The Digital Customer Experience via Open Banking APIs: Interaction in Social Graph!
Tuesday, August 27th, 2019
“One waits for time to change, the other tackles it vigorously and acts.”
Dante Alighieri or Johann Wolfgang von Goethe
Inspired by the article published in IFZ Retail Banking Blog of the Lucerne University of Applied Sciences, Bank-IT: Signs of Change Are Compressing by Dr. Urs Blattmann, I have thought about the signs of the times and show how challenges can be met with our solutions and how USPs can be created for the bank.
The dilemma between compulsion and competitive agility
It remains undisputed that Bank IT, along with technology, is driven by business priorities and subject to constant change. However, digitization is only trendy when innovative ideas can really be implemented. The examples of regulatory requirements and cyber security, in contrast to the expansion of front processes via additional channels, don’t bring any additional income to amortize the investments. All unavoidable extensions cause high costs in the integrated core systems, the interfaces to peripheral silo solutions and a time shortage of the 24/7 processes: Alone for the run-the-bank requirements!
There is also the mentioned parallel to the situation 15-20 years ago, meanwhile with other providers, according to a Swisscom survey currently in Switzerland mainly Avaloq, Temenos, Finnova, Olympic, TCS BaNCS and many more in the world like Finacle Infosys, Finastra, Fiserv, FIS, Sopra Steria. They are subject to the compulsion of today’s requirements with increasing complexity of the entire system. This also applies in particular for all market leaders of the industry, both by balance sheet total as well as assets under management, due to the seniority of their proprietary, highly praised transaction machines. These are often based on hardware and programming languages, which were supposed to have exceeded the lifecycle of technology and maintainability ten years ago. Board chair, CEO, COO or CIO may hope secretly to timely inherit the worst case scenario with the promotion in the eternal hunting grounds to their successor.
The ability to finance a green-field start or a migration to an alternative core systems may not be an option given today’s earnings outlook. The questions asked about competitiveness, as well as the limited punctual breakage of the dams as a wave of change, thus apply for the IT of all market participants with competitive urgency.
Alternative with Social Toolset from Nicheplayer
The IFZ author calls for flexibility, individuality and low costs as well as for management – despite the complex environment – scope for timely and agile action. In his conclusion, he can observe the necessary technologies as well as initial solutions and some progress with respect to ‘time to market’ from the current suppliers. New providers are targeting individual niches and essentially try to win customers with attractive front-end solutions, ‘Best User Experience’ at low costs! In this context I would interpret this with a widespread definition of ‘User’ as Employee in B2E, Client in B2C, and Intermediary as Partner in B2B on a Digital Experience Platform.
As a somewhat generalized starting point, various studies show that the majority of Retail and Private banks hardly differ with the digitization of the core banking solution and e-banking for the retail segment. The differentiation of the offer as a USP, unique selling proposition, is understandably difficult. Those who want to set themselves apart from the competition focussing on higher customer segments can probably achieve this only with a situation-appropriate expert participation in the personalized, digital customer experience.
This concrete objective is explained here with exemplary challenges, their solution prerequisites and a conclusion from the point of view of a niche player such as Enterprise Know How as an innovator and accelerator for a time to market implementation by offering Social Toolset.
Challenges B2C
Are the customer advisors competent in all specific problems or does it require the involvement of experts?
Examples:
- Before retail customers are contacted as possible leads / prospects for Consultancy or Discretionary mandates, marketing research criteria and analysis metrics help to present customer-oriented offerings.
- When the CFO in the Executive Board of an internationally operating corporate client changes, a team of experts for liquidity, capital raising, currency risks, special financing and pension fund investments for future coordinated personal assistance must be formed in order to avoid the CFO move to his previous bank relationship.
- The succession of a beneficial owner due to death in the context of a Family Office mandate implies the regulation of new ownership (BO) in boards and external trusts as well as a review and reconciliation of the current investment strategy with respect to the risk capacity and tolerance of the new tenure composition.
The problems require the creation of agile structures of the B2C customer advisor with internal experts as well as with his external private or business customers for efficient communication and customer-oriented interaction.
More about the Use Case Private Banking, part B2C
Challenges B2B
Can the relationship managers in the EAM / FIM and Global Custody segments differentiate themselves from global and local competitors?
Examples:
- The benefit of economies of scale for big players, who provide intermediaries with free transaction data for their own measurement systems can be competed by the asset manager’s offer of a revolutionary client experience.
- When advisory and custody mandates generate little commissions and only periodic custody account fees in an uncertain geopolitical situation with passive managers, an ad hoc investment committee could recommend decisions such as hedge strategies for rebalancing decisions.
- As the bank’s custody service for end customers is limited to standardized asset and account statements, an individual offering with personal coordination of the risk appetite with the asset manager is increasingly desired.
The problems require the creation of agile structures of B2B customer service with internal experts as well as the external partners and end customers for efficient communication and end consumer-oriented interaction.
More about the Use Case Private Banking, part B2B
Challenges B2E
Are intranet phone directory, line organization chart and restricted sharepoint folders appropriate for specific personnel search?
Examples:
- Programs and projects that must comply with BIS rules mandated by national regulators should be connected internationally with all stakeholders such as Sponsor, Steering Committee, Project Leader in order to join forces for analysis and implementation.
- Whether central compliance has identified the suspects linked to PEPs of all branches and subsidiaries mentioned in the Panama and Paradise Papers can only be coordinated with geopolitical research through a money laundering Task Force.
- Despite our scepticism about existing and planned crypto currencies, such as Libra, we need to use cross-border expertise to guide client advisory behavior towards interested investors in our clientele to prevent asset outflows.
The problems require the formation of agile, multi-dimensional B2E structures for efficient communication and pertinent interaction beside one-sided line organization structures.
More about the Use Case Private Banking, part B2E
The Open Banking philosophy
In contrast to the previous generation, today’s vendors, such as Avaloq, Crealogix, Finnova in Switzerland or many others worldwide like Finacle Infosys, Backbase, Finastra, Fiserv have recognized the signs of the time and the catching-up need of their bank clients as a state of emergency and made great efforts to promote the open banking philosophy for the bank itself or fintech providers. When using Social Toolset, it is deliberately not about the disclosure of data to third parties but the self-use of basic data such as employees, customers, structures and, if available, relations. The reference is made via the defined API with in-house data sovereignty, be it in the cloud, on premise or with a hybrid architecture. Data is in each case protected by a specific security layer.
As presented in the graphic below, data is accessed through APIs that have a hinge function within the ecosystem. As an example, in avaloq.one the applications based on it can be created in a standardized development environment and offered on a marketplace. It does not matter which container – whether Liferay, Kubernetes or others – is used as the integration layer.
Of course, all methods of application realization are also available when using APIs: from a single page application (Web App) to the sophisticated Java portlet with integrated front and back end.
Conclusion
In order to be able to meet the complexity of the global framework on a customer-centric basis, efficient communication via direct interaction over the desired channel in fixed or temporary structures with internal and external participants is a condition. These are visualized with Social Toolset and also connected for the next session. Agile and customizable!
The digital employee, partner and customer experience defined in this way can be processed with different variants directly from the bank, with the core banking supplier, the previous implementation partner, together with the niche player in an agile project organization to timely integrate specific requirements.
A strong focus to the personalized digital customer experience is a giant step for the strategic business, if not the business model. It will break the dams by opening up internal and external communication & collaboration and accelerates the change for better revenue prospects and perspectives!
Initiate the change today, find out more about our solutions and get in touch with us!
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