By Tom Goodey, Retail Banking Sector Lead, Huntswood
In recent months, it hasn’t been uncommon for banks to make the headlines – and it’s not always for the right reasons. Most recently, we have witnessed one of the best-known challenger banks announce an internal error in its calculations of the amount of capital it held, sending its share price down and leading to high levels of customer uncertainty.But more commonly, banks experiencing operational problems also tend to make the news. These are typically related to problems such as online banking becoming unavailable, issues with the mobile app, or a cash machine network going down.
Most customers are likely to accept this if it remains an isolated incident. But if problems begin to recur, or the same incident stretches on over an extended period of time, frustrations and complaints understandably intensify.
Monitoring service issues and provision through MI
Whether it’s a service issue or a deeper reputational matter, such problems can result in a breakdown of loyalty and trust between providers and their customers. It becomes essential to tackle this head on, by managing the fallout through effective communication and responsiveness.
We all know that in today’s environment, customers have high expectations and are quick to vent their frustrations, particularly through social media. Problems can quickly escalate as a sense of discontent spreads and amplifies through these channels.
It has therefore become a key part of banking operations to be able to continuously monitor and act upon customer sentiment and service delivery. Effective management information (MI) is critical to this. All banks need to be able to extract and analyse relevant data on customer satisfaction levels, and track how these are changing, in order to inform their operational processes moving forwards. Critically, should the data suggest a deterioration in service provision or sentiment, firms should be prepared for an uptick in associated customer contact.
Resourcing and recovery planning should the worst-case strike
What can make a difficult situation worse is when customers have difficulty getting through to their bank or fail to receive a satisfactory response. Ensuring the appropriate resourcing levels in contact centres and associated front, middle and back office functions is essential. It’s no good having scores of front-line staff available on the phone if most customers are communicating through webchat, for example.
Past experience can be an invaluable guide to the future. It is important to take the time to look back at any previous incidents and analyse what impact they had, through which channels, and make an honest assessment of how effectively they were handled.What could have been done better? What changes to the customer contact strategy need to be made?
In the wake of technical failings banks should ensure that they have a service recovery plan in place with trusted partners on hand to provide expertise and capacity ahead of systems migrations and major changes, during downtime and following recovery. Banks need to reassure regulators that steps have been put in place to protect impacted customers, while also being able to demonstrate that services are improving and issues are being resolved quickly.
Are challenger banks at a natural advantage?
It could be argued that challenger banks are better placed than their traditional counterparts as they do not have the same legacy constraints, with new systems all built in the digital age. This can potentially mean that where a problem does arise, they are better able to provide customers with a detailed breakdown of issues and rectify them more quickly.
However, at the same time, customers may have less tolerance of service issues with app-based challengers as their digital offerings will have been instrumental in choosing to do business with them. They also have less of a reputational legacy to draw on; controversies may hit them harder than the traditional high street banks who have much longer histories and established track records. It is therefore important that in the wake of a reputational blow, challengers are prepared for the influx of customer contact and are as transparent and honest with their customers as possible to retain loyalty and trust.
The truth is that no bank, no matter how long it has been around, is immune from the effects of reputational or service issues. Another serious parallel problem is that when such issues occur, the danger of concurrent opportunistic fraud or cyber security incidents happening risestoo. With customer security and protection such a priority, the stakes only become higher.
No bank wants to experience a crisis of public confidence. But if they do, the way in which they handle it is critical. Handled well, in some cases it can actually help to increase loyalty by impressing customers through accessibility, responsiveness and taking a customer-centric approach. Handled badly, it can drive customers away in an age where switching is already becoming easier – a risk no bank can afford to take.
Unlocking the potential of APIs
Corporate expectations for fast, efficient and convenient payment services are now the norm. BNY Mellon Treasury Services’s Sindhu Vadakath, Head of Global Digital Channels and Asia Payments Product Management, explores how banks are leveraging APIs to keep pace with these demands and maintain a competitive edge.
The expectation for a quick, seamless and user-friendly banking experience has long been the norm in the consumer space. Today, treasurers expect no less from their corporate banking applications. The gap between this desire for new and improved offerings and delivering greater levels of client service is being bridged by APIs (Application Programming Interface) – a key innovation that banks are harnessing.
APIs are a type of computing interface that enable streamlined, efficient communication and integration between software components. Benefits include operational speed and efficiency and, where process automation is also deployed, rapid – or even real-time – data flows, superior analytics, and real-time visibility over balances and payments statuses.
APIs have become a familiar term in the finance space. In the past few years, regulators and industry bodies have helped drive adoption – with uptake currently varying from market segment to market segment and region to region. Traction has been highest in the US, with momentum building in APAC, EMEA and LatAm.
While many banks have already incorporated APIs into their strategies, the overall progress has been somewhat limited by a lack of standardized, interoperable systems and processes across the financial services industry. But, with upcoming industry initiatives, such as the global migration to the ISO 20022 messaging standard, pushing the industry further towards greater harmonization, the full potential of APIs can be unlocked. Now, therefore, is the opportune time for banks and their clients to invest in their API capabilities.
In today’s fast-paced world, an effective and successful bank needs to deliver optimized payment capabilities, with accurate and efficient processes. This is being achieved through API solutions targeted at specific use cases.
For example, while making a payment may appear straightforward at the point of execution, the underlying processes are complex. Ensuring the streamlined and successful completion of these processes – which include payment initiation, reporting and sanctions screening – is critical for businesses, with any lapses potentially causing financial and reputational damage. As a result, banks are increasingly looking to APIs to provide real-time visibility for the entire payment process – meaning that any potential issue can be spotted and resolved in a timely manner.
APIs can also be used to integrate real-time account balances and transactional data across multiple channels, including Treasury Management Systems (TMS) and Enterprise Resource Planning (ERP). For example, BNY Mellon’s Treasury APIs enables the bank to integrate its solutions with its clients’ internal systems. This allows clients to streamline efficiencies by automating payment processes – with necessary tasks, such as reconciliation, able to be performed seamlessly. Automating previously manual functions via APIs saves time and frees up resources previously spent on repetitive tasks, thereby enabling this capacity to be redirected to value-added processes, such as forecasting analysis, customised reporting and transaction capabilities. Through this solution, clients can also securely access global payment capabilities through a single endpoint to initiate payments and track the status of transactions, from initiation to completion.
Elsewhere, as the Covid-19 pandemic has proved, it is important to have a robust business continuity plan (BCP) in place to offset against the impact of any unexpected events. APIs can be used in BCPs to help create an effective, resilient active-active alternate channel solution for contingency scenarios. For example, if a bank suffers a disruption or outage to their network provider, they will have to ensure they are able to seamlessly switch to an alternate digital channel to process their payments in a timely manner with no financial implications. Traditionally, banks relied on the provider’s online bank portal to instruct payment orders – a process that, to execute accurately and within the cut-off time, uses a significant amount of resources. Depending on the timing and intensity of the disruption, these resource are sometimes challenging to mobilize and activate within a short interval and could lead to serious financial and reputational implications. APIs offer a good alternative to these traditional contingency plan solutions. By enabling a fully functional integration with their network bank providers, banks can process a certain share of daily volumes via an API in addition to their usual channels – allowing for a smooth transition during a contingency scenario.
The next steps for APIs
Though enthusiasm for API adoption is relatively strong, we have only just started to scratch the surface in the B2B space. So far, the biggest strides have been made by Big Techs, which have been particularly adept at delivering API solutions thanks to their nimble business models. While the financial industry is making efforts to evolve – embracing the start-up work culture, breaking silos and developing an open and collaborative work environment – the success and speed of delivery is often hindered by the size and complexity of the solution required. For instance, an API might need to work for multiple parties across various jurisdictions that are each bound by unique regulations in their domestic markets. As a result, consortiums formed by fintech and financial firms, various market network providers and regulators are each working on ways to simplify these processes.
One path forward is increased industry standardization. For example, the lack of cross-border interoperability between market infrastructures and networks currently makes the exchange of data and APIs much less effective. The upcoming migration to ISO 20022 – the new global payments messaging standard – looks set reduce these frictions. With major market infrastructures and network providers each migrating to the new standard, banks looking to leverage APIs and other messaging channels may no longer be required to maintain multiple variations of the message specifications by channels, currency and markets – something that today represents one of the biggest barriers for adoption. Elsewhere, plans are also underway to connect the various domestic real-time payment infrastructures to create an interoperable system for digital payments – one that could eventually support API adoption for cross-border real-time payments.
As the industry standardizes and simplifies its processes, and banks begin to integrate APIs into their own and their clients’ infrastructures, a host of new opportunities, including real-time data feed of balances to drive more proactive functions for treasuries, is set to be unlocked. Importantly, the onus is now on banks to invest in APIs and advocate their adoption to clients.
Sindhu, who is based in the BNY Mellon Singapore Branch, recently took part in the “Executing business strategies with the power of APIs” Sibos webinar. To sign up to Sibos to view the webinar, please click here.
The views expressed herein are those of the author only and may not reflect the views of BNY Mellon. This does not constitute Treasury Services advice, or any other business or legal advice, and it should not be relied upon as such.
Tapping into the right minds
By David Holden-White, co-founder and managing director, techspert.io
The world is awash with information. Analyst house IDC estimated that more than 59 zettabytes of data would be created, captured, copied and consumed in 2020, and that the amount of data created over the next three years will be more than what was created in the past 30. The boom in consumer technology and the rapid improvement in mobile connectivity has meant that the 48% of the globe that owns a smartphone has near instant access to all the digitised, publicly available information in the world in their pocket.
A world overloaded by information
It’s no surprise that people talk of information overload, or how much it impacts productivity. It’s not new either. A 2012 study from McKinsey & Co highlighted that nearly a fifth of professionals’ time was spent searching for and gathering information, half of the time they spent undertaking role-specific tasks. This is only likely to have increased as we’ve become more dependent on digital tools and services.
On top of that is the realisation that, thanks to social media, we’re living in a time when anyone can be an influencer or thought leader if they shout loud enough. It doesn’t matter whether you’re pushing trainers or cloud computing, whether your audience is a broad spectrum of consumers or a niche group of B2B buyers; the tools and resources are pretty much freely available to build a profile and push your message out there.
The result is that it’s becoming increasingly hard to find the value amongst vast and accelerating volumes of online data and noise, and to use that data to make accurate, effective decisions.
This is something we need to be able to do. We’re all expected to work faster, to make better decisions more quickly. The pandemic showed that certain changes don’t need five committees, two working groups and a proof of concept to take place before decisions can be rubber stamped. At the same time, no matter what industry you work in, there will be competitors who are more agile, more flexible, and seem to be much better at making decisions and capitalising on opportunities.
Yet those decisions still need to be backed by evidence, by irrefutable knowledge. What’s more, there’s only so much data can give us. We need the insights stored in the minds of true experts, with lived experiences of the particular problems, markets and technologies in question. In accessing this, we can develop a decision-making edge in businesses that competitors don’t have, that can be used to drive entrance into new markets, or for winning investment decisions.
Limiting risk in investment decisions
As we all know, investments are inherently risk-related, so, anyone making such a decision will do all they can to minimise their risk exposure, especially in volatile post-covid markets.
To do that requires being able to identify, consume and process information quickly. Investment opportunities, particularly in industries with significant growth capacity, come around quickly and get snapped up fast.
Those decisions will incorporate analysing and drawing insights from raw data, using publicly available and analyst-produced information. But there is also an opportunity to draw on human insights, from leading experts in relevant fields, to get a sense of the story that 0s and 1s can’t properly tell yet. Tapping into the right minds is essential to informing investment decision-making in 2021.
In an ever-growing haystack of information, the challenge is finding them quickly. Plus, once they are found, there’s a tendency to keep using them, or to use them as a gateway to others in their network. While there’s nothing inherently wrong with this approach, it leaves investors exposed to a lack of diversity in thought that makes getting to an unbiased view of the world impossible. At the same time, casting their net wide and finding lots of experts is resource and time-intensive, at a point when time is one commodity in short supply.
So, what’s the solution? Ironically, given that the challenge is bringing the right human insight into the process, the answer could lie in technology, specifically artificial intelligence (AI). AI-powered platforms can take a request for expertise and run searches through all available published and credible material to recommend the most appropriate experts for the project in question.
It’s true that there are already services that recommend experts, but they are heavily manual and therefore slow and imprecise. It’s also true, there are also both negative and positive connotations being attached to AI. No technology is without its flaws, and if investors were relying on the AI platform itself to provide expertise then there would be cause for concern. Services that provide access to the experts themselves, however, are providing a fast way through the noise and data – it’s a car to the destination, not the destination itself. Once investors and experts are connected, the former has access to the relevant insight the latter holds in their heads. What AI has done is rapidly scan through millions of people of talent to highlight the relevant knowledge holders with pin-point accuracy.
Using technology to highlight the best human knowledge
Using an AI technology platform to find the most relevant human is a way of taking a resource-consuming process and finding what’s needed in a thousandth of the time. In that way, investors can get fast access to the human insight they need to make the best decisions, allowing them to capitalise on opportunities and not miss the next big growth opportunity.
Australia says no further Facebook, Google amendments as final vote nears
By Colin Packham
CANBERRA (Reuters) – Australia will not alter legislation that would make Facebook and Alphabet Inc’s Google pay news outlets for content, a senior lawmaker said on Monday, as Canberra neared a final vote on whether to pass the bill into law.
Australia and the tech giants have been in a stand-off over the legislation widely seen as setting a global precedent.
Other countries including Canada and Britain have already expressed interest in taking some sort of similar action.
Facebook has protested the laws. Last week it blocked all news content and several state government and emergency department accounts, in a jolt to the global news industry, which has already seen its business model upended by the titans of the technological revolution.
Talks between Australia and Facebook over the weekend yielded no breakthrough.
As Australia’s senate began debating the legislation, the country’s most senior lawmaker in the upper house said there would be no further amendments.
“The bill as it stands … meets the right balance,” Simon Birmingham, Australia’s Minister for Finance, told Australian Broadcasting Corp Radio.
The bill in its present form ensures “Australian-generated news content by Australian-generated news organisations can and should be paid for and done so in a fair and legitimate way”.
The laws would give the government the right to appoint an arbitrator to set content licencing fees if private negotiations fail.
While both Google and Facebook have campaigned against the laws, Google last week inked deals with top Australian outlets, including a global deal with Rupert Murdoch’s News Corp.
“There’s no reason Facebook can’t do and achieve what Google already has,” Birmingham added.
A Facebook representative declined to comment on Monday on the legislation, which passed the lower house last week and has majority support in the Senate.
A final vote after the so-called third reading of the bill is expected on Tuesday.
Lobby group DIGI, which represents Facebook, Google and other online platforms like Twitter Inc, meanwhile said on Monday that its members had agreed to adopt an industry-wide code of practice to reduce the spread of misinformation online.
Under the voluntary code, they commit to identifying and stopping unidentified accounts, or “bots”, disseminating content; informing users of the origins of content; and publishing an annual transparency report, among other measures.
(Reporting by Byron Kaye and Colin Packham; Editing by Sam Holmes and Hugh Lawson)
What banks need to know about observability
By Abdi Essa, Regional Vice President, UK&I, Dynatrace More aspects of our everyday lives are taking place online – from how we...
What finding Alice has taught us about the pitfalls of no will
ITV’s latest television drama Finding Alice has been a necessary diversion during these endless winter weeks of lockdown, but it...
Unlocking the potential of APIs
Corporate expectations for fast, efficient and convenient payment services are now the norm. BNY Mellon Treasury Services’s Sindhu Vadakath, Head...
Tapping into the right minds
By David Holden-White, co-founder and managing director, techspert.io The world is awash with information. Analyst house IDC estimated that more...
VAT domestic reverse charge set to impact over 1.2 million construction workers from 1st March
HMRC’s new VAT domestic reverse charge for building and construction services comes into effect from 1st March 2021 Construction firms...
Report explores the Ceramic Ink Market likely to emerge over a period of 2019– 2029
Ceramic Ink market players – Torrecid Group, Ferro Corporation, Marabu GmbH & Co. KG, Chromaline, Fenzi Group SpA, Rex-Tone Industries...
Detailed examination of the Micro Robots Market to hold a high potential for growth by 2021
Micro Robots market study depicts an extensive analysis of all the players running in the Micro Robots Market report based on distribution...
Dredging Market Research Report by Type, by Production Technology, by Application, by Function – Global Forecast to 2030 – Cumulative Impact of COVID-19
A recent market study published by FMI on the Dredging Market includes global industry analysis for 2015-2019 & opportunity assessment for 2020-2030,...
Synthetic Leather Market 2021 Segmentation and Analysis by Recent Trends, consumption by Regional data, Development, Investigation, Growth by to 2027
Synthetic Leather Market – Global Industry Analysis and Opportunity Assessment 2016–2026 This report by Future Market Insights on the global synthetic...
Automotive Steering System Market In-Depth Analysis on Size, Cost Structure and Prominent Key Players -JTEKT Corporation, Nexteer Automotive Group Ltd., Showa Corporation
FMI offers a 10-year forecast for the Automotive Steering System between 2017 and 2027. In terms of value, the market is expected...