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How to prepare for the death of linear banking

Source: Finance Derivative

By Sudeepto Mukherjee, Executive Vice President, Financial Services at Publicis Sapient

The future of banking is ever-evolving as banks must adapt to new technologies and customer preferences. Over the last few years, most banks have used Customer journeys to become more customer centric and enhance core areas of their business business. Focus on improving services like “onboarding” or “getting a loan” have resulted in a better experience and faster response times for most customers.  However, customer journeys remain far from what they could be – most are designed for the most basic experiences and aren’t hyper-personal or specifically targeted. Legacy technology , siloed operating model and the inability to capture timely metrics around customer needs and pain points  can be barriers to overcoming this challenge.

As a result, customers are inevitably offered generic journeys with a thin veneer of personalization that barely scratches the surface of feeling tailored.  But with the rise of digital banking, innovative FinTechs, AI, machine learning and data analytics, banks can now offer customers infinitely more options than ever before when it comes to managing their finances and a clear trend towards more personalised and non-linear banking experiences is emerging.

Because of this, the future of banking will be significantly different. An area where huge progress can be made is hyper personalisation – experiences  will be customized for the individual by meeting specific needs and processing a wide range of metadata around behaviour, assets, age, ethnicity, gender and literacy. Customer journeys will ultimately  feel much more personal and inclusive.

For banks, this means moving away from making decisions based on broad segment categorisation to analysing and understanding data on an individual level.

Troublesome journeys

One of the catalysts for these changes is that while the current focus on journeys has driven optimisation and cost savings, it has failed to significantly move the needle on increasing wallet share (through cross sell) and enhancing customer experience. Most journeys follow a traditional “channel marketing” style – a linear process of a product or service from start to finish. This process raises challenges because channel marketing is so focused on the endgame, in terms of distribution, that it sticks to a rigid design and fails to provide optionality to customers. With this approach and these constraints that allow for no diversions, the result is that customer journeys are lacklustre and in need of an overhaul.

A customer journey is typically designed as a ‘happy path’. But when companies have ‘unhappy paths’ to deal with, like seemingly insurmountable expectations around products or experiences, there is little room for flexibility or adaptation. The distribution-led channel approach makes the customer journey unresponsive to feedback, for example, which isn’t ideal.

Once linear customer journeys are replaced by always-on targetted solutions, the pathways can become more reflexive. The result will be tailored feedback that can be sent in real-time to make the journey more relevant to solving specific needs. Here’s how this change could happen.

The human approach

Every brand wants to be both inclusive and accessible. In the financial services industry, banks are arguably one of the most integral parts of societal infrastructure. If your money isn’t held in a bank, it’s likely you don’t meet the most basic requirements for survival, such as getting a home or a job, and as a result you become unable to fulfil basic daily tasks and functions. You see a huge focus in developing countries like India to make banking more accessible to citizens. This is a win-win as banks benefit from rising customer deposits and citizens benefit by getting access to more financial products and services to enhance their wealth.

But, banks face a dilemma: their products and services are targeted towards people who have money as they derive a majority of profits from them –  yet by not catering to people who don’t have money, they are missing out on a huge opportunity to enhance future profits as these people can significantly enhance their wealth by becoming bank customers.

The big reason for this is the high cost of serving the different cohorts and this cost of variance means that banks can’t be inclusive to those whose money isn’t sitting in a bank or to people of protected characteristics because it’s simply too expensive. But as we have discussed above, there is not only a moral and societal expectation but also a huge financial benefit for banking providers to be inclusive of all members of society. The core reason for their inability to do this comes down to the limitations of technology, a gap in data and the degree to which experiences can be adaptive and hyper-personalised. Computation Design where machines and algorithms can leverage data to provide specific experiences tailored to very individual needs can help change this paradigm.

Using machine learning to emulate human experience

The human approach and computational design thinking are aligned in many ways. Both approaches operate on the idea that experience is personal, subjective and contextual. In addition, our understanding of society will be increasingly necessary in creating those adaptive and inclusive experiences.

Computational design will drive adaptive experiences for customers through the power of artificial intelligence and machine learning. Machines will be able to create experiences without a need for direct human intervention and this will, in turn allow experiences to scale. Going forwards, scaling won’t be about our ability to design – it will be about our ability to understand different populations of people and the subtle differences in their needs.

Diversity and inclusion targets are targets which everyone should be morally driven to strive towards because there’s absolutely no question that being inclusive and representative of society is the right thing to do and drives financial and mental well being for citizens To reach the point at which a financial services organisation can be inclusive, it must move on from generic customer journeys and focus on adaptive experiences. It must start considering the data that it wants to capture now and this process is about getting that data through current systems, interfaces and experiences.

The next major issue that banks will have to address as they gear up for the future of their customer journeys is how to wrestle with their privacy policy. This is the degree to which organisations think about data privacy: what they can and cannot capture and what they will and will not do with the data in ways that are more transparent and explicit than they are now.

Two things that banks can start doing now are thinking about the richer data needs of the future and start capturing data now, to collect high-quality data sets that will support personalisation in the future – and understand that data privacy and customer data policies should be much more intentional to ensure they’re aligned with customer values.

Although many current journeys lack flexibility, banks can start analysing them now because they can still be valuable in terms of data captured for the future. And, even if they can’t act on it right now,  organisations should begin to capture data –  to build and gather information in advance of its value. This will make the process of an organisational shift towards non-linear banking journeys in the future much easier.

The End (of the customer journey)

The traditional linear banking customer journey will  continue exist to fulfil the most basic of needs like onboarding and providing access to core banking services. . However, banks need to start shifting towards a more adaptive model delivering first-rate, personalised customer experiences based on individual needs. The technology will soon exist where consent driven customer data will underpin a more direct customer experience engagement method that utilises chat-bots, real-time support and advice in order to truly meet customer expectations for 2023 and beyond.

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Leveraging Technology for Sustainable Logistics and ESG Compliance

by Will Lovatt, General Manager and Vice President, Deposco Europe

A growing number of consumers are demanding packaging that is sustainable and environmentally friendly.. Consultancy, McKinsey, recently launched a survey to explore people’s attitudes to the topic across 11 countries worldwide. In all surveyed countries and across end-use areas, the majority of respondents claim to be willing to pay more for sustainable packaging,

Of course, features and functions remain important, but the sustainability and ESG (Environmental, Social, and Governance) aspects of the logistics process are becoming increasingly significant in consumers’ purchasing decisions.  The entire supply chain, including the sourcing of raw materials, manufacturing processes, packaging, delivery methods, return policies, labour practices, and initiatives for regeneration, is under scrutiny. Today’s informed consumers are making deliberate choices, favouring brands and delivery services that align with their values on these fronts. Therefore, it’s essential for brands to not only maintain high standards of service but also to provide a variety of delivery options. This range should cater to immediate needs as well as offer solutions like batched deliveries at convenient pick-up points, catering to the growing demand for flexibility and sustainability in the shopping experience.

Regulation and risk management

Consumers are undoubtedly a driving force in ESG-focused logistics transformation, but businesses must also meet a growing number of regulations that are driving the need for ESG considerations in the logistics sector. For example, the European Union’s Sustainable Products Action Plan includes several requirements for businesses to provide information about the environmental impact of their products. Now, we expect regulators to be closely monitoring final mile delivery and whether zero emissions vehicles are being utilised, at least within urban areas.

From a risk management standpoint, ESG considerations are critical. Neglecting ESG risks exposes businesses to reputational harm, financial penalties, and legal repercussions. Today’s consumer sentiment is such that unsustainable logistics practices can prompt consumer boycotts or lead to regulatory fines, underlining the importance of ESG compliance in modern logistics operations.

The role of technology in greening logistics

So what can businesses do to mitigate ESG challenges? To address ESG challenges, businesses must transition from traditional paper-based systems to advanced technology solutions. These solutions enhance visibility across the entire supply chain, from production to delivery. Distributed order management systems, for instance, offer real-time insight across extended fulfilment networks, enabling the optimised allocation of consumer orders to the most suitable stock sources, balancing cost and speed. In today’s era of stringent ESG and sustainability standards, it’s crucial for organisations to have comprehensive oversight over the movement of goods and the various stakeholders involved, beyond mere timing. This technological shift is essential for meeting the evolving demands of ESG compliance and sustainable logistics.

Actively tracking the credentials and integrity of every checkpoint in the supply chain is now everyone’s problem. Consumers care deeply about the ethical sourcing of raw materials and the labour practices of third-party logistics firms involved in product sourcing. Technology can allow organisations to map the complete movement of a specific customer order, from acquisition to  final shipment, and then notify that customer directly.

Organisations then need to implement sustainable practices in the warehouse, leveraging technology to optimise operations. This includes using technology to determine the most efficient customer packaging sizes, reducing waste, and guiding staff on consolidating orders to minimise shipments and cut carbon emissions. Additionally, offering consumers options like click-and-collect can align with their existing plans, promoting sustainability rather than just delivery speed. Providing flexible delivery options is increasingly seen as crucial, as the fastest route is typically not the most eco-friendly.

A sustainable future

As data and computer security threats evolve, we’re now transitioning to increased controls around how our products are made, procured, packaged and shipped to the public. For a variety of reasons, from ethical to legal and public sentiment, ESG considerations and controls are becoming increasingly important in logistics and fulfilment.

Alongside this, the trajectory is for more sales to be made via Direct-to-Consumer channels, the desire for more convenient services and customer willingness to hop brands means that businesses  must prioritise sustainable practices. Consumers now expect the ability to customise delivery parameters and choose from transparently-priced options, or they will take their business elsewhere. Brands must manage their order and delivery options effectively to stay competitive.

The key to improving supply chain management lies in adopting sustainable order management and fulfilment technologies. Companies should invest in the latest platforms that support best practices in ESG strategy. These advanced solutions enable compliant processes, cost-efficient operations, increased sales, efficient DTC fulfilment and positive customer experiences.

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How AI is turning IoT data into actionable insights in the public sector

By Mark Gannon, Director of Client Solutions at Netcall

The use of IoT devices within the public sector is growing rapidly, presenting opportunities for greater efficiency, cost savings, and vast service improvements among a plethora of other benefits. From transportation, infrastructure and even waste management, the ability to monitor and capture data in a range of critical areas has the power to transform organisations across the sector.

Health and Social Care is one setting where IoT devices can drive real impact by significantly improving the day-to-day lives of vulnerable people. In fact, late last year, it was announced that the Glasgow City Region would receive over £3 million to deliver a Health and Social Care-focused project driven by IoT technologies, as part of wider 5G connectivity funding to make public services better. Remote sensors can be used within social housing to detect and control factors such as damp and mould whilst motion sensors can alert emergency services if a vulnerable resident has fallen – not only helping to provide better care, but enabling care to be delivered more efficiently and rapidly to those that need it.

With public sector spending under constant scrutiny, and wider budget cuts increasingly forcing those operating in the sector to achieve more with less, technology that can easily connect and exchange data from device to system, removing a number of manual workflows and processes, is proving invaluable. Taking that one step further, being able to leverage that data and turn it into actionable insights in the future is fast becoming an exciting reality.

So, what’s holding the public sector back from leveraging IoT devices in this way?

The short answer: Data.

Mark Gannon

Managing IoT-associated data adds a layer of complexity to those responsible for it. With IoT devices typically uploading data multiple times a day,  analysing, and actioning the torrents of data can soon become a mammoth task.

IoT and AI: a winning combination

The application of AI alongside IoT is rapidly being recognised as a key solution to this rising data deluge. Not only can it ease the administrative burden by ensuring the IoT devices and any associated workflows are working effectively, but it can also be used to spot any trends and patterns within the device data. Insights such as these can inform longer-term solutions and decisions whilst also acting as predictive analytics to anticipate the likelihood of certain events occurring in the future. 

In the case of Health and Social Care, this could mean predicting the probability of a vulnerable resident having a fall based on previous data gathered and putting preventative measures in place to reduce this. IoT wearables are another rising trend in the healthcare setting and can be used to track vital signs and detect anomalies that may need urgent attention. Meanwhile for social housing, using smart solutions including intelligent automation and IoT can help housing providers significantly reduce their risk management burden. For example, the data gained from IoT sensors in tenant homes can be used to proactively identify damp and mold risks and automate alerts.

Looking at the public sector more broadly, we could also see the combination of AI and IoT optimised services such as traffic management, waste management right through to public safety and even managing air quality. By using AI to analyse and draw insights from IoT devices, the concept of the smart city is much closer than we think. AI can use IoT sensor data alongside cameras already in position to adjust traffic signals, optimise routes and even detect incidents and alert public services. It is also expected to play a key role in managing and reducing public service energy consumption, by monitoring and controlling street lighting and other public infrastructures.

Turning insight into action

Whilst AI can take care of the initial analysis, to truly extract the value from IoT data, public sector organisations must ensure these insights are fed into the right systems and married up with the correct workflows to turn them into action.

Fortunately, with the use of application development tools such as low-code application platforms, organisations can rapidly create processes that utilise IoT and AI-driven data, connecting it to internal as well as third-party systems. These solutions move away from traditional development, which can be costly and time-consuming, and can empower broader teams to rapidly build and develop their own applications using a visual drag-and-drop interface. By doing so, organisations can quickly integrate systems and technologies to access actionable data.

As AI and IoT technology continue to advance, we can expect to see more innovative and impactful use cases in the future. Unlocking the benefits, however, will hinge on having the systems and processes in place to trigger next steps. By leveraging the tools that enable this, public sector organisations can use the data from connected devices to create powerful, proactive and dynamic services that fulfil the growing needs of its customers.

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Enhancing sustainable commitments in retail banking

Source: Finance Derivative

Mikko Kähkönen, Head of Payment Cards Portfolio at Giesecke+Devrient

Today, more consumers are keeping environmental pledges from banks at the forefront of their financial decisions, and those banks that fall behind their competitors on sustainable action are risking the loss of customers, particularly among the younger generation. This shift highlights a growing expectation from consumers for their banks to make and uphold sustainable commitments, signalling a change in consumer priorities where environmental responsibility is increasingly seen as essential, not just an optional extra. Giesecke+Devrient research shows that as many as 64% of Gen Z consumers would be happy to switch banks if their current provider didn’t meet their expectations.

However, sustainable commitments must be authentic to avoid any accusations of greenwashing. Unfortunately for the banking sector, consumer trust is being strained as greenwashing incidents have risen by 70% around the world. Banks can’t simply make claims that can’t be backed up; pledges must be supported by evidence. There’s a number of practical steps they can take to prove their credentials.

Banking on the evolution of cards

The bank card has increasingly become a physical symbol of the relationship between consumer and bank. As such, banks have taken steps to ensure that it is designed with sustainability in mind. Many are now created with recycled PVC material, commonly up to 100%, with a lower carbon footprint.

Some banks are elevating their sustainable credentials by utilising cards that are made from plastic collected in oceans and coastal regions, helping to clear up the world’s beaches. Alongside this, others are issuing cards made of polylactic acid sourced from (inedible) corn starch. This is a fully renewable biomass that could be industrially composted.

Sustainable cards can then encourage further sustainable initiatives. We’re more often seeing issuers now actively taking part in local conservation, community development and educational projects around the world to help benefit the planet. Communicating these efforts to customers can help reinforce sustainable credentials and leave tangible evidence that proactive action is taking place.

Contributing to the circular economy

Powering the sustainable credentials of issued cards is one aspect, but it’s also vital that banks encourage their customers to do the right thing with them once they expire and they need to be discarded of. We’re already seeing prominent banks making progress in this area. UK retail bank, Santander, has launched a pilot scheme in branches and ATMs that encourages customers to return their outdated credit and debit cards for recycling, for example.

The collected cards are then turned into plastic pellets to be used elsewhere, for instance to make outdoor furniture, sponsored by Santander, for local communities. As more banks opt for card recycling, consumers will be empowered to dispose of their old or expired cards in a green way and help to reduce ecological footprint.

Into the digital world

Outside of card innovations, retail banks can add to their credible green claims with digital solutions. As an example, the card issuance process has typically involved paper letters, with additional PIN letter, that are posted out to customers to activate their payment cards. Instead, an ePIN service can enable customers to instantly access their PIN via their choice of a mobile app or SMS message, reducing paper waste and waiting times.

There are also innovations taking place in terms of QR codes and augmented reality (AR) solutions to enable digital marketing offerings. This means that printed collateral doesn’t need to physically sent out in the post. The more that these types of communications are sent out digitally, the more that consumers see a tangible commitment to sustainable practices.

Banks can even take an additional step by deploying third-party partners to track the CO2 footprint involved with every purchase or payment. By opting for organisations that have a solid track record in green practices, such as supporting product certifications and information on eco-products and their claims, they can make steps to compensate for each transaction carbon footprint.

Contributing to the green story

To ensure they don’t come under any criticism regarding their environmental claims, banks and financial institutions have the opportunity to adopt sustainable practices that align with their customers’ expectations for eco-friendly commitments in both their physical and digital services. They can introduce banking cards made from recycled or entirely compostable materials, eliminating plastic waste.

Digitally, banks can minimise unnecessary paper use by employing online applications to simplify the process of delivering PINs. By innovating in these domains, they can fulfil their environmental responsibilities and establish that essential trust with consumers, contributing positively to the planet’s wellbeing.

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