Multi-channel is Now the New Legacy System
The rush to first create a web channel and, subsequently, a mobile channel meant the scope and functionality were scoped to replicate the products and services traditionally provided within the branch network. The talk was of convenience, with remote access and 24/7 availability: “Banking on the go!” But there was no real innovation outside of a new delivery channel, with products and services still requiring wet signatures or human verification steps, such as identification checking.
Now the rush is on to remove manual intervention and to eliminate friction from account origination and product application, replicating an Amazon 1-click model to reduce user drop out and increase operating efficiency. This capability and features like biometric authentication are now standard capabilities in challenger bank offerings. But in concentrating on just removing steps from the current multi-channel offerings, banks are already starting to fall behind the capabilities and convenience offered by the new breed of third-party payment service providers (TPPs).
What has happened is these multi-channel applications have, in essence, become yet another legacy system to maintain, support, and enhance. The primary difference, though, is that these systems of engagement are by their very nature customer facing and the customer doesn’t care how difficult these features are to retrofit into the legacy estate; if they are not there, the customer will simply go elsewhere and pick a better service.
Concentrate Your Limited Resources on What Will Drive Benefit
Rather than taking a scatter gun approach to Digital spend and trying to tackle all problems at once I suggest that banks concentrate their limited budgets and resources to future-proof themselves for regulatory change. Be it PSD, FATCA, CRS, MFID or Dodd-Frank it doesn’t matter; the key is to create an open banking architecture and provide a means to easily access all data within the bank. A bank that can easily access their data will never worry about future reporting requirements, this will effectively become a BAU activity. This inevitably reduces the proportion of budget and effort being spent on Legal, Regulatory & Mandatory (LRM) projects and, more importantly, can start to create true innovation and bring about competitive differentiation; rather than delivering this opportunity to new competitors in the marketplace.
Retail banks capture a staggering amount of customer information that can support a whole new engagement model with the customer. By leveraging this unique insight into a customer’s incomings and outgoings, habits and buying preferences and augmenting it will the likes of budget planning for life events such as holidays or weddings the customer’s perception of a mobile banking app goes from being just functional to useful and ultimately necessary. Imagine if using this information you could spot life events and automatically change your marketing strategy e.g. when baby supplies are purchased at the supermarket.
To deliver this, an open banking architecture and ability to finally exploit the knowledge locked away in silo applications and systems of record is required. Enabling a smarter, more personalised, and predictive banking system, and turning what was a purely functional banking experience into a useful and valued experience will create true customer loyalty. But can your existing channels take it, or will you be just offering up this insight to your competition?
The transformation of the bank’s architecture and open banking API will inevitably have an impact on a bank's existing channels. Why not embrace this and use it a catalyst for change rather than working around the limitations of the current technologies and introducing more technical debt? More importantly, banks are at risk of allowing others to exploit this open access to their most valuable data while not being able to use it themselves.
Standardised Banking API Will Let Your Competitors KYC Better Than You Do!
PSD2 and the API access this will bring (such as Open Banking API) are attempting to drive innovation within the European Economic Area (EEA) and there's only one certainty, if PSD2 doesn’t deliver it, it will be closely followed by PSD3. I believe the unprecedented access that will be given to TPPs will mean they will be more geared-up to access this information than the payment service providers (PSPs) i.e. the banks themselves.
While the banks will reluctantly offer up this information to others, they will not be in a position to use it themselves within their proprietary multi-channel engagement channels. The reason is they will be too busy trying to fix other things and meet regulatory changes, and all of this in a time of reduced budgets end and the erosion of customer loyalty to any banking brand.
Banks are in danger of meeting PSD2 regulation and with it losing swathes of customers in the process. With the advent of account switching services, customers no longer feel wedded to a particular bank for life and are treating it like any other commodity service, such as a mobile phone operator or energy supplier.
Do You Have Sunk-Cost Bias?
Many banks feel they have sunk considerable investments in their multi-channel platforms. Not only have they invested considerable time, money, and effort in these channels, they have also built up a large scale development, support, and change infrastructure around them. This leaves banks feeling “pot committed” to these investments but it’s all about knowing when to let go. Rather than dwelling on the effort and decisions made to get you where you are today, consider the situation as if you were new to the role, with no baggage. What would you choose to do?
But surely in the time of reduced IT budgets, it’s more cost effective to make enhancements than undertaking a whole new omni-channel programme? Well like buying a new car, you no longer have to stump up the full asking price on day one. Why not pick up a “just add fuel” deal where all you’re paying is for how often you use the car and any optional extras you wish to have.
By adopting a service approach to an omni-channel solution that is ready to utilise open banking APIs and delivering the very best in authentication, user verification and frictionless origination a bank can concentrate on adding real value and innovation. This will not only prevent a customer exodus but attract customers from your competition.
Fujitsu Smart Origination
At Fujitsu Digital I've brought together a best-of-breed ecosystem of partners along with propitiatory Fujitsu IP to deliver this very solution as a service. A bank (or any other customer for that matter) can concentrate on what will drive true innovation and customer benefit and let Fujitsu manage delivering the omni-channel experience as your customers expect now and in the future.
Fujitsu Smart Origination includes:
- Electronic ID Verification, KYC & Credit Checking
- Multi-modal Biometric Registration and Log-on
- Device DNA and Geo-location Registration and Checking
- Omin-channel System of Engagement
- Fully Configurable Risk Profiling for All Transactions