By Steve Morgan, Industry Lead for Financial Services EMEA, Pegasystems
This year, we’ve seen pressures mounting on the traditional banks: challengers have continued to creep in on their territory and the last effects of PPI and changing regulation has been an ongoing headache. On the other hand,the benefits of the latest AI technologies have been felt in myriad ways, and Open Banking has created a variety of new partnerships, to the benefit of both banks and consumers. We’ve come a long way over the last 12 months, so what can we expect to see in the sector as we head into 2020?
Bank branches get immersive
The growth of mobile banking is undeniable. A knock-on impact is the evolution of bank branches into education and financial advisory hubs. Yet, with limited staff, how will banks be able to guarantee that the required expertise to deliver these more complicated services will be available for the customer at their request? Consumers are used to banking on their schedule, so they won’t stand in line and wait anymore. As a result, financial institutions will seek to invest in technology that can facilitate this service offering virtually. For example, customers will be able to seamlessly book appointments online or have conversations via video conferencing facilities with the most appropriate member on staff, at a time convenient for them. Those banks that can do this well, should use this to their competitive advantage.
Micro advisory-focused branches become the norm
Which? recently reported that around a third of the UK’s bank branches have shut within the past five years alone, and the rate at which they are closing will not slow down. The banks that remain will start to concentrate on offering services that necessitate a face-to-face advisory service, mainly those associated with investment and lending advice. Consequently, throughout our cities we are likely to see a proliferation of specialised micro-branches. Included within these branches will be areas where customers can be educated on the latest offers and how best to use online banking tools etc. In addition, there will be private zones for advisory services and less frequently stations where declining volumes of basic transactions can be carried out.
Challengers find it hard to maintain market share
Simplicity is often cited as a USP for new challenger banks. But the unfortunate side effect is that their spread of financial products is somewhat restricted. While many have been able to build up their customer base using clever marketing campaigns, cool apps and excellent customer service, when it comes to retaining them, how can they keep these customers engaged while simultaneously maintaining their pipeline of new customers? In order to maintain their disruption, they will concentrate on refining customer experience and defining their USPs of the future, at the same time as broadening their assortment of products to drive growth of revenues.A significant barrier will be their limited balance sheet. Before they can offer shiny new products, they will need to build up their capital in order to have the ability to sell investment and lending services.
Restructure to thrive
To continue on their digital transformation journeys, banks are moving more of their infrastructure to the cloud and undertaking re-platforming projects. Furthermore, high customer expectations and burgeoning regulatory requirements are forcing them to consider in more detail their strategy for the best way to operate in the world of Open Banking. Over the next twelve months, banks will focus on being fully set up for three key technology areas: product, pricing and data. The effect of this will not be technological alone but will also inspire the restructuring of the business, as banks attempt to minimise organisational silos and establish how technology can be applied to facilitate new business opportunities as well as industry pressures.
So long to overseas operating centres
In the last 15 to 20 years, outsourcing has been viewed as a key lever to reduce your cost base. This was traditionally achieved by a combination of off or near shore cost savings and improved management and technology application. However, AI and machine learning have since arrived on the scene and banks are realising the power that these technologies bring. Often outsourcing would come first and the process and tech automation second. This should now flip for most banks. The result should be fewer customer operations staff and the ability to keep them closer to the customer. Some have already done this and even bringing operations back near or onshore. The benefits are multi-faceted: the elimination of friction effort and cost produced by management/colleague distance and time zone differences being a primary one. In 2020, enhanced AI, automation and next best actions will result in the further consolidation of customer operation centres worldwide.
Retail and commercial banks are grabbing the technology bull by the horns and making the most of the benefits that technologies such as AI have to offer. But we are only at the tip of the iceberg in terms of its true capabilities. At the same time, banks are heading into another difficult year, and part of their success will hinge on how investment in technology is made.As consumers and companies continue to move the vast majority of their banking activity online, it will be interesting to see which financial institutions can keep up with these preferences, and if challengers will continue to make an even bigger dent in the customer base of the traditional banks. If traditional players can get their restructuring right and improve their customer experience, then they shouldn’t have to worry about the competition snapping at their heels.
Study of 50,000+ UK banking app reviews reveals customer ‘frictions’ among prominent retail banks
o Login and user authentication: Nearly a third (30%) of digital banking app customers had issues with logging into the app through their devices, and 1 in 5 (20%) cited problems with username and password or passcode authentication
o Customer service:
§ Nearly a quarter (24%) of customers felt like they were waiting too long for customer support
§ Over 1 in 5 (22%) were unhappy with the customer resolution
§ Over 1 in 10 (16%) customers cited that the support over chat was unavailable or not useful
o Notifications: Almost a quarter (24%) cited that the wrong operation – or none at all – was performed when they clicked on the notification icon. 23% didn’t receive notifications for payments while 1 in 5 (20%) received too many notifications
Today Mobiquity, a full-service digital transformation enabler, launches a ‘Friction Report to benchmark UK & NL mobile banking apps,’ identifying ‘frictions’ within the UK digital banking app customer experience.
The study of 50,000+ UK customer banking app reviews within the Google Play Store and the App store shows the main ‘frictions’ across prominent UK retail banks.
One of the key issues was with login and password authentication. Nearly a third (30%) of digital banking app customers had issues logging into the app through their devices and 1 in 5 (20%) cited problems with username and password or password authentication.
Another ‘friction’ was customer service; nearly a quarter (24%) of users felt like they were waiting too long for customer support.
Almost a quarter (24%) cited problems with notifications. Either the wrong operation was performed, or no operation was performed at all when they clicked on the notification icon. 23% didn’t receive notifications for payments while 1 in 5 (20%) received too many notifications.
Meanwhile, over 1 in 5 (22%) were unhappy with the customer resolution, and over 1 in 10 (16%) customers cited that the support over chat was unavailable or not useful.
Commenting on the report, Matthew Williamson, Vice President of Global Financial Services, Mobiquity said: “As the use of digital payments increases during the pandemic, so has mobile banking usage. The launch of Mobiquity’s Banking Friction Report helps banks to identify the ‘business frictions’ in their mobile banking experience to help align with evolving customer expectations.”
“An interesting observation that can be made is that most of the banking apps in the Google Play and App store score highly, but when you only account for reviews where people actually leave comments regarding an app feature, i.e. feature ratings, scores are quite low. This can be attributed to users no longer having to proactively go to the Google Play or App store to rate an app, but now are prompted to review an app while they are using it.”
“Nowadays, banks cannot risk treating their customers as passive observers, building products and features that do not take their feedback into consideration. Looping customer feedback into the decision-making process is key as banks get real-time information regarding which aspect of the app customers value the most, and where they find the most friction while interacting with the app.”
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.”
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