The banking and financial services industry has changed dramatically over the years. About half a century ago, consumers regularly walked into a bank branch to withdraw or transfer funds, seek information on financial products, or get their issues resolved. The evolution of ATM brought about the first transformation in the banking industry, making 24-hr financial transactions possible. The arrival of the internet led to further developments in the industry, opening up multiple channels of engagement between consumers and their banks. At the same time, the physical aspect of banking started losing ground, with banks such Santander slashing their branch network by almost a fifth!
According to data, customers are less likely to set foot in a branch, preferring to use their smartphone or computer instead. Santander reported a 23% decrease in branch transactions and a 99% increase in digital transactions over three years before deciding to cut down on physical branches and putting more focus on digital.
The Age of the ‘Amazon’
Big players like Amazon have made instant gratification the norm for customers, who expect the same level of service from all their service providers. Therefore, to remain competitive, the banking industry must rapidly embrace the latest technologies to create a frictionless, omnichannel experience for their customers. We are already experiencing one of the most useful customer communication tool, Chatbot.
Consider payments, one of the most basic applications of digital technology in the financial industry.
The transformation in this field was spearheaded by the evolution of physical instruments like credit cards and debit cards. However, physical cards are gradually losing favor, as most people have now moved on to mobile wallets and contactless payment options.
The ‘Data’ Game
According to the PwC Global FinTech Survey 2017, the financial industry is heavily investing in data analytics to meet the evolving needs of its customers. The Worldwide Semiannual Big Data and Analytics Spending Guide from International Data Corporation (IDC) indicates a CAGR of 13.2% in big data analytics revenue between 2018-2022. By 2022, IDC expects the worldwide BDA revenue to be $274.3 billion. According to the report, the banking industry is one of the largest investors in big data and analytics solutions.
It’s clear that the banking industry has recognized the importance of the customer data stored on its servers. And, it is willing to invest in technology to exploit this data for personalized marketing and strengthening the security of their systems.
Know Your Customers Better
The financial industry sits on a treasure trove of data collected across various touchpoints, both physical and digital, over the years. And, just like various other industries, banks can use this data to know their customers better.
Take the example of American Express; with a “database of over 100 million credit cards globally, that account for over $1 trillion in charge volume every year.” The banking giant decided to make use of this data and created a sophisticated predictive model to prevent customer churn. By analyzing historical transactions and 115 other variables to forecast potential churn, Amex can identify accounts that are most likely to close within the next few months and take preventive action to keep these customers from leaving.
Big Data is also useful for personalized marketing or targeting customers based on their buying habits. Here, banking and other financial firms can collect data from the social media profiles of their customers and use sentiment analysis to understand their financial capacity and requirements before marketing suitable products to them.
Big Data and Automation
According to McKinsey, up to one-third of all the work in banks can be automated through technology, leading to reduced costs and elimination of human error to a large extent. JP Morgan Chase & Co. have built a data-based automation platform, also known as COIN. Employing a powerful machine learning algorithm, powered by a private cloud network, JP Morgan is using this platform to review complicated documents. Reportedly, the platform only takes a few seconds to complete regular tasks that previously required about 360,000 hours of work, without any errors.
Various banks rely on big data and AI to identify fraud and prevent any potential scams. For example, banks can process large amounts of data to identify behavior patterns to reveal any potential risks among their own employees. They can also use data analytics to pinpoint fraudulent behavior and reduce the financial risks associated with digital transactions.
Immersive Technologies in Banking
Nowadays, customers no longer visit banks. They prefer to conduct most financial transactions from the comfort of their homes. However, certain situations demand expert help, or the customers may find it too tedious to fill out lengthy forms, such as claim forms, on their own. In such cases, advanced technologies such as co-browsing and screen sharing can help by enabling real-time connections.
Customers and agents can connect online through secure co-browsing sessions, where the agents can view the current resources of the customers while the customers can hide their confidential data like credit card details and other stuff.
But this is just the tip of the iceberg.
With 5G on its way, immersive technologies are becoming commonplace, and adoption of innovative technologies, such as augmented reality (AR) by the financial sector will lead to quick service and accuracy than ever before.
But the use of AR in banking is not new. Many banks and financial institutions have leveraged the power of augmented reality to curate new banking experiences for their clients.
In 2016, Mastercard partnered with Wearality to create an experience wherein users could buy golf clothes and accessories virtually, without doing anything in the real world!
In Oman, the National Bank of Oman offers an AR-enabled app to help its customers locate their nearest branch or ATM. The app also enables customers to uncover deals and offers as they walk around Oman, and uses their smartphone camera to combine real-life surroundings with an AR projection.
In India, Axis Bank launched the Near Me app, which enables users to search for nearby ATMs, finance-approved properties, and even dining offers in their areas!
But customers still want more.
As we already know, customers are no longer interested in visiting brick and mortar establishments for banking. Yet, branch banking is far from obsolete. According to research, “in areas featuring a branch, asset holdings are 2.5 times higher than unbranched areas.”
Yet, the majority of banks experience 90% of their interactions digitally. A logical step in the right direction could be the use of augmented reality and virtual reality to create virtual and hybrid branches for autonomous at-home banking.
Such technology will also be beneficial in offering high-quality services to clients in remote areas that lack qualified banking professionals.
Artificial Intelligence and Banking
Modern-day customers prefer to interact with their bank online or via mobile. However, most of these conversations are one-way. The customers are provided with a finite set of options that may or may not solve their problem.
So, if a customer wants to do something other than checking their balance or transferring funds or obtaining their transaction history, the chances are that he or she would have to contact the helpdesk for information. However, as contact centers are often overburdened, the customer may have to wait for a resolution. Often, call center agents may also transfer calls to other departments, leading to frustration in customers.
Enter AI, or more specifically, AI-enabled intelligent chatbots that communicate with customers through voice and text-based interfaces, enabling two-way digital communications.
In case you are wondering how an AI-enabled chatbot is different from a regular texting app, the answer lies in NLP that empowers a chatbot to comprehend natural language statements and respond to them intelligently.
Generally, chatbots in the financial sector can answer questions relating to the expenditure of certain items, the location of nearby ATMs or branches, enable instant transfers, suggest well-performing hedge funds, and even match customers with appropriate insurance products like the chatbot introduced by HDFC Life in India.
Take the example of Wells Fargo’s chatbot that uses AI to respond to natural language messages from users on Facebook Messenger. After registration, users can ask the chatbot questions such as how much they spent on food or travel the previous week, their most recent transactions, account balance, etc.
In addition to facilitating instant communication, chatbots save you money by enabling a high degree of automation in the customer services department. According to a study, 29% of customer service positions can be automated through chatbots, leading to $23 billion in savings for US businesses.
Chatbots can also be used to deliver pro-active suggestions to customers based on their transaction history or profile.
AI and Predictive Banking
Did you ever wish you owned a crystal ball that could give you a clear view of your finances?
With predictive banking, your wish may soon be granted.
Predictive banking is one of the most exciting trends in the financial industry. Today, banks finally have access to highly sophisticated technology to make use of the rich data in their coffers and give their customers tailored advice for the future.
With predictive analytics, banks can offer not only customer-specific financial advice but also make accurate customer risk assessments before approving loans and conduct behavior analysis to prevent frauds. Predictive analytics are also employed in the derivatives market to analyze the sentiments of different financial markets to make accurate predictions that help users make informed decisions.
Security Compliance in Digital Banking
Most banks are overhauling their traditional fraud detection systems with AI-based ones, as AI-enabled anomaly detection makes it easier and more cost-effective for banks to detect fraud.
In anomaly detection, the machine learning model is trained to sense the contents of banking transactions for standard patterns derived from historical data. Any deviations from this baseline behavior are notified to a human monitor who may accept or reject the alert. The behavior of the monitor further trains the model to understand whether the deviation was a fraud or an acceptable deviation.
Anomaly detection can also be used to analyze spending behavior, which allows the model to recognize any fraudulent shopping details. For example, a sizeable online transaction from a customer’s account that has a history of small purchases can be instantly recognized.
Banks may also employ predictive behavior analysis to identify potential threats amongst their own employees to prevent any scams or frauds.
In addition to payment frauds, banks are also privy to sensitive customer information or PII and must ensure data safety at any cost. Consequently, it is vital to employ secure e-forms for collecting user data that encode PII so that no other party can see the banking details. Developers can use differential privacy, which is “a mathematical approach that means AI models trained on user data can’t encode personally identifiable information.”
In the present times, every financial institution around the world is leveraging modern technologies such as cloud computing, data analytics, AI, machine learning, etc. to deliver customer-centric solutions. However, rapidly emerging technologies and evolving customer expectations mean that businesses in the banking and financial industry must continue innovating at break-neck speeds, lest they become obsolete.
In short, following trends is no longer going to work for financial institutions who wish to dominate the market. To truly capture the hearts and minds of their customers and secure their business, banks must tap into immersive technologies to create highly personalized customer experiences. They also need to make banking more convenient and intuitive by introducing two-way digital conversations and taking their services to customers’ homes through virtual and hybrid branches via augmented reality apps.
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The future of offshore banking
By Granville Turner, Director at Turner Little.
Despite its misconceptions, the popularity of offshore banking is growing. Not only is it a perfectly legal way of holding your money, but with the right professional advice, it is also reassuringly simple to open an account.
This ease-of-use is prompting many offshore banks to change their offering to compete and make overseas banking even more accessible. No longer is it limited to just the super-rich.
So, what does the future look like for offshore banks? We’ve compiled a list of the top fundamental changes happening in the realm of offshore banking.
Catering to niche markets is the future
Rather than managing account holder’s money in general, offshore banks are tapping into how they can best serve different demographics. Essentially, it is about taking a more bespoke approach to managing money at various stages of life.
But catering to a variety of markets doesn’t just stop there. Many overseas banks are now accepting crypto as a form of currency to appeal to digital, tech-savvy generations.
Cryptocurrency is also attractive for those who see the security benefits it can offer.
Paper chains are fast becoming a thing of the past
As banks move away from paper in favour of digital, security is on everyone’s minds. This is because information is an important asset to many businesses, so protecting it is vital. As such, banks are securing data with the most vigorous encryption security standards.
For account holders, this means digital bank transfers and communication become less of a risk and the smarter thing to do. Paper chains are fast becoming a thing of the past.
Instant access, day or night
In today’s digital world, you don’t need to travel overseas to open an offshore bank account; everything can be done online or over the phone. And like most UK standard current accounts, many offshore accounts now offer online and mobile banking features. So account holders can manage their offshore finances and investments while transferring funds with ease.
Offshore banks are following the same route of challenging onshore banks by going branchless. This offers substantial benefits for account holders, as branchless offshore banks don’t pass on as much overhead costs to the customer. Ultimately, this means customers can earn better interest rates and other returns on their investments.
Happy to help
At Turner Little, we work closely with offshore banks to provide you with quality service tailored to your needs. With over 20 years of international banking experience and specialist expert knowledge, we will assist you with your enquiries, no matter how complex. And every account we arrange comes with internet banking, card facilities and the ability to transact internationally.
Hong Kong’s First Multi-Cloud Challenger Bank Goes Live with Temenos
- WeLab Bank designed, built and launched using cloud-native Temenos Transact in less than 10 months
- WeLab offers next generational digital services for the 7.5m people in Hong Kong to access from their mobile phones
- Customers can open accounts remotely in just 5 minutes with bank reporting 10,000 account openings within 10 days of launch
Temenos (SIX: TEMN), the banking software company, today announced that WeLab Bank, Hong Kong’s first homegrown virtual bank, has publicly launched using cloud-native Temenos Transact to provide a range of next generation digital services for customers to enjoy 24/7 from their mobile phones. Designed, built and launched in less than 10 months, the fully digital bank has seen rapid take up with a reported 10,000 account openings within the first 10 days of launch.
WeLab Bank is powered by cloud agnostic Temenos Transact for core banking along with Temenos Analytics and Financial Crime Mitigation. Implemented on Amazon Web Services and Google Cloud, WeLab is the first multi cloud digital bank in Hong Kong. Operating on multiple clouds at the same time gives WeLab increased operational resilience and disaster recovery capability and is a regulatory requirement of the Hong Kong Monetary Authority for new digital banks. According to the Economist Intelligence Unit 2020 report for Temenos, 81% of global banking executives surveyed believe a multi-cloud strategy will become a regulatory prerequisite.
Developing a cost-effective and scalable core banking solution was paramount for WeLab. Temenos cloud native software is built for the digital age using API-first and DevOps principles and engineered to deploy in containers and microservices. This makes it easy for WeLab to scale for future business growth efficiently and eliminates the need to provision for peak processing volumes so that the bank only pays for its actual usage, yielding significant cost savings.
Critically, with NuoDB the solution delivers a cloud-agnostic, distributed relational database that enables WeLab to deploy an active-active on-demand database across multiple cloud providers with near zero downtime failover.
Temenos Transact is a preconfigured system and so requires very little coding and with Temenos model bank to address local practices and regulations, WeLab was able to bring its service to market faster and extend its innovation with more than 400 out-of-the-box APIs.
With Temenos, WeLab bank is set to transform banking in Hong Kong. In as fast as 5 minutes, customers can remotely open a WeLab Bank account with $0 monthly fees and start enjoying differentiated services such as time deposits with competitive rates, an interest-bearing deposit account with an instant virtual Debit Card, and real-time payments powered by Faster Payment System (FPS). Everything can be done on a mobile phone, simply and effortlessly.
Adrian Tse, CEO at WeLab Bank, commented: “WeLab Bank was born from an initiative to reimagine the banking experience for the 7.5 million people of Hong Kong. From the start, we knew this vision needed the most advanced cloud native technology and a partner that shared our vision for digital transformation. With Temenos we have efficiently built WeLab Bank from scratch, free from any legacies, with innovative features that proactively help customers to take control of their money and their financial journey.”
Max Chuard, Chief Executive Officer, Temenos, said: “Congratulations to WeLab Bank on the launch of their trailblazing new digital bank. Building and launching a licensed bank in such a rapid timeframe is a fantastic achievement and we are proud to have supported them in becoming the first multi-cloud digital bank in Hong Kong. Temenos cloud-native, cloud-agnostic strategy means we can satisfy the needs of the most innovative and ambitious neobanks like WeLab Bank to run on multiple cloud providers. We know this is just the beginning for WeLab and we are excited to be part of their story as they revolutionize banking for people in Hong Kong.”
Bob Walmsley, CEO of NuoDB said: “We are excited to be partnering with Temenos to help WeLab Bank achieve their aggressive launch timelines and deliver innovative banking services to its customers. We were inspired by the technical vision of WeLab and knew that executing an on-demand, multi-cloud strategy was a perfect fit for NuoDB. Our enterprise-class, distributed SQL database combined with Temenos’ cloud-native technology helps banks of all sizes around the globe migrate to the cloud to improve agility and reduce costs.”
The Bank is Where the Heart Is
By Nick Barnes, Practice Director, Financial Services & Customer Success at JRNI
When unexpected events occur, people turn to their banks to provide a sense of trust, security, and stability. They need to be available anywhere, anytime, and from any device. As it’s a business based on trust, one-on-one communication is key.
With the world still emerging from the COVID-19 crisis and endeavouring to avert a possible second wave, every country, state, and region has their own unique requirements. Plus, every customer or member has their own demands. Experts and pundits have discussed a new normal, but what’s normal for now involves keeping customers and employees safe while also providing the same sense of stability as before.
For banks, building societies and credit unions, the main concerns include how to maintain personal relationships amidst social distancing; how to be available at any time on any device; and how to provide a sense of calm and security amidst the chaos.
Adapt or fall behind
Customers are quickly learning which of their service providers are adapting best to this new world. Are financial services providers like banks and credit unions adapting, or falling behind?
Finances are a highly personal topic, and often, illogical or emotional. Will I have enough? Will it be available when I need it? It is always a hot topic of conversation, but especially during a pandemic when unemployment rates are rising, and the economic landscape is unsettled. In the past, a customer could walk into the bank, have a reassuring conversation with a representative and move on.
So, how can banks help their customers through tough financial times during the current crisis, when in-person communication is nearly impossible? One solution is to provide helpful, personalized customer service through digital channels.
While in-person assistance will remain important after COVID-19, customers are looking for assistance now. Banks are turning to remote video and voice appointments to boost customer satisfaction and meet customer expectations.
3 reasons to use remote appointments
1. To comply with social distancing
Our Modern Consumer Banking Report last year showed that when consumers visit branches, it’s primarily to talk face-to-face and ask questions/get help. Research from Bain reinforces this, and emphasizes that “many retail banking customers think it’s easier to purchase through a human channel, or prefer to speak with an employee before buying a product.”
Due to social distancing measures, branches cannot be customers’ primary way of managing their finances during this pandemic. However, this doesn’t mean that customers aren’t interested in personalized attention that can be made available via video and voice.
2. To meet new demand
Although spending habits may have changed, consumers are still making critical financial decisions during the COVID-19 pandemic.
Individuals: The financial effects of coronavirus are drastically different from one customer to the next. While some are counting down the days to receipt of their unemployment check, others may be taking advantage of low-interest rates to buy a house. Ultimately, banks and credit unions need to address each customer segment with a unique message and way of providing assistance.
Small business banking: Countless small businesses around the world have been forced to close their doors. Whether they’re needing loans, payment deferrals, or advice, small businesses are looking to their bank as a guide, and a comfort.
Investment management: A recession is upon us, and with that comes a new approach to investing. Financial advisors are fielding questions, providing recommendations, and staying up to date on the market. Beyond this, many are building entirely new strategies for their clients.
Regardless of customer type, it’s clear that each subset of customer needs help from their financial institution at this time.
3. To boost customer retention
Financial institutions cannot afford to lose customers during the pandemic, so customer retention is crucial. Great customer service boosts customer loyalty, and research from Bain shows that loyalty is key to retention:
- Customer loyalty increases revenue, and loyal customers are less likely to switch to a competing bank.
- Customers who are a bank’s “promoters” recommend the bank to others as much as six times more than “detractors.”
- A bank’s “promoters” spend one-quarter more than detractors on their primary credit card.
Ultimately, being able to connect with a customer in need using video or voice can give customers peace of mind and boost loyalty. Delivering personalized financial services without interruption is crucial.
Initial results from video banking show that consumers consider the service valuable. Phoenix Synergistics’ survey from December 2019 found that 17% of customers polled had used video chat through a website or app with their financial institution. Of those that had used video chat, 89% found video chat valuable.
Some suggestions for banks using remote video or voice appointments would be to: firstly ensure your solution is secure and doesn’t expose personal information outside of the conversation; secondly create a culture of consultation to alleviate outstanding fears; thirdly leverage appointment setting to allow customers to pre-schedule consultations and enquiries; finally include remote appointments as part of a wider suite of ‘touchless’ offerings.
The dos and don’ts for bank branches
Forty-three percent of banking customers have expressed their desire to change the way they bank due to the pandemic. As with retail and hospitality, several key customer segments have doubts about visiting physical locations and are transacting more remotely.
The challenge for banks is to make services available wherever customers want to bank – be it by phone, online, or in branch – and when it comes to any transaction, the key is to make customers feel cared for, heard, and secure.
With social distancing parameters in place along with other health and safety measures, there’s significant focus on the need to retool the branch experience. Here are a few suggestions as we move into that next stage of business and interaction:
DO: Have a plan.
Think about how customers will enter and exit each location. Plan for increased space between people in line, how to attend to at-risk customers, properly spaced lobbies, and waiting areas. Consider your employees and what they need in order to stay safe including break rooms with increased space between lounging areas, removal of shared snacks, availability of hand sanitizer and masks.
DO: Make sure you can effectively manage footfall.
Overcrowding will create fear and loss of trust. Make sure you have plenty of directional signage, crowd control measures, and staffing. Solutions including people counters, occupancy managers, and pre-booked appointments both allow for the throttling of traffic, and the ability to build in cleaning time.
DO: Hire the right team and staff adequately.
Being courteous and in control will be the most important ingredient to success. Have enough staff, you will need the extra hands to ensure that all staff is properly trained and ready to enforce new protocols.
Some customers will be understandably anxious going into branches, and some will want to feel that everything has returned to normal, so staff may need to be very firm and well-versed in a new operating style.
DO: Offer customers the ability to bank when and how they prefer.
We’re not suggesting that you remain open for 24 hours, but the goal is to make it easy for the customer. Adding the ability to set an appointment with a wealth manager or an advisor online will enable customers to bank from home, and will enable banks to provide the personalized service customers have come to expect.
Leverage online appointment confirmations to remind customers to have key documents available if they need them. Virtual solutions position the bank to serve as an advisor rather than just a financial institution.
DO: Demonstrate your commitment to a safe environment.
Use clear signage to convey the measures in place to ensure customer and employee safety. Make hand sanitizer or wipes available throughout the branch, and in all high-touch areas. Ensure cleaning supplies are visible, around doorways and near greeters to provide customers with an added sense of security. And make sure that employees are following every measure required of customers.
DON’T: Lose customer confidence.
If you are not prepared, it will show, and it will be very hard to gain back customer confidence once compromised. Social media will not be your friend. Forrester Research reports that 52% of US online adults prefer to buy from companies that demonstrate how they are protecting customers against the threats of COVID-19.
DON’T: Overcrowd or fill your branch to capacity.
Consumers are being trained to avoid crowds, so failure at the branch to comply could result in losing their business. Most physical locations are operating with fewer staff and accommodating 10 – 25% of the traffic once allowed. Keep in mind that you only have one opportunity to make a first impression on customers, and they’re looking to trust you have their best interests in mind.
You will need to expect the unexpected and having more hands-on deck will prove to be beneficial in the long run. Having the wrong staff, or those that don’t take the time to learn new operating procedures or feel comfortable telling that customer who won’t keep a mask on, may not be the best fit.
DON’T: Make it difficult for customers to do business with you.
Social distancing introduces a number of disruptions to the way you’ve traditionally done business. So limiting options to customers – providing no ability to bank online or via phone, not having a live customer service voice or chat option – is not going to help. In addition to making sure the services are available, it is imperative to communicate all options to customers.
DON’T: Assume someone else will do it.
Bank staff need to show that the branch is being tended to, cleaned between visitors, and before opening each day. It is important that staff jump in to help move customers safely through the branch, ensure their questions are answered and overall, take a proactive approach to service without assuming that a sign or another staff member will take care of it. Customers will come to the branch, but gaining their confidence is everything. Don’t lose it by not being prepared. It will be very hard to win it back.
With the constant threat new restrictions in response to COVID-19 outbreaks, banks will need to take a long view on how they enable the operational flexibility that will be needed to adapt to fast-changing conditions. As people prepare to live more risk-averse lives, banks will need to go the extra mile to ensure customers feel less wary about visiting in person whilst also offering a seamless experience for those customers who prefer to remain in the safety of their homes. Those that manage to do so will emerge from the crisis with a sustainable advantage over their competitors.
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