Connect with us

Business

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.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

2024: THE year for customer experience enhancement

Source: Finance Derivative

Rob Paisley, Director, Banking and Financial Services, SS&C Blue Prism 

How recently have you relayed to someone the immaculate service that your tax office, bank or insurance company provided you with? From renewing a bankcard, buying a house or undergoing an investment fund transfer, financial organisations are not noted for their NPS scores.

Nowadays, banking customers find the service inconvenient, due to errors, hidden fees, delays and fund-accessibility issues to name a few, not to mention that financial organisations must compete in a world where online shopping is only a few clicks away. In fact, in terms of satisfaction, customers rank their streaming and parcel delivery service higher. Highlighting the general dissatisfaction is the TrueDigital Quotient, standing at a meagre 25%, emphasising the consensus amongst customers regarding transactions processed wholly through digital channels.

And, while large financial organisations and banks are addressing enlarging customer satisfaction, decreasing operational costs and steering revenue growth by using artificial (AI) solutions at a future time, wouldn’t a more reasonable solution be to manage digital processes through investment in existing intelligent automation (IA)?

Neobanks and digital banks leverage intelligent automation for faster customer journeys. This includes ‘know your customer’ checks, digital onboarding, and seamless processes, catering to both digital and traditional customers effectively – meaning customers can get what they want quickly and without pain. For younger customers, this means digital banking, while traditional customers are provided with better service at a physical location that includes digital offerings.

In banking and finance, most companies think of RPA-IA as an efficiency tool, but significant opportunities often unexpectedly arise when they start to deploy it. Often, it’s the customer experience that benefits most as it’s not just about efficiency. Automation software can help re-imagine your offerings with the customer at the center of it. Amidst the AI rush, revisiting foundational basics before proceeding may be prudent, as IA establishes essential groundwork often overlooked.

Repeated shortcomings for the banking customer

From routine tasks like mortgage applications to specialised services, such as closing accounts, infrequent or one-time customer experiences, significantly shape long-term loyalty and recommendations.

Let me paint you a picture with a tangible example of why people might take their business elsewhere, to illustrate how today’s predominantly young customers are not brand-loyal, and seek the easiest route to fulfil their needs swiftly.

If you join a cloud-based digital bank that has no branches, all transactions will likely be delivered by a 24/7 customer support hotline. Certain banks like this also don’t do checking accounts, only high yield savings CDs and loans which many people are attracted to given preferrable interest rate offers. This all sounds great, but you still run into the infancy of some of these technologies.

To do a mobile cheque deposit, we’ve had clients say it might take 14 days to clear. That’s not good enough. Even two days isn’t good enough given the technology available for these processes. It may also require the customer to write a restrictive endorsement on the back of the check saying it can only be deposited at the specific bank. Once the endorsement is written, it can’t be taken anywhere else other than that bank. If they reject it, they don’t have branches, so customers can’t walk in and talk to a human being and talk to someone.

Anything that improves time to resolution in a self-service fashion on a digital channel helps, but in reality, it’s a dichotomy. How can you have a cashless society until you solve basic issues like that one? It’s a pain to transfer out and you don’t really want to, but lethargy is inherently baked into the system so anything that can speed up the process is going to improve the customer experience.

Dissatisfaction often goes unvoiced, with customers silently departing without notice. Many companies remain unaware until weeks later, indicating a blind spot in recognising and addressing evolving customer behaviour.

With so much money at stake why are organisations struggling to get it right? This year, customer experience takes center stage, with forward-thinking companies investing in process intelligence, business orchestration and automation. Those lagging lack measurement tools and awareness of their shortcomings. Banks excelling in this realm employ more than 500 digital workers and meticulously measure outcomes, while others trail behind with fewer than 10 or none at all.

Cash no longer reigns supreme

Northern Europe boasts the largest global digital banking market, with Sweden dominating with a 98% cashless economy. Nordea, a leading bank in the region, spearheads this transformation by prioritising customer-centricity around the concept of ‘the idea of something better’ through cutting-edge mobile and digital banking solutions. Despite its 200-year legacy, Nordea embraced online banking early on, and in 2015, it adopted banking automation software to revolutionise its operations. Some six million transactions are processed by its digital workforce, including simple tasks such as new card requests, reducing errors and costs, allowing Nordea to tailor its services based on customer preferences.

“It’s one of the key aspects where we want to be the leading bank. We have invested a lot into our mobile bank, which is regarded as the best in the Nordic markets,” says Ossi Leikola, Head of Operations at Nordea. “We also believe very much in a personal relationship with our customers – that’s why we’re very interested in omni-channel.”

Through Nordea’s employment of almost 400 workers and 450 automated solutions for its 10 million customers around the globe, customer satisfaction levels have transformed. Subsequently, by using SS&C Blue Prism intelligent automation, the bank is positioned as a regional leader.

Where customer experience is concerned, efficiency is crucial to retaining loyalty. Companies providing customers with prompt, precise interactions excel in the industry. Intelligent automation solutions streamline transactions, enhancing customer satisfaction, and therefore loyalty. In the current informed market, banks should prioritise use of tools on enhancement, or risk reputational damage to the organisation.

Continue Reading

Business

Money laundering red flags: How to identify and combat financial crime

By Andrew Doyle, CEO, NorthRow

Money laundering, the process of disguising the proceeds of illegal activities as legitimate funds, is a grave financial crime that undermines the integrity of financial systems worldwide. 

When you consider that the National Crime Agency estimates that £10 billion of illegal money is laundered each year in the UK, financial institutions and regulatory authorities have a responsibility to be more adept at recognising the red flags indicative of these illicit activities. Understanding these warning signs is crucial in the ongoing battle to maintain financial integrity and protect the economy from the corrosive effects of money laundering. 

So, what exactly are the warning signs?

Unusual transactions

Financial activities that deviate significantly from a customer’s known income or business patterns is a clear warning sign. This can include large deposits, withdrawals, or transfers that seem inconsistent with their profile. 

Financial institutions need to scrutinise transactions in the context of their knowledge of the customer’s usual financial behaviour, risk profile and the nature of the business relationship. Any significant deviation should prompt a closer look to determine if the activity is legitimate or if it signals something more sinister.

Unexplained source of funds

Large sums of money appearing in a customer’s account from private or unfamiliar sources should raise immediate concerns. It is vital to look at how they acquired these funds and request supporting documentation such as bank statements, recently filed business accounts, or official documents like property or share sale records to verify any such transactions. 

When cash transactions are involved, the difficulty of tracing the origin of funds increases, making thorough due diligence even more critical. In such cases, the institution must ask whether the source of funds aligns with their knowledge of the customer and if there are any indications of criminal involvement.

Rapid movement of funds

When funds are swiftly transferred without a clear and justifiable business purpose, it can suggest an effort to conceal the true origin of the money. Sudden and unexplained changes in a customer’s transaction patterns, such as an abrupt increase in activity or a shift in transaction types, should also raise suspicion. These deviations may indicate attempts to disguise the nature of financial activities.

PEPs

Transactions involving Politically Exposed Persons (PEPs) are particularly high-risk due to the potential for corruption. PEPs include individuals holding prominent political positions and their close associates, who may be more susceptible to engaging in corrupt activities. These individuals often have access to substantial funds, making it easier for them to participate in money laundering schemes. Financial institutions must exercise enhanced due diligence when dealing with PEPs to mitigate the risk of being used to launder illicit gains.

Inconsistent documentation

Inconsistent documentation is another critical indicator of potential money laundering. This can include altered or forged documents, incompatible details between different records, or paperwork that does not align with the nature of the transaction. These inconsistencies suggest a lack of transparency and honesty in financial dealings, potentially indicating an effort to hide illicit origins or intentions. Financial institutions should be wary of any documentation that appears tampered with, or that provides conflicting information about a transaction.

Refusal to cooperate 

When customers are uncooperative or evasive in response to requests for additional information or documentation, it should raise immediate concerns. Avoiding straightforward questions about the purpose or source of funds, failing to provide necessary documents, or showing reluctance to clarify details can indicate a deliberate attempt to conceal illicit activities. Financial institutions must be prepared to report suspicious activities to the appropriate authorities for further investigation.

The presence of one or more of these red flags does not necessarily confirm money laundering but definitely warrants closer inspection. Financial institutions in the UK are legally required to implement robust procedures to detect and prevent money laundering. These measures include conducting thorough customer due diligence, continuously monitoring clients for any adverse changes to their risk profile, and reporting suspicious activities to relevant authorities.

Recognising and responding to money laundering red flags is essential for maintaining the integrity of the UK’s financial system. Financial institutions must remain vigilant, ensuring they have the procedures and expertise necessary to detect and address suspicious activities. By doing so, they can play a crucial role in combating financial crime and safeguarding the economy from the detrimental impacts of money laundering.

Continue Reading

Business

The Human Advantage: Turning human-centred leadership into commercial success

By Helen Wada

We are living in a world where AI is becoming more prevalent, the economic environment is as challenging as it has ever been, yet organisations are at the same time being asked to become more “human-centric” and focus on their people.

A shift from performance to people

The 1980s and 1990s were characterised by a relentless performance culture, where metrics and outcomes were paramount. Autocratic leadership of the past gave way to a more collaborative approach as we entered the 21st century and we saw technology begin to disrupt the way in which we worked. Deliver more with less, work in a different way, grow the top line and reduce costs and technology was driving efficiency and growth.

Helen Wada

Today, as we look forward to 2025 and beyond, technology is once again shifting the dial, but there is also a real shift towards people, we are moving into a new era. The Human era.  Helen Wada, a top UK top executive business coach, who has spent more than 25 years in the corporate world working across professional services and with global organisations, is witnessing firsthand the need to prioritise the essentials of being human. 

The pandemic brought this sharply into focus as we think back to how so many within all kinds of professional settings kept the wheels in motion at a time of fear and uncertainty. Medical workers, civil servants and retail workers all continued while others were told to stay at home. Since then, there has been a significant shift in focus on prioritising humanness unlike ever before, yet the commercial imperative remains – and in some instances the commercial pressures are felt even more than before the pandemic.   

Combining the need to drive growth  while building a human centric culture

One of the main challenges businesses face is finding the middle ground between human-centred initiatives and commercial goals.

In March of this year, Forrester explored what human and technical skills will matter most to B2B Marketers…”Technical and AI analytical skills will no doubt have a crucial role to play, but those in B2B customer facing roles must develop soft skills such as self-efficacy, cognitive abilities, empathy and excellent communication. These human skills are vital for building strong relationships with clients, collaborating with team members and adapting to changing market dynamics.” In addition…we need leadership skills and business acumen….The reality is we need to think about developing that whole person.”

A Gartner survey conducted in 2022 found that 90% of HR leaders believe that to succeed in today’s working environment, leaders must focus on the human aspects of leadership. However, only 29% of employees report that their leader is a human leader.

According to Helen’s philosophy, these “human skills” that sales leaders require align completely to those that she developed through her executive coach training back in 2015.  Helen had always shied away from sales, preferring to focus on her technical expertise and delivery.  Yet, after training as an executive coach, she found a new confidence in having open-ended conversations with customers, building relationships and creating insight and value through the quality of her conversation and challenge.

This got her thinking, was there a way that coaching could prove to be the bridge between human-centric leadership and commercial focus

The Harvard Business Review, along with many other reports has highlighted the role of quasi-coaches; leaders who blend coaching with their managerial roles as pivotal to successful leadership.  But can this be taken one step further.

The sales leaders of tomorrow, not only require their technical expertise, their ability to collaborate and work with AI, they require these human skills, to connect with customers, be curious and create value.

Human-centred leadership in practice

Human-centred leadership requires an approach that looks at everyone as individuals. It is important to understand a person’s aspirations, values, and what drives them. This can be difficult where development programmes are delivered at scale with a one-size-fits-all approach.  Common coaching skills can be developed, yet the outcome of a coaching conversation is always personal and unique.

By themselves adopting a coaching mindset, leaders can demystify complex issues and foster a culture that supports both personal and professional growth. Helen’s thesis asserts that human-centred and commercial cultures do not have to be separate. Instead, they can “coexist harmoniously through coaching. By developing leaders as coaches, organisations can scale human-centric practices, as well as provide the skills required to foster commercial relationships, where connection, curiosity, challenge and collaboration are at the heart of working together.”

Scaling human-centric practices

At the heart of a coaching culture is the creation of personal responsibility and accountability.  Coaching, by its very nature encourages others to grow and thrive, creating a culture of trust and responsibility for everyone to play their role in their own personal growth and development.

By starting at the top, Helen highlights that coaching provides a framework that equips leaders with the skills to understand and support their teams effectively, as well as having better conversations with their clients, whether external or internal to the business.

This is particularly relevant in professional service or partnership environments, such as accounting, law, or engineering, where technical expertise is valued for promotion to a certain point, but to reach the next level of leadership requires an ability to build a different type of relationship with customers – often exploring areas outside of their comfort zone.

Coaching and coaching skills also support individuals deal with uncertainty, as Helen explored with a fellow coach, Paul Golding in her podcast Human Wise.

The HUMAN Framework

Helen has created a framework that encapsulates the essence of human-centred leadership, based upon coaching principles

H: How you show up

U: Understand yourself and others

M: Mindset

A: Act & Adapt

N: Next steps

By working with this framework,  leaders and executives can have a practical way to embrace a way of operating that fosters a human-centric culture with a commercial lens. The best outcomes for you, your team and your business.

The benefits of investing in coaching are both qualitative and quantitative. Qualitatively, individuals understand more about themselves, they gain confidence and develop stronger leadership capabilities.

Stretching these skills into commercial conversations translates into quantitative benefits   where companies can see tangible commercial outcomes resulting from an increased confidence in the market, new relationships, new opportunities, and an uptick in revenue and profitability.  All resulting from deeper, connections and human relationships.

Helen’s approach to coaching emphasises that making the human advantage your commercial advantage is not just beneficial, but essential to business success in today’s human-centric world.

Continue Reading

Copyright © 2021 Futures Parity.