumers

Following years of experience analysing and implementing tech solutions across the banking sector at CGI, to me, it feels evident that the long-term success of banking and financial technology depends on its relationship and acceptance by users and consumers. It can seem obvious, but often a lack of understanding can lead to mistrust which takes years to dispel, can lead to the prolonged use of legacy systems, which in turn puts data and customers at risk.

VRP has been purposefully developed with the consumers’ experience front of mind like no other industry technology has, by allowing an account holder to set up a repeating payment authority with a degree of control and flexibility that has not been seen before. It puts the power back into the hands of the consumer and opens an inclusive world of banking for those potentially excluded.

What sets it apart from direct debit?

One of the biggest questions we are asked about VRP is, how does it differ from alternative payment methods like direct debit? Well, several features of VRP set it apart. For example, while the destination of the payment remains fixed with VRP, there are clear parameters around the amount that can be paid out, either as an individual payment or during a given period. At CGI we believe that this will put consumers at the heart of the financial ecosystem, as VRPs are dedicated to creating a seamless and, importantly, frictionless experience for customers and businesses across the UK. This set-up will provide customers with more options to manage customer payments for a range of services like subscriptions and utility bills.

But is it as secure?

This is a critical question, and one that should be taken with care when answering, but it is in fact more secure than many alternatives.

VRP will offer users additional security benefits through automated payment processing by allowing the user to set limits on the amounts of any payment taken as well as on the duration of any instruction. As with all new technologies introduced across this industry, security is of the utmost importance. VRP is focused on protecting consumers as well as helping them to lead healthier financial lives. For example, if a person has insufficient funds in one account, VRP can transfer money over from another account without needing permission for each repeated payment. This could potentially save a person time and money by preventing them from unwillingly entering an unarranged overdraft and dealing with the associated costs.

How does it impact businesses exactly?

The benefits for individual businesses are much of the same. As VRPs provide them with the option to collect recurring payments from a customer without needing separate permissions for every payment. Businesses can also benefit from ‘sweeping’ possibilities too. Sweeping allows businesses with accounts with multiple providers to transfer money from one account to another. For businesses and consumers, there are many examples of when this could be used such as sweeping funds from a current account to a savings account automatically.

With added security, consumers and businesses can also benefit from more transparency and flexibility across their accounts and individual payments too. Set payment parameters, decided by the consumer, limit the amount of money that can be taken from an account and also allow an end date for the mandate to be set. There is hope that this might support more people with their everyday finances, as VRP is a more inclusive offering with easier access and more day-to-day uses. Also, enabling users to authorise a series of payments rather than having to authorise each individual transaction separately should encourage more people to use VRP. As we face the current cost of living crisis, consumers are demanding easy-to-use technology that automatically helps people manage their debts and build their savings. This is where VRP comes in.

What does the future hold for VRP?

Technology in banking has the potential to open efficient delivery channels as well as new products and services for the industry; providing the framework to meet evolving demands and challenges in the competitive market. We are already seeing this across the industry. For example, Artificial Intelligence is widely implemented across UK banks today to assess risks and improve processes within the digital banking space. At CGI, we predict that VRP will also become a wider-reaching and integral part of the banking industry later this year too.

VRP’s future is promising, with experts and consumers alike already looking toward broader use cases for the technology in the future. There is a conversation to be had on the ways VRP can go on to play a key role within the “cashless society”. To reduce types of financial crime as well as to support more consumers with their everyday banking. As banks have developed sweeping, they have also created the infrastructure needed to support first-party to third-party transactions. Meaning that in the future VRP could potentially be used for broader e-commerce purposes too.

Overall, the future of Variable Recurring Payments is an exciting one, with many big banks and businesses already sharing some of their plans for VRP in the future. The days of innovative technology solutions across more mainstream banks are on the horizon and I am excited to see the role VRPs will have in this development.

By James Isaacs, President, Cyara

Today’s retail banks face considerable challenges. Open banking initiatives –  that make it easier for customers to switch accounts – and increased competition from emerging fintech brands, are making it harder for them to attract and retain customers. This challenge is particularly acute for traditional banks which are seeking to attract younger people, who are drawn to the range of innovative services offered by digital-first emerging ‘neo’-banks.

To stay competitive, traditional banks must improve the customer experience  they offer account holders. They also must look for more efficient ways of working, so they can service all customers in a consistent way, regardless of which banking channel they use – whether it’s banking online, at a physical bank branch, through a contact centre, using a mobile app, or (most often) using a combination of all these channels.

The challenge of consistency

The argument for an omnichannel strategy is compelling. Fuelled by the pandemic, demand for digital banking services has grown. McKinsey suggests that 71% of European banking clients prefer multi-channel interactions, whilst 25% express a desire for a fully digitally-enabled private banking journey with remote human assistance when needed.

The delivery of such systems, however, is not without its challenges. Embracing omnichannel often means transitioning to a cloud-based infrastructure – away from the legacy on-premise systems prevalent in banks. Even when this hurdle is overcome, delivering banking services through multiple channels requires a significant investment of time and resources. Due to these common barriers, many banking CX projects fail to get off the ground.

James Isaacs

At the other end of the scale, there are the banks who have sought to implement numerous channels to cater for every possible customer demand, with varying degrees of success. The key to the delivery of a stellar CX is consistency – ensuring that every stride a customer takes in their journey is seamless, irrespective of the path or the channel they choose to take. The chance of ensuring a consistent service across all these channels is negatively impacted if organisations attempt to simultaneously deploy services to mobiles, website, in-person channels, messenger, chatbots, contact centres, alongside the adoption of newer open banking services.

Selectiveness is key

Organisations looking to optimise CX through the adoption of an omnichannel strategy are therefore advised to be more selective in their approach – adopting one or two new channels or approaches before expanding their omnichannel offering further.

An ideal starting point for retail banks is to look at automation within the customer journey. When applied correctly, automation can be used to help improve customer service in a way that also delivers efficiency gains.

The power of automation

Automation can have a significant impact on the CX delivered within retail banking, which saves valuable time for the customer and enhances the customer journey. Most customers getting in touch with their banks have fairly routine queries, such as a change of address, so the need to speak to an advisor is often unnecessary.

Automated customer-facing support solutions, such as chatbots, offer a faster way for customers to self-serve and secure the answers that they need to certain problems without having to phone an agent. Chatbots are programmed through a knowledge bank that can easily be updated with new information, enabling customers to source the information they need quickly and easily. Chatbots can also be used to direct customers to an agent if they are unable to resolve the issue.

For those customers who do still need to speak to an agent, there are Interactive Voice Response (IVR) systems, which capture information from a customer when they call into the contact centre. IVRs help customers complete simple tasks themselves and route them automatically to the right department. This directly reduces average call handling time (AHT) for agents and the length of time that a customer is on the phone.

The importance of automated CX testing

Yet, offering omnichannel and automated journeys is not enough to satisfy customers. These journeys must be flawless if they are to deliver a seamless customer experience. Forward-thinking organisations understand that the only way to assure perfect execution is through adopting automated testing that places a spotlight on the omnichannel customer journey from the customer’s perspective.

Automated testing can be enabled by leveraging an intuitive testing solution that develops test cases based on existing customer journeys. Retail banks can use automated testing to track various paths through IVRs, chatbots and then base test scripts on those journeys to ensure their flow or functionality is as it should be. Using this strategy, financial organisations can create thousands of automated test cases that cover the full swathe of customer journeys, shortening testing operations to a fraction of the time of equivalent manual tests.

While automated testing provides easily measurable benefits, certain alerts flagged by automated testing are more critical than others. Distinguishing a true failure that requires immediate action as opposed to failures that can be addressed in time is essential to achieving the true return on investment (ROI) of test automation. In doing so, banks can ensure that the customer journey remains smooth, and the CX delivered remains outstanding.

The path to good CX is paved with automated testing

Delivering omnichannel services for banking is key to satisfying customer demand. However, whether it is the delivery of a chatbot, IVR or an open banking model, retail banks are well advised to stagger the roll-out to ensure the delivery of a consistent service to customers. Automation plays a critical role here – both in the delivery of omnichannel services to customers, but also ensuring its ongoing success through rigorous, frequent and automated testing.

Financial organisations that want to remain frontrunners in the market will stand out against the competition by delivering stellar digital and in-person experiences for customers. To assure high-quality CX, walk in the shoes of your customers, testing their customer journey in each and every scenario to confirm there are no cracks in the road. Of course, there may be bumps along the way, but when those are addressed in a timely manner, retail banks will continue to attract and retain customers for the long haul.