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Commercial Credit News
|Moving to Digital Banking with API first|
|Tuesday, 21 June 2016|
Digital business presents very real challenges and opportunities for traditional financial services organisations, but where to start? The obvious place is digital channels and an omni-channel approach; breaking traditional channel silos whilst also ensuring security and data confidentiality. Getting to know and use existing systems in the context of a new landscape also presents real opportunity but, alongside this organisations must deliver innovative services that meet customer demand – rather than pushing traditional services that are no longer relevant. In fact more than that, in digital business, customer centricity has come of age and it’s no longer a nice to have. To be a true digital leader, it’s all about bringing it all together and leading with innovation.
By Bruno Cambounet, VP Banking and Financial Services at Axway
Let’s look at what this means in practice.
How about a personalised loan, on the fly?
Long standing customer Anna, is visiting an area with a view to buying a house; she’s looking to make her first property purchase. As she wanders down a much loved road and finds a house for sale, she asks herself, ‘what would that cost me? Is that dream possible?’ Anna doesn’t want to visit the web and identify which product might work for her or make an appointment in a faraway branch, she wants to know now.
If her trusted bank gets the contextual information such as the local real-estate cost at that moment, they can cross reference this with all the information about Anna’s income and spending habits and make a fit-for-purpose personalised offer before she reaches the end of the road.
With this ‘simple’ case, what are we learning?
Nurture all channels
The first imperative is an omni-channel strategy. Today customer interactions must happen consistently across a wide variety of channels, each with their own distinctive nuances. For traditional banks there are five major channels: mobile devices, website, call centres, physical branches and ATMs. Customer interactions can start anywhere. True, today, many start on a mobile app, such as in the above case, but customers may move to the main web site or visit a branch to continue or complete the process. To ensure that customer interactions are effective, generating positive business outcomes, all channels must be available and offer integrated and consistent service levels. Channels need to be seamless - an interaction through one channel needs to be instantly visible and accessible in all others. With an API strategy banks can create the necessary points of openness, ensuring consistency across channels, whilst also fulfilling security and compliance requirements.
But omni-channel is just that – a channel, it’s not a service itself, it’s a beginning.
Use what you have
For traditional Bank and Financial Services players, the foundation of a digital business strategy must be to leverage existing systems and use them in a totally new way. Success will involve securely exposing a multitude of back office and core systems to new applications to deliver value, service and an improved experience for the end customer. From the technical perspective APIs are the best way to do this because they enable this leverage whilst also managing access to back end system and information.
Always walk in your customers’ shoes
Today, when you walk into a bank or visit the website, you’re greeted with a portfolio of quite separate services: account management; loans; shareholdings; wealth management, the list goes on. The problem is, the focus is on products, not on customer needs - banks still push their offer. But digital business is provoking an important shift: it’s driving the banks to start helping customers with their financial journey, to achieve their goals – rather than peddling a list of financial products they may not want, need or understand. To operate in this new way Bank and Financial Services players must understand the customer at a particular moment in their life. They must predict, or in the worst case, respond to, customer needs and propose tailored services at the right time, through the right channel. The good news is banks have all this information and can utilise APIs to interact with data analytics applications to make accurate customer want and need predictions a reality.
Innovation, innovation, innovation.
Traditional players will achieve real innovation by proactively engaging with a wide range of external ecosystems. There’s a plethora of app based services, partnerships to capitalise on, and a whole host of other relationships outside their internal operations. Working in a more open and creative way, with services you may not initially expect to be relevant, actually leads to the development of entirely new services that bring added value to the end customer. Combining data, information and content from various elementary services with their own in real time creates something totally new: a Mashup. In this new landscape traditional services need to be available, but not pushed in the same old way. APIs play a big part in digital because they enable the innovation layer; the integration between internal bank information and the broader customer ecosystem.
Bring it all together, the Mashup.
In the above example, through embracing an API strategy and management to create the right interactions Anna’s bank can answer her needs before she reaches the end of the road.
The bank interface requests authentication credentials as Anna signs in on her smartphone. Anna’s also prompted to enable location services on her device. Now her bank can leverage all the knowledge they need. From their back office systems, links are established between loan services data, risk and screening apps and external housing market data for that specific area. Within seconds Anna knows how much a mortgage would cost her per month and she knows it’s the best offer because her bank has considered all the variables. The bank has leveraged traditional systems. APIs have enabled the bank to integrate easily, smoothly and securely, with the wider ecosystem, in real time.
This is true innovation and it’s how banks must evolve, creating a totally new service with high value and relevance for Anna, and of course the bank. Voilà, a Mashup.
Take the lead.
In digital business traditional Banks and Financial Services players could actually have an enviable head start; leading in digital business is still there for the taking. They must leverage the wealth of data, information, customer experience and knowledge they already have, adopt an omni-channel strategy and then engender digital openness and interactions with the wide external ecosystem. This approach will create an environment and culture that delivers true innovation and digital leadership with a low cost to income ratio.
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