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Banks are well-positioned for customer remediation – they just may not know it

Banks are well-positioned for customer remediation – they just may not know it 1

By Nanda Kumar, CEO of SunTec

Global businesses across all industries face tremendous challenges around how to capture market share, retain existing customers and attract new prospects. In disruptive times like these, customer loyalty is particularly brittle, and ironically crucial to the survival of many organizations. Banks are no exception.

To thrive and grow, banks must identify how they can be more customer-centric, offer enhanced transparency, deliver customized capabilities and maximize their assets to showcase their value across each step of the customer journey. This new way of thinking for many banks will require them to reimagine their core technology, foster strong partner networks and understand the true meaning of digital transformation, all while placing empathy and agility at the heart of their strategy.

Despite the new difficulties banks face, the current pandemic can also serve as a catalyst to accelerate long-overdue initiatives, according to new research by Boston Consulting Group (BCG). Financial institutions are uniquely positioned to adapt and optimize their existing assets to achieve customer remediation. They already retain detailed intelligence on their customers, have established methods to interact with them, and can aggregate and analyze data to offer a superior customer experience. Banks that emerge stronger from this pandemic will be those that move towards a model that enables them to deliver on customers’ expectations through technology innovation that also helps them to control costs and differentiate themselves from competitors.

Customization is king

As the lines between what traditional banks and fintechs can offer customers continue to blur, the way banks develop, deliver and improve hyper-personalized customer experiences will define who gains and retains customers in a COVID-19 shaped world.

Big tech companies like Facebook, Google, Apple and Amazon have successfully crossed into the financial services market and changed the game for incumbent players. Their business models are built on customization, prioritizing user experience and the customer journey to maintain their existing customer base and grab increasing market share from traditional players. These tech companies understand how to leverage customer data to provide the ultimate personalized experience and use it to suggest – and even predict – the customer journey, setting the standard for consumer expectations. The sheer power, size and reach of these companies has left many traditional participants unable to compete. With a daily presence in consumers’ lives combined with significant capital, existing customer data and strong brand loyalty, big tech and fintechs have become the drivers of  innovation – and have pressured traditional banks to rethink how they can focus on customer-centricity and strive to own the customer value chain.

Challenger banks and fintech providers have enjoyed a high level of trust among customers due to their service-first models that build consumer confidence and encourage loyalty. As traditional banks struggle to retain existing customers, they are also losing out on valuable insights that could help them attract new customers, especially millennials, and offer them a transparent and customized experience vs. merely a product.

Millennial needs are influenced by two key factors. One, millennials grew up on the technology of today. A smartphone is their very own personal life assistant used to shop, entertain themselves, learn, work and manage their financial health. Banks need to take this almost fundamental reliance on technology into account when designing new services that resonate with the unique needs of millennials. Two, banks must also recognize the employment and income stability that traditionally affects this generation, something which has been made even more insecure because of COVID-19 and the knock-on economic effects. As the banking experience evolves from product-based to customer-based, financial institutions will be pressed to find new ways to deliver the hyper-personalization services that customers, especially younger people, expect.

Pandemic pressures mount

Banks must be able to quickly adapt to changing goalposts, new customer requirements and continued disruption. The market volatility resulting from the pandemic has taught us that the only thing the banking industry can be certain of in this environment is more uncertainty.

This will require banks to recast their strategies, roadmaps and budgets so they can respond to today’s challenges, prepare for future business disruptions and ensure they retain existing customers while appealing to new targets. Now is the time for them to modernize their legacy technology systems, enable end-to-end agility and focus on flexibility, scale, and speed to accelerate their digital transformation and excel in a competitive and turbulent landscape.

Leveraging a modular approach and smart partners

Banks recognize they need to take a modular approach to digital transformation and balance their focus between user friendly front-end channels such as mobile, app and web, and critical yet less flashy middle and back-end systems. While there are many options to modernize legacy banking systems, simplifying complex operations and infrastructure should be step one and represents a low risk method to start the digital transformation journey.

Banks can avoid having to replace their stable core systems by embracing intelligent technology and partners to create the right service bundles for their customers. Adopting a digital core, ‘hollowing out’ customer engagement functions from the core system and managing it as a horizontal cross-enterprise layer will reap multiple benefits to banks. It will enable them to enhance product innovation, deploy sophisticated customer data management, expand their partner ecosystem and improve revenue management and pricing.

By leveraging their existing robust infrastructure rather than overhauling their entire systems, and utilizing technology partnerships that provide economies of scale, banks can cleverly ensure the agility, flexibility and budget required to make their digital transformation plans a success. This approach will enable banks to quickly adopt new technologies, add functionality and capabilities, enhance the user experience and provide customized internal and external products and integrated services– all while maintaining ownership of the complete customer relationship.

Financial customer data in high demand

Undoubtedly, the entry of fintechs and bigtechs has changed the way the industry views and uses data. This has created privacy concerns and anxiety around confidential customer data as high-profile data breaches make the news and push regulators to play an increasingly prominent role.

Banks and financial institutions have a surplus of customer data from individual accounts and insight into how the individual or household spends and saves. The ability to maintain access to that data is so valuable that fintechs and data aggregators have been particularly eager to get more access to sensitive data, as responsible handlers. This ‘battle’ over information has escalated in the absence of clear rules and lack of bank regulators’ ability to oversee aggregators as they usually don’t have direct relationships with those banks.

Banks have the responsibility to safeguard their customers’ data and leverage it to build the empathetic bank of the future. That bank will help protect customers from fraudulent behavior, cybercriminals and illegitimate financial activity that could occur if customer data ends up in the wrong hands. As the main ‘gatekeepers’ of financial customer data, banks are also tasked with making smart use of their data to uncover the context behind banking transactions, understand their customers’ ultimate goals and add value to every interaction. Data has the power to enable empathetic banking and help humanize the banking experience – a true competitive differentiator.

At the centre: empathy and agility

Banks must strive to keep empathy and agility at the centre of their strategies to best serve the customer of tomorrow. That means embracing customer data to ensure their offerings add real value to the customer journey. By creating and maintaining access to consolidated data, banks can quickly respond to consumers’ evolving needs and seamlessly access this data by building a digital core layer in their functionality, which captures and meticulously logs the data from every customer interaction, personal information, purchasing pattern and more.

Smart banks will leverage their customers’ information to offer service-first models built on trust and loyalty, while ensuring transparency for both customers and potential regulatory requirements. The bank model of the future is rooted in empathy, understands the customer’s needs, drives customer retention and ensures the long-term health of their business. By humanizing banking, banks will soon realize it empowers them to innovate faster, future-proof their business and reduce costs all while enhancing the customer experience.  The end result will be a transition to an agile, customer-first organization that demonstrates it listens to its customers’ evolving needs, which today is certainly the need of the hour.

Banking

Standard Chartered Bank partners with Microsoft to become a cloud-first bank

Standard Chartered Bank partners with Microsoft to become a cloud-first bank 2

Standard Chartered Bank and Microsoft Corp. on Tuesday announced a three-year strategic partnership to accelerate the bank’s digital transformation through a cloud-first strategy. This partnership marks a significant milestone for Standard Chartered in making its vision for virtual banking, next-generation payments, open banking and banking-as-a-service a reality. Leveraging Azure as a preferred cloud platform, the companies will also co-innovate in open banking and real-time payments to help the bank unlock new banking experiences for clients.

Standard Chartered Bank partners with Microsoft to become a cloud-first bank 3

Embarking on a cloud-first strategy

As part of its digital transformation, Standard Chartered will adopt a multicloud approach, where significant applications, including its core banking and trading systems and new digital ventures such as virtual banking and banking as-a-service, will be cloud-based by 2025, subject to regulatory approvals. The bank will also adopt a cloud-first principle for all new software developments and major enhancements.

As technology reshapes the banking industry, Standard Chartered recognizes that a cloud-first strategy is critical to the bank’s ambition to make banking simpler, faster and more convenient. By being digital-first, the bank will be able to meet the demand for seamless banking virtually anytime, anywhere, and make banking more accessible to people across its network.

Michael Gorriz, Group Chief Information Officer of Standard Chartered, said, “Cloud is a cornerstone of Standard Chartered’s strategy to meet the present and future banking needs of our clients. Cloud providers have invested massively in the reliability and automation of infrastructure and platforms. Using cloud services improves our ability to be agile and innovative, while increasing our operational efficiency and resilience. As disruption in the financial industry continues, we can focus on client benefits by deploying our solutions quicker and allowing for faster integration of new business models and partners. To realize our digital ambitions, Standard Chartered has chosen Microsoft as a strategic partner and this partnership marks a major milestone for the bank in adopting a cloud-first approach.”

Bhupendra Warathe, Chief Technology Officer, Cloud Transformation at Standard Chartered, added that “The pandemic has shone a spotlight on the need for businesses and banks to be resilient from a risk mitigation, cost and security perspective. With the increasing trend of an always-on digital economy, commercial and consumer clients are looking for applications and services that empower them to do online banking from anywhere, flexibly and efficiently. The speed and scale of continuous innovation offered by Azure allows us to innovate with the latest AI services to meet evolving client needs. We can pilot new apps in one market and scale them rapidly across others. This is especially important for a bank with a footprint as broad and diverse as ours.”

Standard Chartered will adopt Microsoft Azure as a preferred cloud platform to meet the bank’s need for resilient data centers and cloud services and addressing customers’ security, privacy and compliance requirements across the bank’s global footprint.

The first set of capabilities to move to Microsoft Azure will be Standard Chartered’s trade finance systems, allowing for seamless cross-border trade for the bank’s corporate and institutional clients.

The partnership will also advance the bank’s digital workplace transformation with Microsoft 365 and Microsoft Teams providing modern productivity and collaboration tools to Standard Chartered’s 84,000 employees across its 60 markets.

Co-innovating the future of banking

Standard Chartered will also use Microsoft Azure artificial intelligence (AI) and data analytics capabilities to enhance and automate banking processes as well as deliver hyper personalization of its client products and experiences. Co-innovation in open banking application programming interface (API) and Internet-of-Things-based, real-time payments will also help the bank unlock new banking experiences for clients.

Bill Borden, Corporate Vice President of Worldwide Financial Services at Microsoft said, “Cloud computing is an enabler for financial institutions to modernize their infrastructure and systems, to gain the agility they need to respond to competitive pressures, regulatory environments and customer demand. We are committed to helping Standard Chartered Bank in its ongoing digital transformation journey as it strives to address evolving customer needs and build the next generation of banking experiences.”

Addressing the social needs of communities in the emerging markets

Standard Chartered strives to understand the evolving needs of its communities and be an enabler for change. As a part of the strategic partnership, the bank and Microsoft will explore sustainable finance and business initiatives to expand sustainability across the industry.

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Banking

What does the future hold for accessing earnings? Introducing the world’s first Earnings on Demand payment and debit card

What does the future hold for accessing earnings? Introducing the world’s first Earnings on Demand payment and debit card 4

By James Herbert, CEO & founder, Hastee

Let’s begin by looking at how our brains are wired. Think about the hunter-gatherer mindset: when we expend effort, we expect an immediate reward.

It’s therefore no surprise that over time, different areas in society have adapted to our nature as humans. Almost everything we want, we can get on-demand. Whether it’s instantly streaming movies on Netflix, online shopping from Amazon, or fast-food delivery from the likes of Just Eat. And, because of such technological innovations our expectations have accelerated when it comes to the pace of delivery. This isn’t individual to us as consumers in our day-to-day lives, it’s also reflected in the workplace. We ultimately want work to work for us.

Part of this of course comes down to accessing wages. Workers should be able to access a portion of their earned wages whenever they need it, in advance of the monthly pay cycle – whether to help during challenging times or in day-to-day life. We solved this solutionBut, to take this up a level, ready for the future, we introduced the world’s first Earnings on Demand contactless debit card, powered by Visa – giving users access to their accrued earnings in real-time, with the card’s balance dynamically increasing every day they work.

So what is the card, and how will it change how we access earnings in the future?

The basis is very much the concept of Earnings on Demand. At university I set up a company called Brightsparks to connect students with work opportunities so they could earn money. Yet I noticed a common trend. With students often having to wait for the monthly pay cycle to get their earnings, many were having to turn down work simply because they couldn’t afford the travel day-by-day. It became very apparent that not having £20 today could stop them earning £200 tomorrow.

It struck me that payday itself doesn’t have to be a rigid construct that people have to wait for. But this isn’t specific to students. Liquidity is a widespread issue faced by people in all industries and of all ages, and according to our most recent Workplace Wellbeing Study, 82 per cent of people turn to high-cost methods of financing to tide them over when needed.

The Hastee Card effectively makes wages directly accessible: it simply lets people spend a portion of  what they’ve already earned.

Some people might wonder why they’d want to step away from the standard monthly pay cycle. But consider this: the monthly payroll (via a cheque) only came about in the 1960s as an Act of Parliament. Before this, most people were paid weekly in cash. The first major firm that shifted to monthly payments did it for cost-cutting. It worked for the employer more than the employee. In fact, that firm’s employees had rejected their employer’s change of payment type when it was first trialled a decade before (look up ‘Pye Radio’). So the way that workers and organisations interact around pay is not set in stone – it changes as technology and society shifts.

The way we perceive and use money keeps evolving. Apple Pay, Monzo, and PayPal have completely changed the way payments can happen, yet payroll still remains largely unchanged. It’s only a matter of time before disruption becomes more widespread.

Looking at it from the employer side, it has its benefits too. Before the climate changed, businesses were accommodating enhanced workplace benefits such as no-desk policies, flexible or remote working. In all cases by businesses offering more, they tend to see a more engaged, happier and less financially stressed workforce – leading to increased productivity.

Earnings on Demand is ultimately a perk that presents an ethical alternative to high-cost credit options such as payday loans, credit cards and overdrafts. And existing solutions offer zero impact on payroll processes, zero impact on the cashflow of the business and are designed for quick, simple integration.

The Hastee Card is an evolution of this all – preparing for the future. It builds upon and enhances the user experience by reducing friction and offering immediate spending power as well as a path to greater benefits such as cashback and rewards in the not-to-distant future.

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Banking

Going branchless: How banks can keep customers coming through the virtual doors 

Going branchless: How banks can keep customers coming through the virtual doors  5

By Richard Kelsey, Head of Software Sales at Backbase

Though you might be familiar with the popular seaside town of Newquay, you may not be familiar with its historic financial district aptly named, Bank Street. Dozens of banks and building societies have dominated this area since the late 1800s. However, the street hit the headlines recently as, 120 years after the first bank opened its doors, the last bank closed them.

This is not new. Bank closures have been part of the news agenda for years, and now, COVID-19 has further accelerated the physical turning into the digital. Across the globe, banks have had to close or limit the operating hours of their in-person locations, forcing banks to digitise at speed. Keeping the pipeline of digital sales flowing for new clients, increasing digital product origination and facilitating those cross-sell journeys to customers is key to survival.

Digital take up

Delivering seamless digital customer journeys was already a fast-growing priority for banking and wealth management organizations pre-pandemic. Research shows that 38% of customers stated UX as the most important factor when choosing a digital bank. In response, banks have been investing in digital technology and collaborating with third-party providers as they strive to offer a superior customer experience and stay competitive. But the global lockdowns – which have restricted people to banking digitally – have turbocharged these trends. Growing demand for digital onboarding, and digitized services to support the ongoing customer journey, must be matched by effective capabilities though.

Plugging the leaks

Conversion leakage is a particular problem during the digital client acquisition process. With branches shuttered during the coronavirus lockdowns, and subsequent openings and customer footfall likely to be severely limited for the foreseeable future, this leakage presents a major, and costly, challenge as institutions seek to convert digital sales and boost their return on investment.

The key is understanding why leakage happens in the first place and time and time again, there are three main trends that cause the most problems:

  1. Switching from a customer’s current provider is too difficult (for example, in transferring bill payments and direct debits).
  2. The digital process is too cumbersome (particularly where existing offline processes are simply put online).
  3. Customers lack human touchpoints and advice when they need it (especially for more complex products).

Combating these levels of leakage requires firms to take an outside-in approach, to see the process from the customer’s perspective. From this viewpoint, they can design a more customer-friendly experience that streamlines the job at hand.

One way to simplify the acquisition journey is to incorporate human/AI advisor interventions at points of friction, where customers may become stuck. Another is to adopt retargeting strategies that address customers who abandon the application process partway – for example, by storing their details in a CRM system and sending them notifications to complete the application, or referring them to an outbound call centre employee who can pick up the process by phone. Such approaches can boost completion rates by 40%, delivering substantial benefits to the bank.

Stronger digital growth

Banks’ return on tangible equity has plateaued globally at approximately 10.5% over the past decade, and the lower-for-longer interest rate environment will add to the pressure. Addressing cost-income ratios has become a matter of urgency.

Firms now face a strategic inflection point. Continuing with old business-as-usual practices will leave institutions struggling to attract new (especially younger) clients, while grappling with an exodus of existing customers and an overburdened cost base. But by digitising processes to enhance the client experience, banks and other financial institutions can increase their revenues and reduce costs, and have a loyal customer base who don’t feel the impact of the branchless bank.

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