• Chris Little, Chief Revenue Officer at finova


• 05.04.2024 01:15 am
#banking #digitalization

At a time when technology is seamlessly integrated with our everyday financial activities, savings management is one of the key areas primed for evolution. The advent of platforms like Hargreaves Lansdown’s Active Savings, which allows customers to park their money with various banks and building societies and manage it all from one place, is changing the way savers interact with their funds. The two central needs driving these technological upgrades are choice and convenience, both of which are now high priorities for customers when assessing new financial products. In fact, more than half (52%) of 25-34-year-olds now prefer using challenger brands over traditional banks when it comes to managing their finances, because these brands often have the agility to offer more tailored services. 

Banks and building societies now need to invest further to adapt digitally and thrive, or remain the same and sacrifice margin to retain customers through inefficient onboarding journeys. With fluctuations in the base rate looming too, now is the perfect time for these institutions to refine their digital infrastructure and enhance their offerings. This is not just about keeping pace, but also about harnessing technology to process high volumes of applications, delivering swift, customer-centric solutions that resonate with today’s savers.

Saying goodbye to paper-based applications

We’ve now reached a tipping point where digital application processes are no longer a nice-to-have, but a necessity if banks are to remain relevant in an increasingly digital world. As the demographic of “digital natives” grows, the expectation for a seamless online experience in financial transactions has become the norm. While many banks and building societies have expanded their digital offerings in recent years, a significant portion of these efforts fall short during the crucial moments of account opening. Across the industry, its generally estimated that almost 50% of digital applications are abandoned due to outdated, paper-intensive procedures that disrupt the digital journey, such as the requirement to submit physical documents for identity verification.

Addressing this self-inflicted bottleneck requires banks to embrace technologies that facilitate a truly digital experience, rather than a pseudo one. By integrating solutions that allow for biometric verification and leveraging Open Banking for fund transfers, for instance, institutions can eliminate the friction associated with rigorous KYC (Know Your Customer) processes. Such advancements not only enhance the efficiency of application processing but also align with the modern customer’s expectations for convenience and speed. This strategic move towards digital fluency in the application process is essential for banks looking to reduce drop-off rates and capitalise on the growing pool of tech-savvy savers.

API-driven benefits

Adopting API-driven services opens a gateway for banks and building societies to amplify their visibility and appeal, especially during high-demand periods like the ISA season. APIs act as the backbone for a symbiotic relationship with aggregators, platforms that consolidate the best financial deals and which enable savers to explore a vast array of savings accounts under a single umbrella. Despite the potential for increased exposure, many institutions remain disconnected from these valuable channels due to inadequate onboarding processes. This gap not only limits their market reach but also hinders their competitive edge in an environment where accessibility and visibility are paramount.

What’s more, the integration of APIs extends beyond mere visibility, facilitating a smoother, more secure onboarding journey through automated ID checks and fraud prevention tools. Banks that harness the power of advanced technologies like RiskNarrative from LexisNexis, which offers a no-code solution for building analytics-based onboarding, can massively streamline their customer acquisition process and enhance their conversion rates. Such technology can also play an important role in customer retention: features like mobile banking apps and self-service portals empower savers to manage their accounts independently, fostering a sense of autonomy and control. This holistic approach to digital banking, from acquisition to long-term retention, underscores the critical role of API-driven services in modernising the banking experience.

Looking ahead

The journey towards digital transformation in the banking sector is marked by both progress and potential. While many banks and building societies have made strides in incorporating digital processes for onboarding savers, evident gaps remain — particularly with outdated paper processes and complex onboarding channels. Addressing these issues is not just a matter of staying competitive; it's about seizing the opportunity to thrive during peak periods like the ISA season. By embracing API-driven services, Open Banking, and the integration of cutting-edge technology, banks can streamline their operations, enhance customer satisfaction, and solidify their position in a crowded market. This strategic pivot is essential for institutions that aim to not only attract but also retain a modern, savvy customer base, ensuring their relevance and success in the digital age.