How can banks operating on a 20th century business model adequately service customers with 21st century expectations?
To meet the needs of modern consumers, financial services firms should take a page from the likes of Amazon and WeChat, looking beyond merely digitizing existing services and instead establish platforms that connect digital services, enable services to evolve through partnerships with fintechs, and externally expose services to deliver connected consumer experiences.
Why develop a digital banking platform?
Technologically, the challenges that persist around data, processes, and organizational silos can be addressed with a digital platform that grants visibility and access to data and processes across an organization; the platform becomes the place where everyone in the business (who has the right to know) can see what systems, data, and processes are available across the enterprise and use that to drive standardization, scale, and innovation.
Building such a digital platform and enabling an internal shared services model can unlock unprecedented economies of scale. Product lines can internally develop and share services offered by others, driving increased use of each new service that is delivered. For example, if one line of business adopts an e-signature application as part of a loan application process, every other line of business on the digital platform is able to leverage that capability as well — either as part of their own product or as part of their own internal processes (e.g. a finance department can adopt the service for contract signing).
Digital banking creates connected consumer experiences
Consider the example of a global top tier bank — one of the 20 largest in the world by assets managed. Like many banks, it faced a growing delta between the expectations of its customers — both retail and corporate — and the digital capabilities it was able to provide. In particular, its global capital markets group needed to improve its customers’ experience around payments.
Like with many banks, clients had to navigate across a complex ecosystem of distinct, siloed payment products, depending on what type of payment they wanted to initiate (e.g. trade vs. wire transfer vs. ACH vs. foreign transactions [FX]).
For the customer, the experience was disconnected, manually-intensive, and repetitive. If the customer wanted to compare pricing between payment options, he or she would have to log into a channel for one of the products, enter payment initiation information (such as from account, to account, recipient, recipient address, etc.), get the pricing information, log out to sign back into another product’s channel, enter payment initiation information, note the pricing information, log out to sign into the banking portal for the next product, enter payment initiation information, get pricing information, and so on.
Because of this pain, the bank made a strategic decision to invest in the development of a digital platform that would allow it to evolve and ultimately transcend the limitations of its disjointed customer experience. The bank recognized that payment processes were similar regardless of the type of payment product, such as customer onboarding, payment initiation, pricing, processing, reporting, etc. It also recognized the commonalities in data (e.g. customer data, account information, pricing, etc.) that enable these processes to be executed and customers to make more informed choices.
Rather than having each product group and channel develop separate payment processes, the bank leveraged the digital platform to abstract data and functionality away from the back end systems and package them into discrete units of code called “services” that could be used by any product line or channel consistently. Using APIs to consolidate channel-specific processes with overlapping functionality into a single workflow across the payments value chain led the bank to a greater than 75% reduction in time to process a payment.
How might others in the space look to replicate the success realized by this company? Take a look at our open banking strategy whitepaper to get started.
