Turning Banking Technology Trends into Meaningful Solutions
IntroductionTechnology is changing the way customers interact with their bank,
impacting deposit services, lending and payments. The most significant
technology trends in banking today encompass the areas of:
This eBook describes the implications of these five trends and offers a framework for
successfully leveraging new technology to create high-impact business solutions.
Digital
Solutions
Omnichannel
Banking
Data
Analytics
Lending
Innovation
Compliance
and Risk
Management
Innovation in digital technologies dramatically changes the way customers interact with their financial institutions.
Mobile technology has transformed consumers’ lives. A smart mobile device provides much more than phone calls, serving as:
• The primary tool for capturing (and sharing) memories: camera and video.
• A global positioning device.
• A map to anywhere.
• Access to e-mail and calendar systems.
• A means to surf the Internet.
• Storage for passwords and other personal data.
Mobile banking services are growing rapidly to include functionality such as checking balances, paying bills, transferring funds, locating ATMs and branches, and remote deposit capture.
PROLIFERATION OFDIGITAL SOLUTIONS1
Mobile is transforming how consumers do EVERYTHING,
including how they bank, pay, research and spend.
Camera Storage
Multi TouchAmbient Light
Sensors
Cell Tower
Signal
Wireless
Network
Bluetooth Compass
GPS Microphone
Gyroscope Accelerometer
When contacting a call center, customers have begun to expect the bank’s agent will already know who they are and what the inquiry is about. If a transaction started online and the caller needs further assistance, any other channel should pick up on the transaction without any repetition from the customer.
Banking customers expect to interact with their institution through more than one channel. In the omnichannel environment, the bank’s channels communicate activity instantly. The graphic on the next page depicts this industry transition in which customer transactions integrate seamlessly between banking channels.
The key is to provide self-service tools to the customer for activities best conducted directly online and to provide more advisory services such as planning to save for a college education, with a personal touch. Any transaction or customer interaction should become seamless between digital and personal channels.
THE RISE OFOMNICHANNEL BANKING2
MULTI-CHANNEL
Customer
Bra
nch/S
tore
s
Conta
ct
Cente
rs
Dig
ital/O
nlin
e
AT
M/K
iosk
ALL-CHANNEL
Customer
Bra
nch/S
tore
s
Conta
ct
Cente
rs
Dig
ital/O
nlin
e
AT
M/K
iosk
Orchestrated
Referrals and
Opportunities
Data Analytics &
Reporting
OMNICHANNEL
Customer
Seamless Orchestration
of Customer Interactions
My B
ank, M
y F
inancia
l
Needs,
My N
etw
ork
My Personal Profile &
Preference
My Kiosk
My Branch/Store
My Computer
My Smartphone
Transitioning to Omnichannel Banking
THE IMPACT OFDATA ANALYTICS3
“There is also huge opportunity for banks with predictive analytics,” states Sirpa Nordlund, Executive Director, Mobey Forum. “From now on, it’s all about the data. With predictive analytics, banks and credit unions can not only generate a 360 degree view of their customers’ financial behavior, they can anticipate their needs and create highly personalized services that surprise and delight them too.” 1
Data analytics plays and increasingly important role in a financial institution’s decision making. Predictive analytics will help guide tactics and set strategies for savvy bank executives.
Predictive Analytics Lifecycle
Analysis &
Modeling
Skills
Data
Management
Deployment
and Fulfillment
Tooling
Acceptance
Governance
Quality
Collection &
Ownership
Frictionless
Services
Sanity
ChecksCustomer’s
Perception
Technology
Creating a data-driven organization
Source: Mobey Forum, VODW, 2016 © June 2016 The Financial Brand1. Jim Marous, “Predictive Analytics: Think Big, Start Small …
Just Start Now”, The Financial Brand, July 2016
Lending via mobile devices, with one-to-one target marketing based on data analytics, can predict quality candidates for online loans. Additionally, as peer-to-peer lending continues to grow, it has the potential to become a threat to traditional banks. Banks have partnered with mobile lending providers to offer consumer loan origination from the convenience of a smartphone, shown in the diagram on the next page.
Many small and mid-sized banks are also moving to outsource lending functions that a trusted outsourcing partner can do better, faster, less expensively or even more safely. In the traditional lending area, outsourcing the various functions has become attractive to institutions looking to reduce overhead in consumer and commercial lending operations. All aspects of lending are candidates for flexible, cost-effective outsourcing solutions, including:
• Loan origination systems
• Imaging systems
• Workflow management systems
• Collections
THE IMPORTANCE OFLENDING SOLUTIONS4
Example of Lending via Mobile Device
• Don’t wait for
consumers to come
to you.
• Use your knowledge
and your data to
better serve their
financial needs.
• Personalized, pre-
approved rate sheet,
granting consumers
perpetual insight into
their personal credit
worthiness and
buying power.
• Preapproved funds
are just a click or a
tap away.
A recent CIO Survey from Aite suggests staying current with banking regulations and fraud risk weighs heavily on the minds of financial services technology executives. They need to realize strong information security requires:
• Very specific expertise
• Continuous training and retraining
• Complex tools
• Expensive infrastructure
• Management rigor
More and more investment is being made in technologies that provide safer systems to protect data. With the expansion of access points to a bank’s customer data, managing entitlement growth should be considered for every device and user. Banks must evaluate security and risk management tools, and entitlements, making it an integral component of any technology deployed going forward.
TAKING RISK MANAGEMENT AND INFORMATION SECURITY INTO ACCOUNT5
What is keeping large bank
CIOs awake at night?
• “Keeping pace with
technology while
maintaining regulatory
compliance.”
• “Staying current with
banking regulations”
• “Fraud risk.”
• “The speed at which we
need to change and the
amount of change
needed to stay
competitive.”
Source: Aite Group’s 2014 Global CIO Survey
The typical approach for implementing new technology at banks involves working through an evaluation process that defines and budgets for new system
deployments. High-level requirements should be scoped at this point in the deployment process. After that effort,
the solution moves into an implementation phase. Often, between these two steps, an information gaps
develops. As a result, technology implementation occurs without meeting expectations while costs run
wild. The typical approach creates a gap in the deployment process.
Typical Approach Creates a Gap
High-level Scope
Budget
Deadline
Functionality?
Multiple Visions,
Multiple Approaches
Team Set Own
Direction and Define
Own Role
Teams Only Know
Final Deadline
Scope Control Issues
Integration Testing
Scope Unclear
Cost Overruns
Deadlines Missed
Functionality Missed
Scope and Vision
Different
Implementation
(Expectations
Misinterpreted)
Post Implementation
(Expectations and
Requests)
Evaluation Process
(Expectations and
Requests)
Definition Approach Fills the Gap
The solution definition process depicted below closes the gap between sales and implementation steps,
seeks to identify true business requirements and defines the exact parameters of the implementation,
ensuring that all participants in the deployment are on the same page.
Budget
Deadline
Functionality
Defined Scope and
Requirements
Defined Approach
and Effort
Refined Budget, if
needed
Refined Deadline, if
needed
Refined Functionality,
if needed
One Vision,
One Approach
Each Team Has
Clear Direction and
Understands Role
Clear Deliverable
Timelines
Clear Scope Control
Clear Integration
Testing Scope
Within Costs
Deadlines Achieved
Functionality
Achieved
Implementation
(Expectations Clear)
Post Implementation
(Expectations Met!)
Evaluation Process
(Expectations and
Requests)
Any new technology deployed in banks must rely on well-defined scope and business requirements in
order to deliver intended benefits. A common, well-constructed set of business requirements results in
on-time and on-budget technology implementations.
Definition
(Expectations Validated
and Set)
Summary
Customers will interact far more frequently with their bank, albeit less in person and mostly via digital channels. Financial institutions will
also utilize data and sophisticated real-time analytics to identify, target and service customers while mitigating risk and devoting resources to
information security. Banks deploying increasingly complex technology solutions must rely on comprehensive business
requirements and a solid solution design in order to gain benefit from new technology deployments. A process that identifies requirements
leads to a thorough design that ensures that a financial institution will leverage new technology trends instead of reacting to them. The
benefits of this comprehensive approach provides banks with greater efficiency and speedier customer service through
increased automation.