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How open APIs can improve the banking app customer experience

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How open APIs can improve the banking app customer experience

By Ashley Murdoch, CEO Corethree 

The incredible rate at which UK consumers are adopting smartphones is revealed in Deloitte’s recent Global Mobile Consumer Survey, which shows market penetration growing from 52 percent in 2012 to 87 percent in 2018. This increase in uptake reflects how highly users value the convenience of mobile digital platforms and mobile devices’ ability to offer, through apps, so much more than just communications services.

Android is the most used mobile OS in the world, and the average number of Android apps on a smartphone is 35.But why so many? After all, it’s the ability to access services right at your fingertips, at a time and place convenient to you that is important. If only one app could provide access to everything a consumer needs, then why bother downloading multiple apps? In China they have exactly this – an ‘app for everything’ called WeChat. Originally a simple messaging app, as different types of digital distribution channels were integrated through third-party application programming interfaces (APIs), it grew into a super-app that today is used by over one billion users to order food, book a doctor’s appointment, hail a taxi, find a date and much more.

Open banking-open APIs

Over the last few years we have heard a lot about open banking, which is designed to bring more competition and innovation to financial services. Within open banking, open APIs make it possible for financial services-themed integrations and features to be offered as part of mobile banking apps. But why stop there? Mobile, as a direct channel to customers, presents a fantastic opportunity for up- and cross-selling consumer-lifestyle products and services that are integrated into the mobile app.

A great European example is Tinkoff Bank in Russia, which is enabling its 8 million customers to access a wide range of consumer-lifestyle services, in addition to its financial ones, via its mobile app and web interface. From buying theatre tickets to restaurant reservations and more, Tinkoff customers can also receive promotional bonuses and loyalty points, all of which help build the bank’s reputation for being more than a traditional, but limited, financial institution.It’s important to understand that it isn’t Tinkoff that provides the additional lifestyle services. Instead, it is third party businesses that integrate their products into the Tinkoff mobile app using open APIs, resulting in a broader and more consumer-friendly user experience and, crucially, additional revenue streams for the bank.

Data – the underlying asset

When offering products and services, whether they are lifestyle-oriented or financial, knowing the preferences and behaviour choices of the consumer being targeted means that all promotions will be relevant and timely, which significantly improves the chances of frequentand positive customer engagement.The ability to offer tailored,personalised promotions is only possible through the intelligent use and analysis of data drawn from mobile app interactions. It is data that provides the user insights that can transform a single-service banking app into a valuable data-driven marketing communications channel. Imagine a customer checking their bank balance on your app, noticing they have a bit extra than expected and so when a message is received offering a VIP shopping session at their favourite high street store and a discount from the transport company they will need to travel with, it feels as if all this has been put together especially for them – and it has.

Partner up

As the September 2019 deadline for being ready to implement open APIs in the UK approaches, what’s the best strategy for banks that are ready to expand the retail scope of their mobile app beyond financial products to take advantage of the multi-service app opportunity? One approach would be to partner with an experienced and proven third party mobile service provider which already uses open APIs,so you can start off by doing some integration testing and marketing-promotion trials. Even better if your chosen partner already provides mobile services for businesses that you would like to partner with. Mobile ticketing providers for transport operators or events and experience companies are great examples, and are already changing the way consumers interact with brands thanks to robust digital platforms and data analysis that ensure your mobile app promotions are always relevant,and therefore valuable, to your customers.

Banking

ECB stays put but warns about surge in infections

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ECB stays put but warns about surge in infections 1

By Balazs Koranyi and Francesco Canepa

FRANKFURT (Reuters) – The European Central Bank warned on Thursday that a new surge in COVID-19 infections poses risks to the euro zone’s recovery and reaffirmed its pledge to keep borrowing costs low to help the economy through the pandemic.

Having extended stimulus well into next year with a massive support package in December, ECB policymakers kept policy unchanged on Thursday, keen to let governments take over the task of keeping the euro zone economy afloat until normal business activity can resume.

But they warned about a new rise in infections and the ensuing restrictions to economic activity, saying they were prepared to provide even more support to the economy if needed.

“The renewed surge in coronavirus (COVID-19) infections and the restrictive and prolonged containment measures imposed in many euro area countries are disrupting economic activity,” ECB President Christine Lagarde said in her opening statement.

Fresh lockdowns, a slow start to vaccinations across the 19 countries that use the euro, and the currency’s strength will increase headwinds for exporters, challenging the ECB’s forecasts of a robust recovery starting in the second quarter.

Lagarde saluted the start of vaccinations as “an important milestone” despite “some difficulty” and said the latest data was still in line with the ECB’s forecasts.

She conceded that the strong euro, which hit a 2-1/2 year high against the dollar earlier this month, was putting a dampener on inflation and reaffirmed that the ECB would continue to monitor the exchange rate.

The euro has dropped 1% on a trade-weighted basis since the start of the year, but is up nearly 7% over the last 12 months. Against the U.S. dollar, that number rises to over 10%.

MORE STIMULUS?

Opening the door for more stimulus if needed, Lagarde confirmed the ECB would continue buying bonds until “it judges that the coronavirus crisis phase is over”.

Lagarde also kept a closely watched reference to “downside” risks facing the euro zone economy, which has been a reliable indicator that the ECB saw policy easing as more likely than tightening.

But she signalled those risks were less acute, in part thanks to the recent Brexit deal.

“The news about the prospects for the global economy, the agreement on future EU-UK relations and the start of vaccination campaigns is encouraging,” Lagarde said. “But the ongoing pandemic and its implications for economic and financial conditions continue to be sources of downside risk.”

Lagarde conceded that the immediate future was challenging but argued that should not impact the longer term.

“Once the impact of the pandemic fades, a recovery in demand, supported by accommodative fiscal and monetary policies, will put upward pressure on inflation over the medium term,” Lagarde said.

Benign market indicators support Lagarde’s argument. Stocks are rising, interest rates are steady and government borrowing costs are trending lower, despite some political drama in Italy.

There is also around 1 trillion euros of untapped funds in the Pandemic Emergency Purchase Programme (PEPP) to back up her pledge to keep borrowing costs at record lows.

The ECB has indicated it may not even need it to use it all.

“If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the PEPP, the envelope need not be used in full,” Lagarde said.

Recent economic history also favours the ECB. When most of the economy reopened last summer, activity rebounded more quickly than expected, indicating that firms were more resilient than had been feared.

Uncomfortably low inflation is set to remain a thorn in the ECB’s side for years to come, however, even if surging oil demand helps put upward pressure on prices in 2021.

With Thursday’s decision, the ECB’s benchmark deposit rate remained at minus 0.5% while the overall quota for bond purchases under PEPP was maintained at 1.85 trillion euros.

(Editing by Catherine Evans)

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Bank of Japan lifts next year’s growth forecast, saves ammunition as virus risks linger

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Bank of Japan lifts next year's growth forecast, saves ammunition as virus risks linger 2

By Leika Kihara and Tetsushi Kajimoto

TOKYO (Reuters) – The Bank of Japan kept monetary policy steady on Thursday and upgraded its economic forecast for next fiscal year, but warned of escalating risks to the outlook as new coronavirus emergency measures threatened to derail a fragile recovery.

BOJ Governor Haruhiko Kuroda said the board also discussed the bank’s review of its policy tools due in March, though dropped few hints on what the outcome could be.

“Our review won’t focus just on addressing the side-effects of our policy. We need to make it more effective and agile,” Kuroda told a news conference.

As widely expected, the BOJ maintained its targets under yield curve control (YCC) at -0.1% for short-term interest rates and around 0% for 10-year bond yields.

In fresh quarterly projections, the BOJ upgraded next fiscal year’s growth forecast to a 3.9% expansion from a 3.6% gain seen three months ago based on hopes the government’s huge spending package will soften the blow from the pandemic.

But it offered a bleaker view on consumption, warning that services spending will remain under “strong downward pressure” due to fresh state of emergency measures taken this month.

“Japan’s economy is picking up as a trend,” the BOJ said in the report, offering a slightly more nuanced view than last month when it said growth was “picking up.”

While Kuroda reiterated the BOJ’s readiness to ramp up stimulus further, he voiced hope robust exports and expected roll-outs of vaccines will brighten prospects for a recovery.

“I don’t think the risk of Japan sliding back into deflation is high,” he said, signalling the BOJ has offered sufficient stimulus for now to ease the blow from COVID-19.

NO EXIT EYED

Many analysts had expected the BOJ to hold fire ahead of a policy review in March, which aims to make its tools sustainable as Japan braces for a prolonged battle with COVID-19.

Sources have told Reuters the BOJ will discuss ways to scale back its massive purchases of exchange-traded funds (ETF) and loosen its grip on YCC to breathe life back into markets numbed by years of heavy-handed intervention.

Kuroda said the BOJ may look at such options at the review, but stressed a decision will depend on the findings of its scrutiny into the effects and costs of YCC.

He also made clear any steps the BOJ would take will not lead to a withdrawal of stimulus.

“It’s too early to exit from our massive monetary easing programme at this point,” Kuroda said. “Western economies have been deploying monetary easing steps for a decade, and none of them are mulling an exit now.”

(Reporting by Leika Kihara and Tetsushi Kajimoto; additional reporting by Kaori Kaneko; Editing by Simon Cameron-Moore & Shri Navaratnam)

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World Bank, IMF agree to hold April meetings online due to COVID-19 risks

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World Bank, IMF agree to hold April meetings online due to COVID-19 risks 3

WASHINGTON (Reuters) – The International Monetary Fund and the World Bank have agreed to hold their spring meetings, planned for April 5-11, online instead of in person due to continued concerns about the coronavirus pandemic, they said in joint statement.

The meetings usually bring some 10,000 government officials, journalists, business people and civil society representatives from across the world to a tightly-packed two-block area of Washington that houses their headquarters.

This will be the third of the institutions’ semiannual meetings to be held virtually due to the pandemic.

(Reporting by Andrea Shalal; Editing by Chris Rees

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