Vineet Vijh, senior engagement director, Unisys
Retail banking is changing through many external forces. The on-going global financial crisis has impacted the regulation surrounding the banking industry, but there are other factors changing the environment banks find themselves operating in. One of the key catalysts for change is mobile technology, which represents the biggest opportunity to retail banking since the advent of the credit card four decades ago. This new dynamic is redefining the relationship between the bank and its customers.
The traditional view of a bank is as a transactional medium. Banks are where people save, retrieve and borrow money. Despite considerable investments by European banks in developing their branches into ‘financial services supermarkets’ this view still remains the case today. Smartphones, tablets and other mobile devices bring with them many ways for banks to at last tackle this perception, enabling them to embed themselves far more deeply within their customers’ lives.
The move to mobile banking is being touted heavily by market analysts. According to Gartner, worldwide mobile payment transaction values will surpass $171.5 billion in 2012 and Sandy Shen, research director at Gartner, has said: “We expect global mobile transaction volume and value to average 42 percent annual growth between 2011 and 2016 and we are forecasting a market worth of $617 billion with 448 million users by 2016.” These predictions represent a paradigm shift in the retail banking model and a potential opportunity for disruptive and highly innovative players to meet the needs of the technology-savvy consumers who rely on their mobile devices for many facets of their day-to-day life.
Over the next few years we think there are three key areas in retail banking which will be transformed by mobile devices, these are: payments; products and customer service.
Payments are the most obvious aspect of a bank’s operations that can be streamlined and enhanced by mobile devices. While many banks in Europe have hesitated to roll out m-payments, other parts of the world have moved more quickly. Mobile payments are an accepted way of life for some consumers in Japan and Nordic Europe. Closer to home, Barclays Bank in the UK offers person-to-person mobile payments through its Pingit app, with many more mobile payments services being highlighted in the media, such as Square, founded by Twitter co-founder Jack Dorsey.
The adoption of the m-payments, to date, has not been held up by lack of payment enabled handsets but by the perceived value of just a simple payment or money transfer function – they compete with many other methods that are already available. What changes things now is the smartphone’s ability to integrate the payment function into other applications; it is this which will make banks more relevant to the everyday lives of consumers. Phones will be used interchangeably with a credit or debit card, reducing the potential for fraud, while enabling banks to add real value to the shopping experience – for example flashing up real-time balance updates on the smartphone’s screen, or offering services like extended warranties or damage insurance at the point of purchase.
The benefits of being able to interact with customers via their phones, based on their location, aren’t just limited to payments. Mobility makes a whole range of new service paradigms possible. Consider home-buying: offering customers the ability to source a preliminary mortgage quote and book an appointment with an advisor from the property they are viewing would be a tremendous help to them, and a powerful way of capturing mortgage business from current account customers. Smartphones’ location-awareness could also mean property particulars are sent automatically to branch advisors, making the sale easier still.
Location-awareness has also proven itself valuable for products where eligibility, costs and conditions can vary geographically. In the USA, Unisys has developed a location-aware mobile application for a loan provider, which can automatically provide a tailored quote based on the customer’s location. A manual address check is still needed, but the system enables the company to provide quotes immediately, starting the sales process without delay. Insurance and leasing are other product areas which stand to gain considerably from this unique feature of mobile devices.
Handheld devices won’t just have an impact on how banks deliver and market services to consumers – they can also drive big changes in the ways banks organise and manage their own staff. A European bank Unisys works with has recently issued branch staff with tablet devices so they can strike up conversations with customers visiting the branch, answer simple questions about products, and very quickly and easily schedule a meeting with an advisor should they wish to find out more. We provided a simple app which links directly to the bank’s CRM and scheduling systems – so even if the meeting gets postponed, staff can still follow up on the customer’s interest.
Less of a security risk than you think
With every new technology, the theory goes, come new risks and challenges. While prevailing wisdom suggests mobile handsets are far less secure than more conventional means of banking, the truth is they can bring far greater security, providing they are integrated properly. The wrong approach would be to attempt to re-purpose their online banking security system, for mobile banking, or to develop a completely new and different security system solely for mobile apps. Banks need to evaluate their security systems holistically and redesign the system to be common for all channels or modes of communication with the customer. This includes harnessing mobile devices’ capabilities to protect customers and minimise fraud.
Location awareness could be a boon for fraud management. Key indicators of fraud, such as two transactions occurring in very different places, can be easily investigated and, by checking customer location data, rectified with minimal inconvenience. Similarly, mobile devices could enable banks to implement biometrics almost universally, in a way which customers will welcome – using voice and even facial recognition to authenticate transactions and digitally ‘sign’ documents like direct debit mandates. In this way, the smartphone could begin to replace the aging and increasingly risk-prone systems of PIN codes and personal details which have been the mainstay of authentication in banks for decades.
We think the opportunities and changes brought about by the innovations we have outlined here will together be far more significant than the advent of online banking fifteen years ago. Indeed, the m-commerce paradigm has been successfully adopted by leading businesses in other industries, particularly retail, where customers have responded particularly positively to the advent of mobile shopping. In this sense, the mobility model is well proven. Where banks in particular stand to benefit from mobile technology is in fraud control, authentication, and supporting sales of complex financial products. Clearly, security is the key to progress, and banks must carefully evaluate their systems and procedures here. However, the potential to transform relationships with customers, exploit cross-selling opportunities, and improve security and fraud detection, is a heady cocktail for European bank executives smarting from four years of intense public scrutiny and depressed margins. The commercial opportunities for mobile banking are enormous.
UBX appoints new Chief Investment Officer
In line with its strategy to explore and invest in companies and platforms of the future, UBX—the Fintech and Corporate Venture Capital arm of Union Bank of the Philippines (UnionBank) — is announcing the appointment of Matthew Kolling as the company’s Chief Investment Officer (CIO).
As CIO, Kolling will be managing UBX’s Corporate Venture Capital (CVC) fund. He will also play a key role in raising capital for UBX while assisting the company in key corporate transactions, including the structuring of joint ventures and acquisitions.
Prior to his appointment at UBX, Kolling has been Head of Venture Investments at Aboitiz & Company since 2019, wherein he had been working with UBX on investment portfolio decisions. Before that, he held senior positions in Private Equity, Venture Capital, and Investment Banking at firms such as Providence Equity Partners and Morgan Stanley in New York.
Kolling has more than 20 years of experience in managing investments and deals in the Technology and Telecommunications industries and is active in Venture Capital and startup communities in the Philippines and the Southeast Asian region. He currently chairs the Manila Angel Investors Network, among others.
“We at UBX are excited to welcome Matt as our new CIO. We firmly believe that Matt will be instrumental in driving value creation opportunities, both within the CVC fund and our corporate ventures. We look forward to working with him as we fulfill UBX’s vision of a future where banking services are embedded into everyday experiences that matter,” said UBX president and CEO John Januszczak.
Meanwhile, UnionBank president and CEO Edwin Bautista said, “The addition of world-class talents in our pool reinforces our strategy to future-proof the organization and our business as we prepare for many new opportunities that come with the changing times.”
It’s all relative: Older generations feel helping out the family financially is more important since the Covid-19 outbreak
Before Covid, 23% of people prioritised helping younger generations out financially, that increased to a third as a result of the pandemic
A recent survey* conducted by Hodge has revealed that the Covid pandemic has led to more people wanting to help younger family members financially.
A third (31%)** of those questioned said that since the Covid outbreak giving a financial gift to children or grandchildren is more important to them, compared to 23% who said it was a priority before the pandemic.
The traditional “Bank of Mum and Dad” is still very much open for financial help, with parents being responsible for 72% of the gifts, but the study also revealed that financial gifts can come from all corners of the family – including children (14%) and siblings (14%).
The survey also found that a third of people have received a financial gift from family, with those aged between 25-34 as the most likely to receive
The most popular reason for gifting money to family is for special occasions such as a quarter of gifts were given for weddings and birthdays but 11% of people have received money to help with big purchases such as cars and houses. In addition, 19% of people have received help with day to day finances, with around 14% of those receiving a gift have done so to pay off debt.
Emma Graham, Business Development Director at Hodge, said of the research: “Our study showed that, as a nation, we all want to help our family out when it comes to money. And whilst we all think of the Bank of Mum and Dad or Gran and Grandad as a traditional source, we were surprised to see that 14% of brothers and sisters are also helping out.”
The findings come from a recent intergenerational study conducted by Hodge, who interviewed over 3000 people about their attitudes towards finances and their aspirations for the future. The full research findings can be found at https://hodgebank.co.uk/2020/05/19/money-its-all-relative/.
As part of the study, people were also asked about paying back the gift, with 40% of beneficiaries expecting to pay their parents back, but this dropped to 28% if the gift came from grandparents.
From the gift donor’s perspective, 26% expect the gift to be paid back, however just 15% of grandparents expected the money back.
Hodge has produced a set of guides on how families can navigate the tricky subject of giving financial gifts within a family, as well as the considerations and steps that be families should think about taking before a gift is given, such as is it a loan or a gift and thinking about contingencies if the family member’s circumstances change. The guides can be found here: https://hodgebank.co.uk/news/
Emma continued: “It’s clear that families feel strongly about offering financial support to each other if they are able and this has increased since the Covid pandemic. Before Covid, 23% of people prioritised helping their families out financially in the next five years. Since the Covid-19 outbreak that has increased to a third of people saying helping a family member financially had become more important.
“So, it is clear that the Covid-19 lockdown and subsequent predicted economic downturn, has led to more families looking to share wealth to help younger children or grandchildren during this difficult time. Many people may look to Later Life mortgages, where many products have reduced their rates and have flexible lending criteria, to help out a loved during these difficult times.”
New report identifies the factors which will determine SMEs’ chances of a successful COVID recovery
· Analysis of the performance of over 1,000 UK small and medium-sized businesses by Allica Bank provides roadmap for SMEs
· Regular training, an openness to innovation, and a clear vision all contribute heavily to an SMEs’ chances of success
· Allica Bank has launched a programme of free workshops to expand on the findings and support business owners
Business bank, Allica Bank has combined data and insight from over 1,000 UK SMEs with a multiple regression analysis to determine what factors most closely aligned with an SMEs’ chances of success and separated the highest-performing businesses from their peers. These ‘rules for success’ have been compiled from the research data to support British businesses as they look to chart a course to post-Covid recovery.
The full report identifies six behaviours for small and medium businesses to follow, to maximise their chances of a successful COVID recovery. The six top-line rules emphasised by the data were:
Rule 1: SMEs should regularly train staff
Of the top-performing businesses analysed, 47% provided training for employees at least on a quarterly basis, compared to just 32% of other businesses. Regular employee training was linked closely to success by the model.
Despite this, many small businesses have neglected training and nearly half (46%) of the small businesses analysed only provide training for employees about once a year or less often. This included 15% that never provide employer-funded training. This discrepancy could represent a significant opportunity for small businesses to unlock the potential of their employees and thrive in the post-Covid economy.
Rule 2: SMEs need to focus on innovation and technology
Looking again to the best performing businesses, 76% were found to either continually (39%) or often (37%) be considering new opportunities for technology in their business. This is compared to only 51% for businesses considered to be outside of the top ranks, out of which only 27% admitted to continually looking for new technology opportunities.
Rule 3: Small business must have a formal, long-term vision
Nearly two thirds (66%) of the most successful businesses in the survey had a formal, long-term vision, compared to just 50% of businesses outside the top 100. Looking to the businesses that scored the lowest on the SME Performance index, only 37% claimed to have a formal, long-term vision.
Rule 4: SMEs should broaden their customer reach and find new markets
Of the top-performing businesses, 65% of these have overseas customers compared to just 40% of the worst performing businesses. Among the best performing SMEs, over a third (34%) identified international expansion as one of the top three drivers for their success.
Rule 5: SMEs need to develop reinvestment plans
22% of the best performing SMEs reinvested some of their profits into the business in the past three years with an average 9% of profits being redeployed. Tellingly, this is nearly double what other businesses admit to reinvesting in their business (5%).
Rule 6: SMEs should engage with local business organisations and networks
Of the top 100 SMEs, 30% had obtained external credit to expand over the past three years (compared to 24% of other businesses). Meanwhile, only 16% of all other SMEs had engaged with local enterprise partnerships or growth hubs in the past three years (compared to 23% of the top 100 SMEs).
Chris Weller, Chief Commercial Officer, Allica Bank, said:
“All small businesses are different, as are all small business owners, but one trait they share is an innovative resilience. Whilst the coming months and years will undoubtedly continue to present extreme challenges, there is no doubt that small and medium sized businesses across the UK will rise to meet them head on.
“To give them the best chance to succeed, though, they need to be equipped with the right tools. There is certainly no silver bullet or panacea for every small business, but as this study has found, there are a number of common factors found in the most successful businesses that allow small enterprises to thrive and that they can consider individually for their business.
“This research has identified common ‘rules for success’ that speak to every aspect of running a business, not just the financials. Once we saw these results, we wanted to use them to help small businesses begin to re-build and prosper, by outlining common factors and then examining how best they can be practically applied to businesses in all sectors of the economy.
“Small business owners and their employees have been hit hard by the crisis, but they have the drive and resourcefulness to breathe new life into the economy and bring energy to post-Covid Britain. Our commitment at Allica Bank is to give them the support they need to do so, every step of the way.”
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.
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