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DON’T BECOME THE YAHOO! OF BANKING

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DON’T BECOME THE YAHOO! OF BANKING

By Lee Bolger, Account Director, Financial Services at OpenMarket

Lee Bolger

Lee Bolger

Yahoo!, Nokia and MySpace. All were once on top of their game and could seemingly do no wrong. All have suffered quite spectacular changes of fortune, victims of believing their own hype and not innovating quickly or readily enough.

Now you might say these examples are technology companies but as the mantra goes: today, every company is a technology company. Banks might consider themselves bullet proof institutions but that thinking is at best naïve, at worst negligent.

Mobile has changed the rules of the game

It is well and truly the age of mobile; there isn’t a part of our personal or professional lives it hasn’t touched. Banking is no exception. According to a report by the British Banker Association, UK customers had downloaded banking apps 22.9 million times by the end of March 2015 – a rise of 8.2 million in just one year. Meanwhile, in-branch banking transactions decreased year-on-year by 6% in 2014.

These facts are illustrative of what we as consumers value today: convenience, choice and control are all key deciding factors when we choose where to bank or shop. The greater reliance on apps and the disconnect from the local branch have completely reshaped the dynamic between banks and their customers.

An app though, is barely even table stakes today. It’s certainly a necessary tool but faced with Fintech innovators like Transferwise, a lot more needs to be done to prove that banks understand their customers and their needs. Here are three ways in which banks can prevent themselves going the way of Yahoo!

  1. Know your customers and how they will want to bank in the future

‘Know your customer’ has become almost a cliché in an age of customer-centricity but too often this knowledge of a customer doesn’t go far enough. Businesses need to know more than what their customers want today; they need to have one eye on the future. One of the biggest and most common mistakes made is to assume that once you have a winning formula that will still be the recipe for success in one, two or five years from now. It won’t.  Just ask MySpace. Financial institutions need to listen carefully to trends and patterns both inside and outside the industry to understand what customers will want in the future and make sure they prepare for that.

A recent infographic by OpenMarket and research and advisory firm Javelin, revealed that the two most important customer segments in the US that demonstrate how Americans will bank, pay, shop, save and invest in the future are demanding, risk-taking and have a mobile-first mindset. Both Moneyhawks® and Emergents are seen as tech-savvy, and keen to interact with financial institutions via mobile devices. This points to a technologically adept customer base, likely to change quickly. It’s clear that the mobile banking strategies of today won’t work tomorrow. New technologies, changing expectations and evolving financial needs will call for new approaches.

  1. ‘Mobile first’ doesn’t mean just mobile

As I said before, we live in the age of mobile. Consumers want fast, safe and convenient platforms which allow them to bank easily and on their own terms. They also want to stay connected with their accounts and assets, and be updated with sensitive information accurately and in real time. Mobile certainly fits the bill. However, a common misconception is that, as new means of communication constantly change the rules of the game, they render old channels obsolete.

But it isn’t a case of putting all your eggs in one basket. Each channel has its strengths and weaknesses making them well suited to different tasks. With 90% of text messages being read within three minutes of receipt, SMS is a powerful tool when it comes to keeping a continuous handle on finances. It can support everything from making payments to alerts around potentially fraudulent transactions and anything in between.

Phone, on the other hand, can be important when it comes to resolving complex problems with the customer care department or discussing financial solutions with an expert. Email is cost effective and can provide less critical or sensitive updates, but 80% goes unread. Twitter, IM and app activity is instant, but only reaches a portion of consumers. Financial institutions need to get the right mix; different tools, for different tasks.

  1. Expect change and embrace it

In a fast-paced financial and digital landscape the only certainty is change. This means that financial institutions need to be agile enough to respond to these changes quickly, which is admittedly difficult for such large businesses. Nonetheless, as mobile and consumption habits change, banks will have to embrace the new banking culture. Hyperabandonment is a reality and  people will readily switch banks if they believe they can get a better service elsewhere. Instead of sticking to the status quo out of fear of losing customers they should build strategies around disruption and offer great customer engagement.

By offering personalised communications channels that cover present needs and agile enough to be able to adopt to future needs, financial institutions can engage with customers with the right message, at the right times and on the right channel. It is important to remember that, regardless of how the demographics and habits change, customers will always value great experiences.

Banking

Why ID verification is no longer a barrier to global growth in banking

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Why ID verification is no longer a barrier to global growth in banking 1

By Barley Laing, UK Managing Director at Melissa

Issues related to effective identity (ID) verification have restricted the global growth of both large banks and smaller challenger fintechs. With its plethora of internationally recognised IDs and verifiable private addresses, the western world is far different from much of the rest of the world, where this type of information does not exist. For example, many people in Africa and Asia lack recognised addresses. This anomaly prevents financial institutions from carrying out vital ID checks as they normally would, meaning they risk missing out on possible expansion into new and often burgeoning markets.

Proliferation of mobile

Smartphone usage is increasing in all corners of the world. Africa is no exception as the continent is  set to see another 300 million new mobile internet subscribers in the next few years. This rise offers an opportunity to financial services organisations based in the west who have been concerned about the ID verification process in countries where ID, as they know it, can be hard to obtain.

While there’s no magic bullet approach to ID verification in these countries, it’s essential to use all the sources of information the mobile device provides to inform the identity of prospective and existing customers. For example, mobile telephone numbers offer a form of digital identity as people rarely change them. These numbers can be used for dual stage verification, such as an SMS sent to the registered user’s mobile number with a unique code to complete the login to a secure website or transfer funds.

Technology is driving secure customer onboarding and ID verification via mobile. Today, prospective customers can use a merchant’s app on their smartphone to scan their identity documents – such as a driver’s licence. The scan can extract the prospect’s data from the Machine Readable Zone (MRZ), saving time while securing the correct data electronically for the financial institution. Checks can then be carried out in real time to verify the document.

The IP address of the mobile device can play a vital role in fraud prevention. It’s possible to match the location of the phone’s IP address with that of the registered owner – where they are known to live or work. If this information matches up, it’s likely the registered user is using the phone. However, suppose the device’s registered owner is based in a country different from the information provided by the phone’s current IP address. In that case, there could be fraudulent activity taking place.

But it’s not just mobile; other new technologies play significant roles in the ID process.

  • Biometrics

Biometrics, which are human physical and behavioural characteristics that can be used to digitally identify a person, are becoming a vital part of the ID verification process. Once a customer has passed the ID checks at the onboarding stage, biometrics – which can operate across all devices – may help confirm the customer’s identity with facial comparison technology. However, basic biometric services can be hackable. For example, fraudsters could obtain the photo of a customer that might enable them to gain access to that person’s account. That is why it is crucial for organisations to use a biometric algorithm that checks for eye movement as part of their ID verification process. This ensures they engage with a real live person, not a static image or avatar, to prevent fraud. Just as important is how biometrics quickly and straightforwardly enable customers to access their account or service without responding to time-consuming security questions or remembering various passwords, thereby shaping a positive experience.

  • Real-time access powers real-time decision making

When onboarding a new customer anywhere in the world, be sure to source a global dataset of billions of records. For real-time ID verification, fraud prevention, and data accuracy purposes, it should allow you to perform sufficient cross checks of the contact information provided by the prospective customers – their name, telephone number, email address, or home address. This dataset must leverage government agency, credit agency, and utility records, where possible, and access politically exposed person (PEP) watch lists.

  • Social media tells a story

Don’t forget that social media such as Facebook and Instagram provide a wealth of knowledge on those who use them. Accessing this data within the parameters of best practice data protection for ID verification purposes helps organisations identify users’ location and transactional behaviour to support the ID verification process and prevent fraud.

Evolving technology – mainly related to mobile – makes fast, accurate, and secure ID verification anywhere in the world a reality. By combining this technology with access to accurate contact data from billions of global consumers in real time, the door is open for forward-thinking financial institutions to move into new global markets and drive strong growth securely.

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Banking

Bank of Idaho Selects Teslar Software to Enhance Customer Service

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Bank of Idaho Selects Teslar Software to Enhance Customer Service 2

Partnership enables bank to spend more time with borrowers, better meet their needs

Teslar Software, a provider of automated workflow and portfolio management tools designed to help community financial institutions thrive, announced today that Bank of Idaho selected its platform to improve productivity, freeing lenders to spend more time with their borrowers and improve service to the community.

Bank of Idaho is a business-focused bank that is one of the top SBA lenders in the state of Idaho. The bank first partnered with Teslar Software to leverage its automated workflow and portfolio management tools across its entire lending portfolio.  It selected Teslar’s portfolio management, loan review, construction management and exception tracking solutions.

During the implementation process, Teslar’s technology made an impression, specifically its automation capabilities, so the bank felt it would be beneficial to also leverage Teslar PPP Forgiveness to help its businesses more efficiently navigate the PPP forgiveness process.  Known as “the bank with a heart,” supporting community businesses with PPP loans has been a natural fit for the institution. And, Bank of Idaho hasn’t just helped its current customers; of the 1,200 applications processed, nearly 50% were new relationships.

“Teslar’s automated workflow and portfolio management tools are changing the trajectory of our organization,” said Jeff Newgard, CEO and president of Bank of Idaho. “The streamlined, modern processes are improving our customer experiences and allowing us to build stronger relationships. We’re building a frictionless banking experience that can help businesses in our community get through this difficult time and grow with our support and attention.”

Leveraging Teslar Software’s platform will enable the bank’s lenders to spend less time bogged down with traditional, manual processes and more time engaging with borrowers. They’ll also be able to increase visibility and communication across departments and can better serve customers and cross-sell.

“Bank of Idaho prides itself on taking a consultative approach to customer service,” said Joe Ehrhardt, CEO and founder of Teslar Software. “The bank truly cares about its customers and effectively helping them. Through partnering with us, they’ll be able operate more productively and empower their bankers to focus more on forming meaningful relationships with their customers, which is more important today than ever before.”

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Banking

Turkey’s Akbank Will Use FICO Optimization to Build Value in Credit Card Portfolio

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Turkey’s Akbank Will Use FICO Optimization to Build Value in Credit Card Portfolio 3

Akbank’s teams will also use FICO’s advanced decision optimization capabilities on a range of business problems

Highlights

  • After a competitive search, Akbank chose FICO to optimize its consumer credit card limit decisions for new and existing customers.
  • Akbank also plans to use the same optimization technologies in solving different problems such as setting loan amount and price, and customer credit limits
  • FICO is also working to futureproof the bank’s risk management growth by training in-house Akbank team on the optimization methodologies and action-effect modelling.
  • Akbank’s strategy is to establish an optimization centre of excellence.

Global analytics and decision management provider FICO is providing decision optimization software to manage the growing consumer credit card portfolio for one of the biggest Turkish retail banks, Akbank.

More information: https://www.fico.com/en/products/fico-decision-optimizer

FICO has a global pedigree in credit limit management optimization projects, and many of the world’s leading financial institutions use its optimization technology. Akbank will tap into this depth of experience to create an optimization centre of excellence. Akbank has tasked FICO to train an in-house team so they can build their own applications for other areas,  such as loan amount and pricing optimization, customer-based limit optimization and restructuring optimization.

FICO will configure and develop sophisticated “action-effect” models for Akbank’s retail lending team using FICO® Decision Optimizer to manage their initial credit limit assignment and the on-going limits for Akbank’s consumer credit card portfolio.  The action-effect models project customer responses to offers in order to determine the best offer for each customer.  These will be configured into the optimization framework, allowing the Akbank team to choose an operating point that meets their objectives and constraints.

Serhan Pak, Akbank’s senior vice president, Retail Lending, said: “We view optimization as a strategic tool for Akbank, as we build on excellence in credit analytics to reach our strategic goals. The robustness of FICO’s analytic technology and the fact that their optimization applications are in use worldwide made them a natural choice for us.”

Emre Unlusoy, regional director for Turkey & Balkans at FICO, said: “Akbank is aiming to improve profitability, market share and revenues while decreasing non-performing loans. This is an ideal use of optimization, which brings together analytics, decision logic, mathematical optimization and domain expertise.”

FICO® Decision Optimizer enables business analysts to develop, assess and improve the decisions that drive customer interactions and business results. Users can test decision strategies for the optimal results that balance trade-offs between cost, risk and reward, by factoring in dynamic economic and market conditions.

Akbank’s mission is to be the leading bank that drives Turkey into the future. The bank has grown to over 750 branches and employs more than 12,000 people.

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