By Rodney Johnson, Head of Mobile Practice Channels, Capgemini Financial Services
Social media and mobile have forever changed our lives, from the way we purchase items to how we search and use information to make both personal and business decisions. With 90 percent of financial services organizations dedicating funds for social media initiatives in 2012, according to a recent report by Aite Group, it’s clear banks deem social and mobile important channels1. However, while it’s important for banks to plan effective social and mobile strategies, there are key risks and challenges, relating to customer data and security that must be acknowledged and addressed or they risk missing out on the opportunity to deliver a superior social and mobile experience to their customers.
In this article Rodney Johnson, Head of Mobile Practice Channels for Capgemini Financial Services will explain what the current social and mobile landscape looks like for banks and detail the benefits of investing in a social media program along with some of the key challenges they need to address.
The current social & mobile landscape
While the majority of us have a general understanding how mobile devices and social media are used on a personal level, it’s important for banks to first understand how they are used across the financial services landscape.
As many financial institutions have learned, customer expectations for banks to provide an array of services via mobile devices and social media have only increased over the last few years. Furthermore, customers are often expecting a quick, easy, customized and seamless way to access and update account details, gain information, report customer service issues or make a complaint. Currently banks across the globe are using social media to provide a comprehensive way for their customers to access a multitude of services, such as information about new products and promotions, account information and reporting customer issues.
Some of the largest banks such as Bank of America and Citibank have dedicated Twitter pages for customers to report and resolve customer service issues but small to mid-size banks are also looking to mobile and social media to provide an enhanced customer experience
For example, Spanish bank La Caixa includes a link to its customer service team via Twitter and Australia’s Commonwealth Bank displays tweets in its app, and also provides Facebook updates and its latest YouTube videos to its customers.
Additionally, Société Générale, in France, seeks direct feedback from customers on a wide range of topics through Facebook and Twitter. In Poland, Alior Sync and ICICI Bank in India encourage customers to share their spending and savings goals through Facebook.
An established social media presence governed by a sound mobile strategy can yield many benefits to financial services companies, which can directly or indirectly strengthen their brand position as well as generate additional revenue including:
Enhanced brand visibility – Having a meaningful social media presence lets companies increase their brand awareness and exposure to their target customer segments. According to a survey by Social Media Examiner, 45 percent of adults check out brand pages online regularly2.
Reduced costs – Social media is already being used by banks to receive customer complaints and issues and provide real-time resolution. This opens up another channel for customers to reach company representatives, which translates into fewer people waiting in line to speak with costly call centre or branch representatives. Banks may also start providing automated banking transactions via tablet apps, minimizing overheads associated with traditional infrastructure
Foster innovation – Mobile and social media are intrinsically linked to spurring innovation as they allow for input directly from the customer base. This enables banks to collect direct feedback and data from consumers, coined as crowd sourcing, and use that information to explore ideas to support their business needs and enhance offerings.
For example, The Priority Club Select Visa Card was developed through a private online community setup by Chase and IHG. Cardholders provided deep views into their lifestyles and travel behaviours, allowing Chase and IHG to offer more relevant rewards to their customers
Generate new revenue sources – The reach of social media and ubiquitous mobile devices are very effective marketing tools for banks. Well-designed social media pages can be used to launch new products and promotions, effectively directing traffic to a bank’s web site and subsequently improving search rankings. As an example, Commonwealth Bank in Australia provides its customers with a mobile app called Kaching, which allows them to handle daily transactions, conduct P2P payments and social media banking without leaving Facebook.
Enterprise applications –Social media channels such as Facebook are very effective for reaching customers but they can be extended to internal employees too. Recruiting teams regularly mine social media sites for identifying and approaching top talent candidates and sales staff may network with customers and approach potential prospects via social media channels as well. There are enterprise specific social media networks and applications that are very popular amongst companies, including SalesForce.com’s Chatter solution.
Understanding and tackling risks and challenges
As with any external communication, information posted on social media sites must adhere to corporate policies and government regulations. There must be clear rules about customer information and data security. A few examples of guidelines banks should consider to avoid potential risks include:
- Reining in employees who have their own social media pages
- Refraining from selectively editing Tweets and Facebook posts
- Ensuring boards and executives have oversight of social media
- Reviewing and performing due diligence on all vendors’ social media activities
New York-based Chase is an example of a bank that has mitigated risks and challenges well and has come out on top in social media in the second quarter. The bank currently has a social media presence, touting 3.8 million Facebook likes, 22,229 Twitter followers, 559 tweets sent and 116,052 YouTube views. They have excelled to this position by simply understanding its customer needs and wants as it relates to mobile and social media but also by adhering to strict guidelines on how they conduct their social and mobile strategy.
Furthermore, banks need to ensure the right people with the best knowledge of their products and services are representing them on social media. In some situations, banks have lost control of the sales process as a result of customers turning to social media. Rather than meeting with a sales representative to discuss a bank’s offerings and services, customers are relying on Facebook, Twitter, Google+ and other mobile channels to decide which bank they want to choose to do business with An effective mobile strategy would outline how to incorporate social media into the marketing campaigns and also provide insight on how to effectively navigate the social media channels.
In order to address their challenges, banks must setup tools and technologies that can listen-in to the social media channels and integrate them into sales and services systems in order to obtain the best return on investment from social media.
This action begins with an effective mobile strategy and roadmap. Both elements are crucial to the success of banks moving forward and enhancing the technological integration needed to improve their social media offering to customers. . It’s the pure mobile experience that is going to determine a bank’s level of success. In short, understanding the challenges and what it takes to conquer them successfully are key to driving mobile and social media forward in this space.
The simple reality is that mobile technologies have forever altered the world we live in. Banks must adapt and learn to make mobile work for them or risk missing out on differentiating themselves to prospective customers or, worse yet, fail to retain their current customers. Financial institutions that don’t fully understand the role mobile plays and work to incorporate it in ways that help to leverage their value proposition, through social media or otherwise, will be negatively impacted.
The future of mobile and social media
The future of social media and mobile for banks will be marked by several advancements in customer centric features for better service, personalization, targeted marketing and co-innovation initiatives. Such initiatives will be integrated across various channels such as branches, call centres, the web and mobile channels to provide a seamless customer experience.
The convergence of social and mobile channels will also transform how services are ultimately delivered to customers. Imagine an unhappy customer walks out of a bank and then tweets about it. The bank can then monitor for such tweets and respond by having the bank manager phone the customer and provide a one-on-one resolution. Gone will be the days of customers spending valuable time on the phone trying to resolve an issue. Instead, social media and mobile presents banks with an opportunity to provide a differentiated service that enables an efficient, valuable and cost effective way to keep customer experience and satisfaction levels up.
While the opportunities and avenues around the mobile and social media channels appear to be endless, it remains to be seen how banks will make the most of these without compromising security, privacy and while adhering to corporate policies and government regulations. However, with the sheer dominance of mobile and social media, banks are being challenged to react quickly and effectively by providing these types of capabilities in the near term. It will be interesting to see how the financial services industry will further adapt to provide an enhanced and personalised experience for their customers.
1. Aite Group/EFMA survey of 166 financial services executives, August‐October2010.
2. Forrester Report: “Best Practices In Digital Money Management”, May 2013.
How open banking can drive innovation and growth in a post-COVID world
By Billel Ridelle, CEO at Sweep
Times are pretty tough for businesses right now. For SMEs in particular, a global financial and health crisis of the sort we’re currently witnessing represents a truly existential risk. Yet there is hope of a brighter future. Digital transformation is already helping organisations in countless sectors, with everything from building supply chain resilience to rolling out potentially life-saving contact-tracing schemes. Yet it’s not just delivering transformative benefits in grand projects like this.
Thanks to open banking rules, a new wave of fintech innovation is sweeping the globe, offering business leaders a new launchpad for success. Even something as simple as corporate expenses can be transformed by the power of open data — to help firms cut costs, reduce fraud risk and become more productive.
Opening up data to innovation
It’s easy to get bogged down in the technical details of open banking, and the slew of new acronyms it has ushered in: Third Party Providers (TPPs), Account Information Service Providers (AISPs), Payment Initiation Service Providers (PISPs), and Application Programming Interfaces (APIs). Yet at the heart of the open banking revolution is a simple concept: the idea that forcing banks to open up their customers’ financial data will create more competition, and fresh opportunities for market entrants to create innovative new services.
This was at the heart of the UK government’s world-leading strategy when it was introduced back in 2016. A revised EU payment services directive (PSD2) gave it legal teeth, mandating that all payment account providers in the region provide third-party access for customers that want it. The push is also about reducing banking fees and enhancing financial inclusion, of course, but it’s in competition and innovation that the benefits really shine for businesses.
Access to real-time financial data via open APIs has already resulted in a range of new services which are helping businesses ride out the current economic storm. Whether it’s capabilities that can help freelancers prove loss of income to receive targeted loans, or services designed to streamline business processes to reduce costs and fraud — examples of innovation are endless.
What’s more, it’s already global. Aside from the PSD2, open banking rules are taking shape in Australia, New Zealand, Japan, Singapore, Hong Kong, Mexico and elsewhere. According to frequently cited Gartner predictions, regulators in around half of the G20 countries will create an open banking API regime over the coming year.
In the UK alone this is set to create a £7.2 billion revenue opportunity by 2022, with 71% of SMBs and 64% of adults expected to adopt it by then, according to PwC.
Making expenses pay
Corporate expenses and travel management might not be an area one immediately associates with high levels of innovation. But here too, open banking is having a profound impact. By combining automation, in-app approvals, integration with corporate policy and secure open banking APIs, companies like Sweep are offering new ways to solve old problems.
Part of the legacy challenge relates to productivity. Managing corporate travel costs and expenses was cited last year as the biggest concern of the UK’s small and mid-sized firms. Separate research claimed that SMBs are estimated to lose over £8.7 billion annually due to the time it takes employees and managers to complete these menial tasks. By automatically integrating real-time corporate bank account information into an easy-to-use app, we can save up to 15 hours a month on data input and travel administration per employee. That’s all time they could be spending on growing the business.
Another key area of concern is fraud. According to some estimates, fraudulent expenses claims could be costing UK firms £1.9 billion each year. In the US, the figure could be approaching $3 billion annually. Whether it’s the result of submitting expense claims for personal purchases, claiming for additional mileage on work trips, or over-claiming for other items, it all adds up. What’s more, fraud tends to spike particularly during times of recession, when normally diligent employees look for ways to supplement their income.
In this use case too, there are benefits to be had from open banking-powered solutions. Traditional manual processes offer too many gaps that can be exploited by fraudsters. Submitting paper receipts to finance departments — which must then input the information into spreadsheets or accounting software — is slow, error-prone and lacks accountability. However, with modern digital systems, transactions are automatically fed through from bank account to expense management platform. Here they are seamlessly checked according to policy and automatically approved, rejected or flagged for further investigation.
The future’s open
Thanks to the power of open banking, innovative fintech use cases like this are transforming operational challenges into opportunities to cut costs and fraud risks, improve employee productivity and become more strategic. With real-time data fed through from corporate bank accounts, finance directors can better understand spending patterns, react with greater agility and gain the insight they need to run their businesses more efficiently.
So what of the future? The good news is that open banking is only just getting started. As more sophisticated machine learning algorithms are developed, it has the potential for even greater disruption by empowering SMEs with predictive analytics and forecasting tools, or more accurate fraud checks, for example. Those in Europe may benefit most as PSD2 allows businesses to use tools that work seamlessly and securely across markets, without requiring any duplication of work.
In fact, open banking is not just good for individual SMEs, it’s important for Europe as a whole if we are ever to nurture successful digital unicorns to compete with those coming out of the US and China.
Open banking been described in the past as a quiet revolution. With the right buy-in from business and the continued innovation of digital platforms, it may soon become a full-throated roar.
Banks take note: Customers want to pay with points
By Len Covello, Chief Technology Officer of Engage People
‘Pay with Points’ – that is, integrating the ability to pay with loyalty reward points directly into the online check-out process – is a trend that is growing exponentially with big-name brands like Amazon, PayPal and American Express leading the way.
The past few months have posed an unprecedented challenge in the loyalty space, especially with the pandemic’s impact on travel. The unforeseen impacts across the board have caused institutions with premier incentive credit cards to feel increased pressure to retain their loyalty members. As such, exploring innovative ways to create a personalized loyalty experience for customers is at the forefront now more than ever.
Offering the flexibility to pay with points is certainly one option that can help transform financial institutions’ (FIs) loyalty programs. With the evolution of consumer preferences – like relying on other forms of payment outside of credit and the move towards contactless payments – viewing points as currency naturally ties into the “new ways” in which American consumers bank, pay and shop.
Personalization is a win-win for banks and loyalty program members
As the world continues to evolve in light of the pandemic, consumer habits like mobile banking and shopping online for groceries are likely to carry over long-term. As a result, consumers will expect their loyalty programs to provide new incentives to fit their ever-changing needs. By offering loyalty program members the ability to pay with points for the items they want or need during the online check-out process, FIs are creating a more personalized shopping experience. This can help increase member retention, especially compared to dated loyalty programs that offer limited options for point redemption.
As we’ve learned with iPhones, tap to pay and other technologies that reduce friction, once consumers begin using a new and convenient digital service, there’s little desire to go back to the old way of doing things. By incorporating pay with points into loyalty programs sooner rather than later, FIs will be setting themselves apart in terms of meeting their member’s needs with modern payment offerings.
Outside of providing a personalized experience to loyalty program members, pay with points as a program perk also has specific benefits when it comes to a bank’s bottom line. Currently, there are billions of dollars in liabilities in the form of unused points sitting on banks balance sheets. This is in part due to loyalty program members inability to spend their points how they want. By allowing a more personal and flexible way to spend points, banks can reduce those liabilities while creating a more engaging experience for their members.
Meeting consumer demand is easier than you think
Incorporating the infrastructure to power new digital capabilities is more often than not a cause for concern: how expensive will it be? What does down time look like? How long will it take to get up and running?
Luckily for banks, the process is actually quite simple – and inexpensive. With a lightweight integration of a few APIs, banks can tap into a pool of retailers to make their merchandise available for purchase with points by loyalty program members in no time. And as the retail network expands, there’s no need for additional IT work to add new brands into the fold. Ultimately, API integrations upfront create a frictionless and scalable solution for FIs and a preferred shopping experience for members. And based on market feedback, the personalized experience that results from giving customers the option to spend points as easily as they would cash or card, far exceeds any initial inconveniences that may arise.
According to our recent Customer Loyalty Survey, 75% of customers are more likely to spend loyalty reward points to make a purchase over other payment methods. The findings also indicated that 72% of customers are actively engaged in loyalty programs because of the available redemption options.
Long-term loyalty is not just about acquisition or promotional material, but rather the experience of redemption and viewing loyalty points through a fresh lens. Customers today are well-versed in what’s available to them online. The more redemption options offered to the consumer, the more appealing the FI becomes.
Loyalty point redemption in action
In April of 2020, when the world was mostly in lockdown, we looked at how a select group of approximately 3,000 consumers spent their loyalty reward points, comparing April 2020 to April 2019. Key findings suggest that, if given the opportunity, consumers will spend their loyalty points to buy what they want or need based on their specific circumstances. For example:
- Significant increases in the purchase of outdoor items like BBQs and smokers (+3401%), fire pits and heaters (+2644%) and pool and patio accessories (+1297%) suggested people were making the most of the spaces around them.
- Consumers were focusing on their personal health and well-being with the increase in points spent on fitness accessories (+1664%), bike accessories (+1453%) and fitness trackers (+536%).
- Finally, the increase in purchases of hand-held power tools (+3076%), smart control lighting (+1750%), stick vacuums (+1096%) and specialty small appliances (+531%) suggests consumers took advantage of the opportunity to check projects off their at-home to-do lists.
We’re keeping a close eye on how loyalty point purchases evolve as more retailers and FIs get on board with viewing points as a true form of currency, especially in a post-pandemic world. Which items will rise to the top in the coming months and years as the payments ecosystem evolves? Will flight purchases or experience-based purchases regain popularity?
What’s next in the loyalty payments space?
As consumers continue to look for alternative payment methods, offering the flexibility to pay with points is the perfect opportunity for FIs looking to reinvent their loyalty programs. Engage People has always viewed loyalty points as a fiat currency, creating innovative technology that allows for easy integration that satisfies loyalty program members’ needs.
In the future, there’s a real opportunity to incorporate loyalty reward points into everyday life – extending beyond the online shopping experience. Imagine a world where you can pay for coffee, your bills, monthly subscription services like Netflix or make charitable donations with loyalty points just as you would with a credit card or cash. The future involves a mindset shift by consumers, financial institutions and the entire payments ecosystem, and that shift is viewing loyalty points as a true form of currency. Like reaching for cash, a debit or credit card, loyalty points can easily become a payment option of choice for consumers. FIs that are at the forefront of this trend now have the most to gain long term.
The Importance of Liquidity Solutions
By Justin Silsbury, Lead – Product Manager at Infosys Finacle
Economic uncertainty and business complexity have made a deep impact on corporate treasury management in recent years. With regulations getting tougher, funding becoming elusive, and profits shrinking fast, the way liquidity is managed is making a real difference to companies’ survival. As corporate treasurers around the world struggle with the challenges of liquidity management, they are turning to their banks for support; it is imperative that the industry respond with digital solutions that enable clients to manage money efficiently at low cost.
Why corporates need liquidity solutions
Corporate banking customers need a liquidity structure that maximises security, liquidity and yield. Even today, treasurers in multinational corporations lack visibility into their companies’ overall cash position across countries and currencies. Delivering returns on excess cash, although important, is not a priority for them, but making sure the money is safe and available when needed, is. Therefore, a liquidity solution should be able to consolidate a company’s cash position across all its accounts around the world, provide a unified view in real-time, as well as offer timely suggestions on maximising utilisation and yield. It should automate all these functions as far as possible to reduce both manual overheads and the risk of moving money manually on a daily basis.
Broadly, liquidity solutions are of three types – cash concentration solutions that automatically move money around the world; interest optimization solutions that reward customers based on their aggregated balances without the need to move any money; and investment sweeps that move all the consolidated funds to a money market fund or other short-term investment to earn extra returns.
And why banks should provide them
There are several reasons why banks should invest in a sound liquidity solution. The most important one is that without it, a bank can never become a customer’s principal financial institution. A large corporation will have many banking providers, each one trying to increase share of wallet; in this situation, a high involvement product such as a liquidity solution is particularly effective for building stickiness and strengthening a bank’s position vis-à-vis others. An illustration may be useful here: say a food retail chain banks with Santander in the U.K., and other banks across Europe. If the retailer chooses to consolidate its cash daily into its U.K. account using Santander’s liquidity management solution, where the excess cash can then be swept into an investment vehicle overnight, over time, Santander can cross-sell other products to the client to increase revenue and stickiness.
Technology does it
Corporate banking has historically lagged retail banking in technology adoption. It is high time that banks remedied this by digitizing their corporate solutions. Specifically, they can leverage a variety of digital technologies to provide clients instant access to liquidity, global visibility into the overall cash position, and efficient working capital management. With robotic process automation and machine learning, they can simplify and automate processes to cut cost and lead-time. Blockchain enables banks to offer fast, secure, cross-border transactions, while open APIs ease collaboration and co-innovation with Fintechs, customers and developers.
Banks need to deliver frictionless, personalized, “retail banking-like” experiences over customer-centric corporate banking channels. Instead of channel silos – one for liquidity, another for payments and so on – customers will see data from all their accounts in one place, from where they can manage liquidity, forecast cash flows, secure trade finance etc. On their part, banks can use 360-degree customer insight to issue not just timely alerts but also contextual recommendations. For instance, being able to alert a customer that a large payment is due the following week, but also suggesting the best options for arranging those funds.
Apart from improving the customer journey, a real move in corporate banking is towards cloud adoption. Many banks have started the cloud journey, but many still have some distance to cover before they are fully cloud-enabled; mainly, they are migrating monolithic, on-premise workloads to the cloud. Early adopters, such as JP Morgan Chase, HSBC and Citibank, are setting the pace by developing their own capabilities as well as procuring certain components from Fintech partners to plug into their overall solution.
One size doesn’t fit all
In the past, corporate banking solutions were largely meant for big companies, but today they are relevant to enterprises of all sizes. Internet and mobile have enabled even small local firms to scale far and wide, creating a need for solutions to manage their money across borders. Therefore, banks need to make sure their liquidity solution can accommodate the different needs of different clients. Only a flexible, componentised solution can do that.
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