How banks can beat the tech giants at Data

October 16, 2017

It’s all about data ecosystems…

There’s a long tradition of using time in the bathroom to think and reflect. For the ancient Greek mathematician Archimedes, his understanding of how to measure volume fell into place when he was in the bath. For me, my most recent eureka moment came while I was brushing my teeth.

I had just bought a new, wifi-enabled toothbrush. It’s great. It gamifies a repetitive task and helps me to do it better. My new brush collects data on me and has an app that gives me insights – helping me to have cleaner teeth. However, this single data set after a while is ignored, another app bites the dust.

Clearly, in the future, Oral B could make a smarter brush that can detect the health of my teeth, even my mouth. More data points that together give a slighter bigger picture of my health.

But they shouldn’t stop there. There are hair brushes that monitor your scalp and hair; Fitbits that measure your heart rate, sleep patterns and stress levels; and scales that monitor and track your weight. So what if they brought these data islands together to provide a much more complete and detailed picture of your health? Now you could take all the information you have and combine it to start providing advice and even coach us to be healthier.

That’s when I stopped thinking about my teeth and moved on to where the big bucks are – banking. Aren’t banks too narrowly focused on banking data? With open banking they can get a broader picture of our wealth; however, the standards don’t apply to insurance, investments or other areas of our financial wellbeing. For a complete picture they also need more dimensions than the current data, like timeframes, goals and life-stage. Some Robo-adviser platforms do allow you to put in more data about you finances, but still we end up with just a view on our wealth.

Just as today we have data on various aspects of our health in silos, the same goes for our wealth, and many other aspects of our lives. What about our careers, our social circles, our knowledge/skills? What if we could draw it all together into one mega data ecosystem?

As more of our lives become monitored – the state of our cars, the food we buy, and the amount of sleep we get – the more data we can mine to help us to make the best decisions. Think of the value of having a dashboard that shows our wealth, health, home, social and other data ecosystems especially when these ecosystems interact. Imagine being able to predict your future income based on you career achievements, or medical bills based on your diet and exercise.

Less monetisation and more stewardship?

There’s huge value in these ecosystems of data. But it all has to be kept safe. Certain data accumulators, such as Facebook, are now being scrutinised on their use of data. And whilst bank reputations have been tarnished over the last decade of debacles, they are, however, still trusted with our money. Despite regulations making account switching easier, customers have not voted with their feet.

So maybe another opportunity exists for Banks, not necessarily to compete head on with Facebook to monetise customers by targeting, but to protect this data and provide stewardship of customer privacy. Tech companies like Apple and IBM see opportunities in between with “differential privacy”, which is monetising from insights that don’t identify individual users for direct marketing. Great article on this from Rana Fooroor.

Regulations like the General Data Protection Regulation (GDPR) are giving customers more control, so banks really need to work harder to make it enticing for customers to want to give up their data. Similar to how many of us download apps that we perceive as useful and give up rights to access our phone features, banks need to find useful applications that customers will want to give their data. If they can achieve this it will make their relationship stickier. For example Deniz Bank’s Kumsal service, in Turkey, allows small businesses to create their business website, upload a product catalog and customer database. They can run their business using apps from the bank to manage their expenses too. All this is valuable data, which could be difficult to move if they wanted to switch banks, all driven by a set of useful apps.

Where’s it heading?

The world economic forum report “Deep Shift” forecasts that 80% of us will have at least one digital presence online and that “In the future, building and managing a digital presence will become as common as when people decide how to present themselves to the world everyday through fashion, words and acts”. The future of banking isn’t about hard cash, or just banking data. The goal will be to take the sum of the data from the entire digital presence each of us has built through our smart toothbrushes, scales, etc., and find insights that allow banks to add value to customer’s lives.

So, the currency is changing and it is now the broader data ecosystems beyond banking whilst ensuring privacy is respected and value is returned to the customer.


Mobile Banking Is Dead

October 8, 2017

I saw a post earlier this week which asked what mobile banking would look like in the future. There were a few responses discussing personal dashboards, statements with PFM insights, chat banking etc. Quite frankly nothing new.

We’re moving from transactions to experiences…

As customers we manage our money for many reasons: day to day spend, saving for a rainy day or holiday, managing a home, going to university. For each reason we have different needs. Today, we have a single banking app that facilities data and transactions with the bank, the customer uses one app to service all their needs. Why do we expect that in the future one interface / experience will continue to manage all our money management needs?

In the future, you may have one account but many apps on top to manage your individual needs. You might use something like Monzo for your day to day spend so it helps you track your general spend. If you’re a contractor, you may use Coconut to manage your work expenses and invoices. You might use CLEO to interact more easily with your account or Chip to help you achieve specific savings goals. You might use Yolt to aggregate multiple financial products so you can plan your overall finances / wealth.

Whilst some of these are banks, others are aggregators. Open Banking will enable more aggregators as should a Bank’s API strategy. The point is that customers will benefit with better experiences from apps that are very good for specific money management needs, rather than a single general purpose app where they have to figure things out for themselves. For me, it is analogous to using email for all your communication needs. Today most of us use Twitter, Chat, Facebook, SMS and email all for different purposes and appropriate experiences. I already use Cleo and Yolt on top of my bank account and have no plans to change my bank.

Complexity kills apps…

Ever tried writing a formatted document in a mobile version of Word? Internet Banking apps can have over 200 features, and with embedded PFM and engagement features, over 350. It maybe that finding the most common features is super easy, but the other features have to be catered for if you really want it to be a fully self-service model. So mobile will be great for every day, not necessarily everything.

Today most customers have 1-2 products with their bank. However, if banks want to take advantage of Open Banking and become aggregators, then not only do the features go up but so does the amount of data to display and navigate.

It’s great to talk…

Using an app either on mobile or the internet generally means you have to understand and navigate banking features using the language (in menus and buttons) of the bank. One of the reasons why chatbots are gaining popularity is that you can speak your own language. A bot with really good Natural Language Processing will do the work to understand what you want from the bank’s perspective. So saying “Send Frank $50” is interpreted as Move Money or Funds Transfer from a banking perspective.  In addition to these the more progressed chatbots have a “personality” that can add a bit of fun to your dialogue, I really do enjoy Cleo’s little animation responses.

Mobile Banking is Dead

In conclusion, interaction has evolved and is continuing to at a pace. Mobile banking evolved from Internet Banking but the future is Experience Driven Banking not Mobile.












API Strategy: Partner API’s

May 2, 2017

Like an Extranet, Partner API’s are limited to specific parties, often for a very specific purpose like providing a product / service. Technically the API is no different to a public API, but access to the API will be limited typically using a 3rd party API gateway solution. Partner API’s are usually monetised, and this can be achieved in a number of ways e.g:

  • Directly: Charge for access to API’s

This might be by individual or bundles of calls, or through a subscription charge for access (e.g. see . You may even decide to give access to a subset of API’s away for free so as to try and sell “premium” services later.

The charge can also be built into the API itself, online payment platforms that take a      percentage of transaction values are a good example of this.

  • Indirectly: Use API’s to create revenue streams outside

As above there are many ways to do this:  Banks are already used to selling 3rd party products and taking commission or introducer fee’s on products like insurance and credit cards: API’s make this easier.

You can find a good discussion of monetisation models here.

You might create partnerships simply to create a new value chains that increase customer loyalty e.g. make it easy for customers to use a P2P Lender within the banking service rather than customers having to create a separate relationship with them. The bank will also benefit from a better understanding (data) of the customers financial activities. Driving innovation is also an objective for many banks. Hence increasingly banks are creating their own API Marketplaces e.g. or ).

Increasingly banks are looking to differentiate their offering through “vertical integration”. This is where banks will use API’s to integrate 3rd party products and services to augment what they provide. This may be purely financial providers or others that help the bank target very specific customer journeys or segments. For example Monizo (UK) and Kumsal (Turkey) both target different segments of business banking and augment their banking service with other services that are useful e.g. tax filing and expense tracking.

Hence in looking at your API strategy remember it’s not just about what you publish, but also about what API’s you consume from 3rd parties. Choosing your partners is an important decision, especially when you own the customer relationship. Some of the things to consider when selecting a partner:

  • What if the partner “defaults” or their service goes down – will their absence break a process/journey?
  • What data are you passing and do you need to get customer permission first?
  • How many relationships does the bank want to or can it manage
  • What do you lose by using a partner rather providing the service yourself e.g. customer intelligence

Partner API’s may be part of your overall API strategy or managed quite separately from others (Public and Private API’s), either way they are going to play a key role for banks going forward and need to be managed accordingly.

Key Take Aways

  1. Your Partner API strategy should have clear objectives and measurable outcomes ( e.g. increased revenue, customer loyalty)
  2. Choose your partners wisely and manage them proactively

The next post addresses the 3rd type of API’s, Private (internal) API’s – sometimes known as Enterprise API’s.

API Strategy: Public API’s aren’t just about regulations

April 25, 2017

It’s easy to think that Public API’s are just about regulation, such as PSD2 in Europe, driving open banking. Certainly regulatory driven open banking will force banks to have Pubic API’s, but they are not the only type of API’s. A few banks, the “innovators” have had public API’s well before the arrival of open banking regulations. In this post I examine the two most common Public API’s: Regulatory and Platform API’s:

Regulatory API’s

Europe’s second payment services directive (PSD2) is the first regulation globally in banking aimed at increasing innovation and competition in Banking. However it is clear governments in other countries like the USA are watching carefully before following suit.

Whilst Banks have to follow regulations they should also be cautious as without having a parallel customer intimacy strategy, it will be easy for banks to be disintermediated by 3rd parties providing stronger value propositions and more compelling customer experiences. Banks can achieve this in a number of ways for example:

  • Provide services and products beyond that possible by having access to just Open API access. Remember today regulations only give access to current and deposit accounts, not loans or other products. They also only provide access to payments and account information, not to services like setting up direct debits or beneficiaries.
  • Create meta-data to drive better insight or services for the customer. Spend categorisation is one obvious example. Whilst it is possible to categorise with account information, 3rd parties will not have full access to the rich meta data that is captured by banks so can only provide basic spend analysis. For example mobile transactions can provide location, weather and device type information over and above basic transaction detail.
  • Aggregate other bank data to provide a full single customer view to the client. Many robo-advisors are already down this path, not looking to replace the account but to own the customer relationship for managing their total financial affairs.

Platform API’s

Banks have the opportunity to either become a platform or use a platform. The platform sits between buyers and sellers and can either be based on software, a device or data.

Here an API is exposed freely to create “stickiness” to the platform. The consuming organisation will have access to an API that will allow them to create new value. For example CBA1 created Albert, a POS terminal with open API’s. This allowed 3rd parties to leverage the banks merchants using Albert and provide new applications based on API’s that give access to data and functionality provided by Albert. For example an app for rating service provided by the merchant or the ability to split a bill between friends. These apps provide additional value to merchants using the banks POS and in turn help the bank to sell more POS terminals, a mutually beneficial relationship (a key tenant for creating an ecosystem). It is also a mutually interdependent relationship, as the app vendor wants access to the bank customers, and the bank wants the app developers to create compelling solutions based on their technology. Square, the innovative payments provider, was possibly the first and certainly led the way in this kind of approach.

Another example would be Deustche Banks, Autobahn Forex trading API’s2 (available since 2011), here the bank provides access to forex trading. The bank does not prohibit anyone, but there is a process for validating the users of the API’s. Credit Agricole3 created their marketplace over 4years ago to create an ecosystem of apps for their customers. Visa4 has a broad range of API’s including extensive access to data and analytics and BBVA5 have certainly put their money where their mouth is when it comes to API investment.

Many banks and Banking As A Service (BAAS: e.g. Fidor, Solaris, Leveris ) providers are following suit. However they all need to be mindful not to have a “build it and they will come” approach. Creating and fostering an active marketplace requires a long term commitment and significant effort and planning. There will no doubt be fierce competition for developers attention as more banks enter this space. Without a proactive approach marketplace’s can become stagnant, and I predict many will fall by the wayside due to lack of investment or competitive strategy.

Dis-intermediation and a lack of a planned strategy are not the only threats as API’s open the door to new security threats and hence banks will need new infrastructure to keep the wolves at bay.

Key take aways:

  1. Ensure you have a strong customer intimacy strategy if you want avoid disintermediation
  2. Creating eco-systems is a race for developers, ensure you have a clear strategy to recruit, retain and motivate developers, as well as a plan to sustain growth of the ecosystem.
  3. Access to data or devices offer as much (if not more) opportunity for API’s as banking products/services.
  4. Security (API Infrastructure) is an important piece of the jigsaw




Next: Partner API’s

Do you need a business strategy for API’s?

April 19, 2017

There seems to be a gold rush around API’s, every bank, fintech and his friend have their picks and shovels to mine their wealth. Hackathons, marketplaces, platforms are abound as they seek to drive innovation and chase the “network effort” for compound growth that has catapulted today’s winners like Amazon, Uber and AirBNB. API’s themselves aren’t new, the internet has given them a new lease of life while mobile ubiquity has provided a compelling audience whose owners look for their lives to be easier, better and more convenient. Hence API’s are the key enabler for improving customer journeys.

About 3years ago I searched Google for “digital banking”, it was early granted, but nevertheless clearly on the horizon. There was hardly a page of results specifically targeting anyone looking for guidance on creating business strategy for digital and today the same can be said of API’s.

This is surprising given the investment already gone into API’s and hence from a business perspective a number of questions go round my head:

·      Are there enough developers for every bank to drive innovation through hackathons?

·      How many banks can grow and sustain an active marketplace (aka ecosystem)?

·      Is it beneficial for a fintech to partner with a bank and become a B2B player?

·      Will API’s disintermediate banks rather than make them prosper through innovation?

·      Who should publish and who should consume an API?

Having spoken to many banks globally, I have yet to meet one that has a clear and solid business plan behind their investments into API’s. A plan to create an “ecosystem” or marketplace is not a strategy, as it needs to address opportunity/returns, competition, risks. So I’d love to hear from Banks that are proud of their API strategy.

A key tenant of API’s is that giving access to them generates new value, which may take form in many ways such as creating innovation, creating new revenue streams or adding value to customer journeys. I believe the keys to an API strategy is first determining WHO you give access, to WHAT and WHY. To create your strategy, start with WHO and then the WHAT and the WHY will be specific to that audience.

For me the WHO is similar to the early days of the world wide web and hence exist at 3 levels for a business, each having a distinct and separate goal. These 3 levels I call the 3 P’s: Public, Partner, Private. Firstly like the open Internet, there are Public API’s which are accessible to anyone. In banking, regulations is driving for open banking which will be enabled by Public API access. Although getting account information or making payments will require customer permission, these will be open such that banks can not determine who can or can’t access them, if their customer has provided permission to a 3rd party to do so. However Banks may open up other public API’s too, for example to drive innovation.

Next are Partner API’s, these are API’s that are accessible to only to specific Partners of the bank, similar to how many companies run portals or Extranet’s for partner access. These could be Fintech’s, other banks or indeed organisations nothing to do with financial services. Banks will need to use API Gateway’s to manage access to these API’s for specific organisations only.

Finally, there are Private API’s, these are used internally by a bank, similar to how they use Intranet’s. Generally these will be used by larger organisations with many disparate departments

I’ll be covering the WHAT and WHY for each scope of API (Public, Partner and Private) in the following posts.

There is a future for Branches: Its also about employee experience

March 30, 2017

Branch banking may originate from simple beginnings, but the longevity and tradition of this fundamental banking service have rendered the bank branch one of the most familiar amenities of any town around the world. Branch banking has been continually evolving since its inception, though the last fifty years have seen innovation and technology develop with increasing speed, striving to offer a service reflective of the rapid digital developments customers adopt into their everyday lives. Though the large expansions and new banking channels used to supplement the branch experience caused difficulties as well as triumphs, such as internal silos creating agility and speed issues, the branch remains the heart of customer communication with their bank. In an age of growing preference for digital channels and seamless interaction, the most innovative and successful branches have been those adaptive enough to consciously move away from the traditional branch model, offering instead a branch experience integrating engaging, convenient technology with the personalized, highly informative interaction customers visit the branch to receive. This notable shift in the design and delivery of branch banking services is occurring across the globe, with the benefits of an updated, forward thinking approach to branches clearly visible in increased branch visits and sales. The role of the branch in providing customers with a level of service unable to be matched by digital channels has resulted in both digital-only banks and industry innovators acknowledging their value, with digital bank Chebanca! opting to incorporate branch banking into their services, reacquainting a number of their digital only customers with the advantages of the branch. When thoroughly planned and sharply focused on utilising the technology of today to provide a strong customer experience, as witnessed with shipping container branches and driverless mobile banks, branches continue to see success.

While the potential threat posed to the long term success and necessity of bank branches by chatbots, AR and VR is a fascinating and largely plausible reality, this emerging technology is unlikely to have any imminent impact on branch use. Chatbots, AR and VR may have a wealth of potential uses in enhancing banking customer experience, but the technology is currently in its infancy and is unlikely to be in widespread use across the industry for some time. In the short to medium term, the future of the branch will not be impeded and rendered obsolete by innovative technology if branches are successfully and thoughtfully reinvented to reflect the changing expectations of customers while providing a strengthened customer experience. Though effective use of digital technology is the common thread of all the successful branches featured in this paper, the technology itself is not the primary draw, nor is it utilised to compete with online and mobile banking. Rather, technology is used to facilitate improved customer experience in the branch, to enhance the aspects of branch banking that set it apart from its digital counterparts such as knowledgeable assistants and personalized experience, instead of attempting to replicate the service available online.

Customer experience is at the very core of the branch and is crucial to ensuring repeated visits and customer loyalty, but this alone will not ensure success. For branches to maintain longevity banks must focus on employee experience alongside customer experience, through integration of the technology available to both. Despite this, many banks appear to be focusing solely upon providing exemplary customer experience, when an equally high standard of employee experience from the devices and systems available to them will have considerable impact on branch success. A well-developed employee interface on par with the technology available to the customer, with improved navigation and greater agility, will permit employees to provide a faster, smoother service for customers in the branch.  The disparity between a customer’s technology focused experience in an innovative branch and the branch representative’s difficulty to provide a service that matches this due to their outdated, cumbersome systems creates a poor impression on the customer, as well as harming their impression of the brand. A stronger sense of brand is achieved for both customer and employee when all are equipped with the high quality screen experience customers are spoilt with. This attempt to standardize the experience could also be extended further to include contact centre screens, ensuring customers can receive the same impressive level of service when interacting with bank representatives outside of the branch.

Evidently, the value of engaging employees across all devices is not to be dismissed. The branch banking experience continues to remain a competitive banking channel due to the level of customer service available, unrivalled by online or mobile banking. This familiar banking avenue provides the invaluable experience of a personalized interaction, with the most comprehensive and detailed method of answering queries and offering relevant information. Yet if employees are struggling to offer this service while grappling with inefficient systems and user interfaces, the simplicity and attraction of this banking interaction is hindered. It is imperative employees are confident the quality of the technology and systems they access are of equal calibre to the customer experience innovative branches provide. No matter how appealing and inspired a modernized branch may appear, if the employee experience is inadequate and demoralizing, customer experience will never match the expectation the cutting-edge branch presents.

The virtue of focusing on customer experience and employee experience in unison is clear, yet few banks appear to be adopting this approach to optimising the branch banking process. While 93% of financial institutions acknowledge the primary aim of their digital strategy to be enhancement of customer experience and engagement, highlighting industry awareness of its importance, focus on employee experience alongside it is notably absent. If banks are not replicating this dedication to utilizing technology and digital developments for employee experience, neither employees nor customers can have faith in the bank’s commitment to providing a strong, enduring branch experience. Interwoven development of customer experience and employee experience is imperative for banks to be well equipped to tackle the digital challenges of today and the future, a focus that is a firm priority for Temenos products. Temenos know that without consistent employee engagement resulting from strong employee experience, customer experience will fail to reach its full potential, no matter how beguiling the technology available to customers may be. If both experiences are closely linked and developed alongside each other a more cohesive experience is created, enriching the seamless banking interaction today’s customers expect and reducing silo issues, crucial to maintaining branch success for as long as possible. With the value of this relationship being overlooked by such a large segment of the banking industry, Temenos are not guilty of this oversight, placing a firm focus on both employee and customer experience to provide each with a positive and engaging experience, serving as a shining example of why innovative branch banking remains relevant and beneficial to users worldwide.

Future of the Branch: Are Branches viable going forward?

March 23, 2017

Innovative, modern branches, with a primary focus on offering a digital-based experience in a physical branch, appear to have found a way of keeping the branch a relevant and frequented banking channel, despite the ever-increasing popularity of online and mobile banking. Banks that are considering how their branches could create a unique and stress-free experience offering a greater level of service than can currently be gained through purely digital channels, while still acknowledging the value and importance to the customer of an interactive, convenient interaction, have found success with their forward-thinking approach to updating their branches. Though such branches are experiencing greater popularity and continue to attract customers, the considerable emphasis on digital interaction in-branch is not without its difficulties.

Implementation of user-friendly interactive screens, from self-service expansive wall fittings to branch representatives offering banking products and advice with the aid of a tablet, have become intrinsic to these streamlined branches as key points of interest for customers, replacing computer monitors only viewed by branch staff. These interfaces that were only accessed by branch staff, not shared and utilised by branch customers, therefore required considerable modification to be suitable for customer use, become more user-friendly and of a modern, simple design. For some banks, the potential cost and timescale of this alteration would be huge, with a full overhaul of a crucial branch system costing the bank a significant sum of money they may not have the ability to allocate to branch renovation, while also resulting in prolonged closure of branches while the systems are altered. The scale of this project could also be a concern for banks, with hundreds or even thousands of screens requiring redevelopment. Though innovative branches around the world have illustrated how the branch can still be valued and required by customers when offering a more agile, personalised service, the time and cost involved in updating and transforming branches is a significant concern, preventing some larger, older banks from adopting this relatively new approach to branch banking.

Currently, elevating the appeal and ease of branch banking using innovative technology is imperative to keeping branches relevant, useful and desired by customers, but will the rapid advances in technology eventually bring the end of the need for a physical branch? There are a multitude of possibilities for what could finally cause branches to become obsolete, with innovations such as pure voice interaction seeming to pave the way. The relevance of voice powered technology in banking is beginning to be recognised, with Barclays recently introducing voice recognition software for their phone customers, eliminating the need for multiple security questions and passwords. The technology identifies a complicated “voice print” from customers using more than 100 characteristics, highlighting how voice-powered banking can be secure and easy, becoming a more desirable alternative to visiting a branch. A similar concept has been incorporated into banking apps, with Santander providing a service in their SmartBank app that allows customers to verbally ask simple questions about their transaction history, rather than search through this data manually. Already, this app offers an easy, speedy service unable to be matched by a branch, and is intended to eventually enable customers to fully service their accounts, engaging in valuable services such as reporting lost cards and making payments. Mashreq Bank in the UAE has also seen the potential benefits and convenience of this technology, partnering with Apple to use Siri for voice-powered payments. Providing customers with a service more user-friendly and less time-consuming than other current digital channels further reduces the need to visit a branch, showing that ever-improving digital channels are able to adequately answer customers questions and reduce the time and steps involved in using banking channels. With voice-powered technology looking to become more universally used, through deals such as Samsung’s with the creators of the next gen AI VIV, a sophisticated, learning, voice-powered platform able to make app usage, including banking apps, more convenient and user-friendly than ever, the advantages of branch banking will continue to diminish, with stylish, tech-heavy branches unable to compete with the ease of access and scope of emerging digital channels.

Future of the Branch: Unconventional Branches

March 16, 2017

Solving Unaddressed Customer Problems 

While internet and mobile banking have revolutionised the ease of access to banking products, there are occasions where neither digital nor traditional branch banking are accessible options, an issue FNB is determined to resolve in the unbanked rural communities of South Africa. First National Bank recently opened a mobile branch housed in a converted shipping container, featuring key banking services including an ATM, ADT and teller services, providing customers with a means of depositing cheques, applying for loans and opening savings or investment accounts. Though the low-cost and rapid construction time of FNB’s mobile bank cause the endeavour to be more desirable than opening a traditional branch, the primary benefit is the mobility of the compact branch, permitting the branch to be transported to whenever it can be of service. The advantage of such an adaptable branch is clear, with the initial destination of the branch (Mutale, Limpopo) being changed temporarily to Tembisa following a natural disaster, in order to aid the impacted community. The potential benefits of such easily movable branches are plentiful, with FNB already continuing to assess areas where demand for this branching option may exist. The value of innovative, customer-centric banking is a concept that must be incorporated into branches if the demand for branch banking is to continue, and the success of FNB’s project illustrates how unconventional branches can offer something unique and desirable for customers.

With ease of access appearing to be one of the most important aspects of the future of banking, Metro Bank seems to have looked to the past for inspiration, opening American-style “drive-thru” branches, a style of branch that first operated in the UK in 1959. Despite not being a new, original concept, Metro Bank have garnered considerable success from their first drive-thru branch operating in Slough since 2013. Metro Bank’s faith in this style of branch caused them to open a second drive-thru location, situated in Southhall, West London in a retail park. Drive-thru branches offer many services found in traditional branches including the ability to pay-in cash and cheques and withdraw funds, all without the customer needing to leave their car. Metro Bank have found these branches receive the heaviest traffic on days where the weather is poor and is frequently used by parents with young children in the car, while its seven day a week opening hours and 8pm close on weekdays adds to the convenience of the branches, enhanced by being located close to a main road. The primary aim of this service is to provide customers with more choice over how they bank, prioritising convenience through acknowledging that every customer will have different preferences. The success of Metro Bank’s drive-thru branches showcases how shifting the focus of branch banking to meet the needs of your customer base is now more important than ever in ensuring that branch banking offers something unique and relevant to the customer.

Another non-traditional branch solution that has operated in the banking industry for quite some time is the concept of mobile banks, utilised by Natwest since the 1970’s and continue to visit numerous rural communities throughout Britain. Idea Bank in Poland have pushed the envelope of this concept, creating a fleet of driverless zero-emission BMWs fitted with ATMs to permit small businesses to deposit their daily revenue at the end of each day, as well as make withdrawals. The service is incredibly user-friendly and easy to use, with customers simply requesting the car to arrive at their place of business using the Idea Bank Money Collection app. The car will arrive at the chosen destination within minutes, or alternatively can be booked in advance for a specific timeslot. The service has been a great triumph for Idea Bank, now offered across 12 Polish cities, with the number of cars expanding from 4 to 12 in the first year of its inception, with the intention of reaching 30 by the end of this year. The mobile ATM sees deposits three times larger than those of a bank branch, and is considered a noteworthy success by the fintech industry, receiving “Innovation in Payments” recognition at the BAI-Finacle Global Banking Innovation Gala. The idea for this innovative approach to ATM deposits was developed in order to change the cumbersome process of business owners taking their money to the bank in person, a practice adopted by 80% of Polish SMEs. Idea Bank’s mobile ATM fleet is an impressive example of how identifying a problem for a bank’s client base, that can be successfully resolved with innovative and user-friendly technology, can lead to the installation of branch banking that is more reflective of the needs of the customer.

Is there life in the old bank?

March 12, 2017

About 3 years ago when I started presenting on digital I’d open with a couple slides. The first about Fintechs nibbling around the edges of Banking the notion was these were piranha’s – one wouldn’t kill a bank, but there would be shoals of these that could. The second about GAFA (Google, Amazon, FaceBook, Apple) being sharks that could take larger chunks out of banking. The premise of the opening was that banks were under threat and if they didn’t change they could be squeezed out of the market.

Now as we face a new dawn of Open Banking I question that line of thinking, and I wonder whether it is the traditional banks that will get squeezed out or whether we will see a raft of FinTech fall by the way side and whether GAFA actually want to go anywhere near banking? I recently finished reading Elon Musk’s biography who too had questioned the efficiency and customer focus of banks and he wanted to disrupt banking. So it was interesting that he decided that banking was too complex and that regulation would make it very difficult for him to do that. So much so that he would only focus on payments, and in parallel focus his efforts on colonising Mars instead!

What I hadn’t accounted for was for new banks sometimes called “challenger banks” or neo-banks or even new business models like banking platforms.

Addressing Fintechs first: A Forbes article estimates that globally anywhere upto 6000 Fintechs having been created1. The article highlights OnDeck and Lending Club but despite growth in their sector both debuted in 2015 around $25, and both now sit at around $5!  It remains to be seen how the Fintech boom plays out in comparison to the dot com boom / crash of 2000.

The current trend is towards creating banking eco-systems, a collaboration of banks and Fintechs. The challenge for banks will be to pick “winners” and for Fintechs to get scale through this B2B approach and their own B2C efforts. I see a trend of “build API’s and Fintechs will come”, however I am not convinced the partnership will or should work this way (more on banking API strategy later this month) as banks will have to be selective about who they work with to protect the interests of their customers. Fintechs that heavily rely on a B2B approach will suffer on valuations for funding/exit, so scaling a B2C approach is key to their survival.

Next thinking about “challenger banks”. I fail to find an independent one that has amassed a customer base of more than 500,000. Simple has been acquired by BBVA, who also acquired Finnish challenger Holvi and have invested heavily in Atom. Similarly the German banking platform Fidor was acquired by BPCE. No pure play Internet banks survived and standalone brands launched by traditional financial services organisation have been acquired (or is that rescued?) such as Intelligent Finance and Egg in the UK. Whilst from starting out triple digit growth is the expectation, a year of double digit growth could define the writing on the wall.

And what about banking platform plays? Moven has transformed itself towards a “front office” platform, whilst many others like Thought Machine are re-inventing “core banking” as a platform. Their challenge is similar to that of Fintech’s, getting scale. For them providing a solution that handles different regional issues like internationalisation, regulations and tax whilst also providing the flexibility to those on the platform to differentiate themselves is it not an easy task.

This doesn’t mean I advocate traditional banks not addressing the digital challenge, rather that “there is life in the old bank yet” and that you can “teach an old bank new tricks”.

Future of the Branch: Re-inventing Branches

March 9, 2017

 Inviting, Innovative and Inspiring

Despite the growing preference for digital banking channels, branch banking is far from obsolete, with banks worldwide endeavouring to re-invent the branch experience to increase appeal and convenience for customers. Mindful of the value of digital engagement and the declining need for conventional branches, Polish mBank opted to combine digital marketing techniques with the familiarity of branch banking by opening smaller Light Branches, situated in areas yielding high foot traffic such as shopping malls. Rather than adjusting oversized branches or abandoning them completely, the new Light Branches take advantage of mBank’s online and mobile banking products, permitting the bank to both improve efficiency and scope of the sales network and to fulfil the expectations of the growing number of digital consumers. This overhaul of their branch network includes operating 40 Light Branches by 2018, 80 larger Advisory Centres housed in office buildings focused on advisory, cross-selling and business banking support while still making use of recent technologies including remote digital support, and 60 manned mall mKiosks designed for both private and corporate customers to make use of further bank offerings such as acquiring a loan, credit or debit card.

The key concept of the Light Branches is to use innovative digital engagement to attract customers to the quick and easy methods of opening new accounts, receiving a loan and cash handling to name a few, available both in branch and online.  The branch entrance features an interactive screen utilising Kinect technology, able to present discount offers to customers as they approach the screen. Inside, a touchscreen video wall makes browsing the banks products simple and engaging, further streamlined to the customer by video-camera age and gender identification offering targeted mDiscounts. Customer service stands dispersed throughout the branch featuring tablets allow customers to engage in key banking services. mBank has also deployed a central management system for the project, with all devices and interactive activities united on a single local network. This amalgamation of traditional branch banking with recent technology innovation presents a forward thinking attitude to branch banking sure to slow the process of branches becoming obsolete, as well as the importance of a centralised rather than siloed system, and has seen much success.  Just six months after opening, Light Branches were found to outperform traditional offices in sales, attain 200 visitors a day and increase efficiency while lowering floor space costs.

The importance of integrating branch banking with digital services has also been acknowledged by digital banks, most notably Italy’s Chebanca!. Despite having begun as a digital-only bank, Chebanca! now operates 50 branches, in order to greater establish a sense of trust, branding and service that digital-only banks are not always capable of achieving. However, Chebanca!’s branches are far from traditional, with their self-service machines and appointment-only advice stations seemingly the only aspects found in a traditional bank branch. Though Chebanca! branches do feature teller stations to discuss opening accounts and other services, the staff pride themselves on not being bankers but experienced retail workers heavily focused on customer satisfaction. These branches also operate video stations, essentially advice stations that require no appointment, able to connect customers with video operators on large screens and make use of biometric recognition. These branches have been greatly beneficial for the bank, with the video stations alone enhancing customer relationships and increasing cross-sell and up-sell success rates. In areas featuring a branch, asset holdings are 2.5 times higher than in unbranched areas, 45% of new customers each month come from the branch, and 37% of all Chebanca! customers make use of the branches. This illustrates that there is still demand and value in branch banking, when tailored to reflect the needs and concerns of the customer.

Canadian bank Tangerine also sees the value in alternative branch banking, with its “Café” approach to branches featuring self-service kiosks, a coffee bar and children’s play area. The aim of such Cafés is to give customers of this largely online bank the opportunity to discuss their finances face-to-face, with associates who aid customers in learning to manage their money and accounts. Similar to the approach to branch banking held by Chebanca!, Tangerine’s “Café Associates” aren’t bank tellers, with no access to Client Files, while the Cafes themselves do not accept or carry cash. It is possible to access accounts online while in the Café using the iPads and computers while seeking help from the associates, and ABMs are available for deposits and withdrawals. The simplicity and breezy attitude of these branches aims to attract customers to an easy and mobile system of banking, with the branches seemingly acting primarily as means of gaining new customers rather than a key point of access for existing customers. This concept is also present in Tangerine’s Pop-Up Locations and mall Kiosks, offering a fast and easy way to open Tangerine accounts. While innovative technology such as scanning a driver’s license to fill out an account application form is key to the ease of access Tangerine presents, it’s unavoidable that the value of branch banking to attract new customers is still of great importance.

The role of non-traditional branch banking is also an intrinsic aspect of Vietnam’s first digital bank, Timo.  Timo, standing for “Time is Money”, aims to save its customers time and money by removing paperwork, queues, and the inconvenience of conventional branch banking. Timo’s sole branch operates in Ho Chi Minh City and is referred to as the “Timo Hangout”, where the primary aim is to encourage potential customers to open an account. However, the “hangout” operates more like a café than a bank, offering free wifi and complimentary drinks to potential members, as well as 50% off the bill for current Timo members. The hangout endeavours to showcase the bank’s different account and app options to customers, offering an introduction into the ease of online banking. The relaxed and casual setting targets Vietnam’s key demographic of millennials, in a country where the average age is just 30, aiming to sell a lifestyle rather than solely a superior product. Though Timo’s inability to operate purely online can be attributed to banking regulation in Vietnam requiring accounts to be opened in-branch, the informal, comfortable setting of a Timo hangout shows the importance of assurance and trust that can be best established face-to-face.

While Timo and Tangerine incorporate digital elements into their bank branches, operating with the primary aim of offering customers an easy way to open an account rather than encouraging repeat visits for banking support, The Bank of East Asia believes the branch to still be a valuable channel for regular visits from customers. Committing to offering an engaging and helpful branch experience, The Bank of East Asia focused on creating digital branches to offer a cohesive omni-channel experience while targeting the crucial demographic of young, tech-savvy customers. This wholly paperless branch system is brimming with innovative and engaging digitised banking services, including the touch-screen i-Counter that operates as a manned counter during the regular business hours, converting to i-Teller, BEA’s interactive service station, in the evening to connect customers with staff via video call to still enable the facilitation of transactions or loan applications. The digital branch also features the i-Window touch-screen system, showcasing information on investing products and offering easy electronic application for such products by incorporating electronic signatures and real-time audio recording, the i-Zone credit card self-application, and the i-Kit automatic form completion system dependant on OCR and digital signatures. These digital branches have reaped the benefits of operating as a smaller branch, such as a rapid branch renovation time and a reduced back-office area making them well suited to highly-trafficked mall locations. Their success in also rooted in their considerable customer appeal, with the digital branches seeing a 35% increase in deposits per customer and a 65% rise in mortgage drawdown compared to conventional BEA branches. Customer response to branch banking that feels modern and helpful is clear, illustrating how branches can continue to succeed and form a key part of the banking experience for the customer, simply by effectively targeting the needs and preferences of its customer base.