Banking reimagined for a connected world

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Picture this: You’re on your way to work when you get an unexpected call from your daughter, studying in a different town. She’s run out of cash and is in dire need of money. She can’t wait till you reach the office and transfer money to her through Net Banking. Worse, you haven’t opted for your bank’s Phone Banking service. Staying calm, you walk up to a roadside ATM. A couple of minutes later, you walk out, content in knowing that your dear one has the money she needs.

The future of banking is here. In fact, banking is going through its “uber moment” as we speak. The banking industry today is in a state of flux, with multiple technology, regulatory and demographic factors cutting across the length and breadth of the value chain – and impacting the way banks conduct their businesses. In response, modern banks are working to reimagine themselves for this new, connected world by offering a slew of new-age services to their customers. RBS, for example, launched its Get Cash feature to do just that.

The constant proliferation of new technologies and the evolution of existing ones have also radically altered customer behavior and expectations, blurring the boundaries between different industries in the process. Today’s digital, connected consumer not only expects, but demands an experience similar to that of an Uber or Amazon when interacting with a bank’s website or mobile app. This, in turn, calls for rethinking the way banks deliver experiences vis-a-vis products to their modern-day consumers.

Innovate or perish – the new mantra for banks
Fintech are causing a massive disruption in the banking industry. By leveraging a combination of agile approaches, frictionless user experiences, and the latest technology, these digitally native businesses are using innovation to take a bite out of profitable banking sectors such as payments and personal financial management (and they’re doing it without the investment incurred by incumbent banks). In the context of our contemporary hyperconnectivity, banks need to keep reimagining their business. The good news is that Indian banks are putting on an impressive show when it comes to transforming from digital to truly digital. With the ever-increasing challenges brought on by new entrants (not to mention the evolution of customer demographics and preferences), Indian banks are making the investments necessary for driving innovation. Most of the big players, for example, are turning their focus toward radical customer centricity, acquiring or investing in Fintech firms, establishing dedicated innovation labs, and/or collaborating with relevant technology partners.

Putting the consumer at the heart of your business
Banks are increasingly following a customer-centric roadmap. And for a good reason: today’s consumers expect a unique kind of engagement with their banks. They want banks to talk less about products and more about how to complete their financial tasks more effectively. For instance, instead of offering customers bank alerts or cheque books, it’s more pragmatic for banks to offer services that remind their customers to pay their monthly rent. The aforementioned Fintech companies are already leveraging technology innovations to provide such customer experiences…

Delivering personal experiences for more focused engagement
The tech explosion has made it an uphill task for banks to differentiate between consumers’ expectations across different demographics, geographical areas, genders, etc. Access to relevant data and clear insights about a customer’s present context is critical to creating powerful, personalized experiences. While banks have explored traditional Business Intelligence (BI) tools, they need to broaden their horizons and shift toward using data engineering and data science. Some financial institutions are seen making that move; recent trends, for example, suggest that banks are increasingly using predictive analytics to offer focused services to their customers.

Exit omni-channel experiences, enter opti-channel experiences
Omni-channel banking experiences revolve around allowing the consumer to access all of the bank’s services across all channels. Banks are now looking at ways of replacing this with a more recent phenomenon: the opti-channel experience. This means banks will cease to deliver the same experience to their customers across multiple channels, but will cater the experience to both the channel and consumer at hand. Case in point: upon losing your card, you get an SMS alert. While your bank may choose to send you alerts through several channels, SMS may be the optimal channel for this particular situation and, therefore, deemed ideal. This is a major shift that banks, especially those looking to redesign their strategies for competitive advantage, should consider.

Leveraging technology as an enabler
Having zeroed in on a customer-driven strategy, banks must explore technology’s full potential – both as a driver and enabler of innovation.

So, which key technology trends are likely to disrupt the Indian banking industry in the foreseeable future? For starters, breakthrough innovations revolving around the Internet of Things (IoT) are expected to redefine the way banks deliver services to their customers. In addition, new-age technologies such as machine learning, conversational UI (e.g., Alexa), chatbots, blockchain, and cloud native solutions (among others) have the potential to usher in banking’s next wave of innovation. Chatbots, in particular, will make banking services customer-friendly, cost-effective, and in sync with how Millennials operate. Advances in big data and data sciences are creating a massive opportunity for banks to create a customer data platform that can provide 360o views of customers across various first party, second party, and third party data sources. Banks can leverage all of these technological advancements to gain more contextual insights about their consumers, better understand user intent, and become more relevant in each consumer’s life.

The biggest opportunity? These technological advances stand to humanize bank’s interactions with their consumers.

Creating a seamless ecosystem of services
Open banking, a connected ecosystem for financial and non-financial services featuring an entire gamut of service providers, is touted as the future of banking. API (application programming interface) has emerged as one of the key disruptive banking technologies in recent times. Driven by European standards, the concept requires banks to move to a common API standard that allows customers (rather than traditional banks) to avail all financial services.

Experts believe that open banking will drive the creation of a large financial ecosystem that connects with people and businesses alike to achieve both parties’ desired results. For this, banks will have to think like fintechs, either innovating as fast as them or partnering with them to provide the best experiences to their consumers. SapientRazorfish is already working closely with a few banking clients, designing apps and services (such as split bill apps) that can be utilized to deliver better business results.

Mobile banking to deliver better customer experience
The future of digital banking isn’t online, it’s on the smartphone. Quick to realize this, banks are investing in mobile banking across the globe to support a wide range of mobile touch points. The goal? To enable customers to be faster and nimbler with their payment investments – even on the go. With just a few taps and swipes on her smartphone screen, a customer should be able to find and complete the same loan application she started on her bank’s website. Customers are using their mobile phones to access their account balances, pay someone, top up a phone, and find out about financial products and services.

There are tell-tale signs of the increasing adoption of mobile banking: Money transfers using mobile banking and immediate payment system (IMPS) witnessed the highest rise in over 12 months ending October, 2016. Mobile banking transactions went up by 175%, while money transacted using mobile banking grew 369% from October, 2015, to October, 2016.

Parting thoughts
Interestingly, the competition landscape for the banking industry is changing significantly. Indian financial platforms like Paytm and Airtel Money have recently acquired partial banking licences. Alipay, an online payment platform by Alibaba Group, has emerged as one of the largest banks globally. Retail players like Amazon have unveiled their own financial services, as well. And all of this spells tough competition from diverse sets of industries, ushering in a whole new era of future-driven banks.

With technology touching every aspect of our life, the advent of a largely digital society seems more imminent than ever before. To survive, banks must increase their momentum of change and remain focused on the desired outcomes to ensure a successful digital transformation journey. Players in the Indian banking and financial sector couldn’t ask for a better time to find the right partners for this journey.

- By Prashant Mehta, Vice President, Global Service Line Lead – Systems Integration & Data, SapientRazorfish

The thoughts and opinions shared here are of the author.