By Mark Aldred, banking specialist at Auriga
To survive in today’s market, banks have to think differently. Investing in innovative technologies such as video banking – as part ofa digital transformation – is one way financial institutions are adapting.This means that in addition to the changing use of technology, the roles and contributions of bank staff will also change.
Why video banking?
Video banking is a highly cost-effective service that enables banks not only to increase operational efficiency but also to boost customer engagement, satisfaction and sales. It is available in two main forms – online via a consumer’s own mobile device over the internet and in-branch, whereby customers use an ATM, ASD or kiosk to communicate with a remote teller.
In the UK,Barclays, and more recently NatWest, have started offering online video banking services enabling consumers to access customer services from their own mobile devices, but in-branch video banking is less common. According to 2018 Kantar research on behalf ofEfma, CUNA and Vidyo, it is in-branch video banking that more respondents (90%) said they would be willing to use than online video banking. But why else should banks consider investing in in-branch video services?
Cost-effective for the bank and improved access to cash and services for the consumer
Video banking can help improve access to financial services. Falling demand for physical money has prompted banks to close branches and cash machines causing rapidly declining access to cash in the UK. This is despite the 2019 Access to Cash report, warning that 17% of the UK population (8m people) say cash is an ‘economic necessity’ to them, and the Which? research suggesting people living in rural and remote areas as well as in poorer neighbourhoods are likely to be hit hardest.
Video banking enables banks to offer financial services in rural areas in a more cost-effective way than they could by maintaining a regular bank branch, as the bank can service customers remotely via a central teller rather than hiring or retaining the number of staff required to service multiple branches in person. For example, someone in rural mainland Scotland or the Highlands and Islands can access face-to-face support setting up a bank account by remotely accessing a video teller based in Edinburgh, not only making better use of existing staff members’ time but also keeping the branch open and profitable.
This is also a benefit to customers as it means local access to financial services is protected. In fact, video banking can make for an even more convenient experience than that of a traditional bank branch. With a remote teller available via video link, banks can service customers beyond the usual opening hours and even keep branches open 24/7, seven days a week with the resultant opportunity to increase branch productivity
Improve customer experience and customer retention
Video banking can enhance the customer experience and increase client retention. According to the same Kantar research, over half of organisations that had deployed video banking reported improved customer satisfaction(56%).This is unsurprising as in-branch and online video banking give consumers increased choice over how they bank. This is without losing any of the benefits of person to person interaction required for more complex, time-consuming activities such as securing a loan or applying for a mortgage.Furthermore, video banking means better access to assistance for consumers seeking help with self-service technology or product advice. Video banking goes hand-in-hand with technologies such as AI, chatbots and robo-advisors, however, to successfully improve the customer experience it must be part of an omnichannel strategy.
Best-in-class remote banking experience
Both in-branch and online video banking can be combined with new technologies, such as AI, to deliver higher-value conversations at a low-cost and in half the time. Biometrics and facial recognition can also be used to identify callers accurately and faster, videos can be analysed to provide rich insights for improving the customer experience and historical data can be used to predict the best contact centre agent for which to route the call.In addition,in the same way that AI is applied to chatbots to understand a customer’s emotions, AI can be applied to video banking to understand customer sentiment and decide how to communicate with them. If the consumer looks frustrated, the AI can notify a human being to take over. If they look happy and relaxed, the bank could use this as an opportunity to offer a new service or upsell.
Video banking must be part of the omnichannel experience
However, it must be said that video banking should not be viewed as simply another channel to add to the mix – it should become part of the full omnichannel banking experience. Customers don’t view video calls as separate from the rest of the brand, so banks shouldn’t either. Therefore, organisations need to invest in a unified data- and service-sharing platform to ensure seamless transfer across all channels and technologies, including video, AI, chatbots and robo-advisors, so that information exchanged via one channel is available on all other platforms.
Top Five Recommendations For In-Branch Video Banking Implementation
- Undertake a cost-benefit analysis: It’s important to understand what banks want to get out of video banking and how it can be applied to maximum effect
- Refer to the data: Measuring against KPIs is vital to successful video banking implementation
- Invest for the future: Banks should consider the vendor carefully and opt for a platform over a one-off solution
- Think about audience: Customers of all demographics can benefit from video banking, not only Millennials or Gen Z. There’s low resistance to accessing services over video links so long as they are secure and private. Never hesitate in making video a mainstream banking option.
- Train your staff: Staff will need to be taught how to fix technical issues, deliver support via video link and show customers how to use video banking. They also need to be equipped with broader knowledge and expertise of services and products
Video banking enables banks to effectively bridge the gap between brick and mortar branches and purely digital services like mobile and online banking. Investing now can help banks improve profitability, customer loyalty and grow sales, but in order to fully reap the benefits, it must be seamlessly integrated.
Local authorities and business networks play a key role in small business success, and must be protected during COVID rebuild
- 23% of UK’s top performing businesses have been supported by local enterprise partnerships and growth hubs
- Similarly, 30% of Britain’s strongest businesses have obtained external finance in the last 3 years
- New findings come as part of an independent, holistic study into small business success, commissioned by Allica Bank to support British businesses
A new study, commissioned by business bank, Allica Bank, shows that a high level of engagement and interaction with external institutions and resources, is central to SMEs’ prospects of success.
The study analysed data from over 1,000 companies and ranked their success on a scale that evaluated factors including productivity, growth, consistency and outlook. To measure SMEs’ external engagement, survey respondents were asked whether or not they had engaged with local enterprise partnerships, growth hubs, or external financial advisers, as well as whether they had obtained credit or sought re-financing advice, in the last three years.
The benefit to small businesses in making the most of external resources are clear to see, with a quarter (23%) of the UK’s top performing SMEs – those in the top tenth percentile – actively engaging their local enterprise partnership or growth hub in the last three years. This compares to just 16% of all other small businesses. With such a clear benefit to businesses, these external networks must not only be protected but prioritised by any Government plans to rebuild the economy post-COVID.
Similarly, of the top performing SMEs in the country, 30% have obtained external credit in the past three years, compared to less than a quarter (24%) of all other businesses. This figure drops even further for the weakest performing businesses – those in the ninetieth percentile – where just 12% of businesses have obtained external financial support in recent years.
Chris Weller, Chief Commercial Officer, Allica Bank, said:
“At Allica Bank we understand that no two businesses are the same. We also know that no-one knows a business as well as its owners and managers. But they can’t be expected to be experts on everything.
“In the UK there is a wealth of external advice and support for small businesses and we urge each and every business out there to tap in to the external resources around them. Third-parties, such as business clubs, chambers of commerce, local enterprise partnerships and trade bodies, can be invaluable sources of advice and further resources. And although they have excelled in their given field, business owners may still lack knowledge in many other areas of running and growing a business. Therefore, engaging with third parties can give business owners the kinds of insight – and fresh perspectives – they need to succeed.
“As the economy and the country comes to terms with the impact of the COVID-19 pandemic, it is important these vital SME resources are protected and given the funding they need to continue providing invaluable insight and support to small businesses up and down the country.”
Allica Bank’s SME Guide to Success identified six ‘rules to success’ that were more likely to be displayed by top-performing SMEs compared to their counterparts. The full report contains a wealth of additional data and insight into each of these topics.
As part of its mission to empower small businesses, Allica Bank is making the findings freely available and running a series of free online workshops with relevant partner organisations for businesses to attend.
Do we really need banks? Yes, but digital transformation industry-wide is vital
By Charley Cooper is Managing Director at enterprise blockchain firm, R3
The Coronavirus crisis has taught us that we are capable of going digital quickly when we need to. As the banking sector faces a second wave, the ability for individual firms to grow and succeed will be reliant on better connectivity and efficiency at the industry-level, writes R3’s Charley Cooper.
The sudden and dramatic pace of change has been seen globally over the last six months. Decades of paper-based practices are being updated, digitised and overhauled as the whole word adapts to working online. As of today, countries are accepting “alternative arrangements” for original paper export certificates, New York is allowing notary services by video, and global banks are accepting “original” documents and acceptances by email.
Over the coming months, we will see this digital transformation extend from individual use cases and firm-level deployment to entire industries. And perhaps in no other industry is this more critical than in financial services, where the role of banks continues to be challenged because of the inefficiencies they face as a result of decades of siloed technology deployment.
While unquestionably an improvement over reliance on manual processes, regular “digital transformation” as implemented by a single bank has limited benefits. These typically include greater automation of business processes, acceleration in adoption of electronic channels, elimination of manual processes, standardisation of non-value-adding business practices and a focus on driving up data quality and speed of information flows.
Now consider achieving digital transformation at the level of the entire market, rather than on a bank-by-bank basis. Whilst a digital transformation project for a single bank might automate a business process between a front and back office, a digital industry transformation project might optimise the trading and settlement of the asset between buyer and seller and their custodians too.
Of course, such things have been attempted before. But there have been many failures and the successes are notable by how they have resulted in new dominant centralised providers – for example for market data, messaging or settlement. The advent of blockchain architectures showed us there was a new way to tackle the problem, one that worked with the grain of existing markets.
Done right, the prize is a huge “productivity dividend” as entire markets are unshackled from their analogue histories.
Tackling interbank reconciliation at the industry level
The Italian financial services industry provides a pertinent use case of digital industry transformation. 32 banks in Italy went live in March with one of the first real-world deployments of enterprise blockchain technology in interbank financial markets. 23 more banks went live in May, with further institutions scheduled to go live this autumn. Built by the Italian Banking Association, ABI, the Spunta Banca DLT app on R3’s Corda Enterprise platform tackles the market-wide issue of interbank reconciliation.
The traditional reconciliation process for interbank transactions in Italy—formerly governed by the “spunta” process— is notoriously complex. Resolving mismatches in transactions is a labour-intensive process, hampered by a lack of standardisation, fragmented communication and no “single version of the truth.” The Spunta Banca DLT app automates the reconciliation process and enables banks to pinpoint mismatches in interbank transactions quickly by sharing common data in a secure way.
Connecting such a large and diverse group of banks in a live environment to tackle a shared problem is a major milestone for digital transformation in the Italian banking sector, providing a glimpse into a brighter, more efficient and interconnected future for all financial markets.
The current crisis has accelerated the launch of digital technology for many use cases across a diverse range of sectors, but those that stand the test of time will be developed with an industry-level mindset, not firm-level.
It is now clear that the age of inter-bank optimisation is over – the path forward from this crisis will be paved by software that focuses on adding real value for entire markets, connecting banks to overcome the biggest challenges they share as an industry.
Banks must adapt and start thinking about technology in new and innovative ways if they are to retain their critical role in the global economy.
How open banking can drive innovation and growth in a post-COVID world
By Billel Ridelle, CEO at Sweep
Times are pretty tough for businesses right now. For SMEs in particular, a global financial and health crisis of the sort we’re currently witnessing represents a truly existential risk. Yet there is hope of a brighter future. Digital transformation is already helping organisations in countless sectors, with everything from building supply chain resilience to rolling out potentially life-saving contact-tracing schemes. Yet it’s not just delivering transformative benefits in grand projects like this.
Thanks to open banking rules, a new wave of fintech innovation is sweeping the globe, offering business leaders a new launchpad for success. Even something as simple as corporate expenses can be transformed by the power of open data — to help firms cut costs, reduce fraud risk and become more productive.
Opening up data to innovation
It’s easy to get bogged down in the technical details of open banking, and the slew of new acronyms it has ushered in: Third Party Providers (TPPs), Account Information Service Providers (AISPs), Payment Initiation Service Providers (PISPs), and Application Programming Interfaces (APIs). Yet at the heart of the open banking revolution is a simple concept: the idea that forcing banks to open up their customers’ financial data will create more competition, and fresh opportunities for market entrants to create innovative new services.
This was at the heart of the UK government’s world-leading strategy when it was introduced back in 2016. A revised EU payment services directive (PSD2) gave it legal teeth, mandating that all payment account providers in the region provide third-party access for customers that want it. The push is also about reducing banking fees and enhancing financial inclusion, of course, but it’s in competition and innovation that the benefits really shine for businesses.
Access to real-time financial data via open APIs has already resulted in a range of new services which are helping businesses ride out the current economic storm. Whether it’s capabilities that can help freelancers prove loss of income to receive targeted loans, or services designed to streamline business processes to reduce costs and fraud — examples of innovation are endless.
What’s more, it’s already global. Aside from the PSD2, open banking rules are taking shape in Australia, New Zealand, Japan, Singapore, Hong Kong, Mexico and elsewhere. According to frequently cited Gartner predictions, regulators in around half of the G20 countries will create an open banking API regime over the coming year.
In the UK alone this is set to create a £7.2 billion revenue opportunity by 2022, with 71% of SMBs and 64% of adults expected to adopt it by then, according to PwC.
Making expenses pay
Corporate expenses and travel management might not be an area one immediately associates with high levels of innovation. But here too, open banking is having a profound impact. By combining automation, in-app approvals, integration with corporate policy and secure open banking APIs, companies like Sweep are offering new ways to solve old problems.
Part of the legacy challenge relates to productivity. Managing corporate travel costs and expenses was cited last year as the biggest concern of the UK’s small and mid-sized firms. Separate research claimed that SMBs are estimated to lose over £8.7 billion annually due to the time it takes employees and managers to complete these menial tasks. By automatically integrating real-time corporate bank account information into an easy-to-use app, we can save up to 15 hours a month on data input and travel administration per employee. That’s all time they could be spending on growing the business.
Another key area of concern is fraud. According to some estimates, fraudulent expenses claims could be costing UK firms £1.9 billion each year. In the US, the figure could be approaching $3 billion annually. Whether it’s the result of submitting expense claims for personal purchases, claiming for additional mileage on work trips, or over-claiming for other items, it all adds up. What’s more, fraud tends to spike particularly during times of recession, when normally diligent employees look for ways to supplement their income.
In this use case too, there are benefits to be had from open banking-powered solutions. Traditional manual processes offer too many gaps that can be exploited by fraudsters. Submitting paper receipts to finance departments — which must then input the information into spreadsheets or accounting software — is slow, error-prone and lacks accountability. However, with modern digital systems, transactions are automatically fed through from bank account to expense management platform. Here they are seamlessly checked according to policy and automatically approved, rejected or flagged for further investigation.
The future’s open
Thanks to the power of open banking, innovative fintech use cases like this are transforming operational challenges into opportunities to cut costs and fraud risks, improve employee productivity and become more strategic. With real-time data fed through from corporate bank accounts, finance directors can better understand spending patterns, react with greater agility and gain the insight they need to run their businesses more efficiently.
So what of the future? The good news is that open banking is only just getting started. As more sophisticated machine learning algorithms are developed, it has the potential for even greater disruption by empowering SMEs with predictive analytics and forecasting tools, or more accurate fraud checks, for example. Those in Europe may benefit most as PSD2 allows businesses to use tools that work seamlessly and securely across markets, without requiring any duplication of work.
In fact, open banking is not just good for individual SMEs, it’s important for Europe as a whole if we are ever to nurture successful digital unicorns to compete with those coming out of the US and China.
Open banking been described in the past as a quiet revolution. With the right buy-in from business and the continued innovation of digital platforms, it may soon become a full-throated roar.
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