Three Christmas Wishes for Digital Banking

December 17, 2018

Whilst most writers will turn their attention to reviewing the past year or more likely their predictions for the coming year, Christmas is a time to think not only of our loved ones but of others less fortunate. So my Christmas post this year is three wishes of Banks globally to help those less fortunate than us. I believe banks can make these wishes come true as part of their business strategy for digital.

Almost 20 years ago the Harvard Business Review published an article by Micheal Treacy and Fred Weirsema, titled “Customer Intimacy and other value disciplines”. The paper proposed to survive in an industry companies have to be at least industry average at three principles: Customer Intimacy, Operational Efficiency and Innovation. To be a leader, companies only had to master one of them. Now in the digital era their theory has never been truer.

Open Banking is driving a wedge through manufacturing and distribution, whilst fostering innovation in new business models, segments and products. Banking manufacturers will leverage scale to drive down cost per transaction and create much greater operational efficiency, whilst distribution banks are leveraging the customer shift to digital to create deep customer intimacy through targeted customer journeys and mastery of data. Innovation driven by open banking models is most prevalent today with the rise of challenger banks aiming to dethrone traditional banking models.

My three Christmas wishes for digital banking are based on these three sound principles for digital banking strategy.


The Wish of Customer Intimacy

Digital banking is a shift away from business models based on physical reach of customers. Challengers are creating new offerings based on very different customer segments like Henry (high earner not rich yet) and Dinky’s (dual income no kids yet). My first banking wish is for banks globally to use a Customer Intimacy strategy to help those with mental illness. On a good day most sufferers are indistinguishable from those around them so it’s understandable that many of us are unaware of the challenges people with the illness face. However mental health is a growing epidemic, and some even point to technology as a contributor for some of the growth in this illness. In the UK over half of people with debt problems have mental health issues says UK charity ‘Money and Mental Health’. A survey by the charity highlights sufferers problems are made worse as spending increases when they are in periods of poor mental health.

Money management is complex and made worse with so many products and providers in the market, customers have to juggle limited funds through different products to maintain a household. Often the most readily available funding options, like payday loans, are the worst for those suffering rather than a solution.

Banking has a role to play here and that is to simplify money management, to help people understand their finances better and reduce stress for those most vulnerable to this illness. Banks could provide the apps and data to help people not only reach their aspirational goals like buying a new car or sending kids to university, but to help them understand when spending is out of control or advise of the most affordable options to finance important purchases. Challengers like Monzo and Starling already help users to block gambling sites from the cards to help them ensure their problems are not made worse. Barclays goes further in allowing users to set blocks on more categories of spend like bars. And Lloyds bank works with charities like ‘Rethink Mental Illness’ to create guidance and assistance for those in need.

So my first wish is that banks globally look not only how to profit and drive customer intimacy from customer data but also to protect those with mental health issues by providing support and best advice so that managing money is not another pressure in their lives.


The Wish of Operational Efficiency

According the “Findex” report produced by the World Bank Group 31% of adults (1.7bn people) globally don’t have a bank account or a mobile money provider. Virtually all of these are in developing countries. The poorest 40% account for half of these, and are likely to only have had a primary school education. Yet organisation’s like the World Bank group and the Bill & Melinda Gates Foundation identify that those in poverty are much more likely to escape poverty when their money is held in an account rather than held as cash where it can be lost or stolen.

In the past transaction processing costs may have been a reason why banks haven’t addressed this customer segment, in the digital era with banking in the cloud leveraging elastic scaling this is no longer the case. In some countries mobile money providers have partly filled the void, but banks and fintechs have quite some way to go before they make a bigger impact to reducing the number that are unbanked. Between 2014 and 2017 the report identifies that 515 million opened an account, reducing the percentage unbanked from 38% to 31%.

When money is held in an account not only it is protected but banks can provide better money management options and advice to help those that need it most to lift themselves out of poverty.

In the digital era challenger banks are already leveraging the cloud to improve operational efficiency whilst traditional banks are yet to move.

My second wish that more is done not just to compete but to specifically address this segment. By moving to the cloud not only will banks be able to improve operational efficiency but they will be able to scale to address the 1.7bn adults that remain to be banked.


The Wish of Innovation

One of the biggest trends in digital banking is the recognition and focus of banks on customer experience. It is the challenger banks that have really exploited this focus, but traditional banks too are investing on improving customer experience. We are seeing banks move from servicing transactions to providing deeper customer journeys that make life easier and better.

My first two wishes address specific segments of customers that banks can help those in need, my third wish for banks is to use Innovation to address more segments of customers that need help. Some banks provide very basic accessibility options, but disability is another large segment. What about the homeless, or refugees? How can banks use innovation to make life better for more customer segments? For example in the case of the homeless often those that want to help them on a rainy/cold day are put off from helping for fear that money donated to them is used for alcohol or drugs instead of food, clothing or shelter. Could banks create a currency that could only be used to purchase food, clothing or shelter? Can social networking tools and principles be used to help charities focused on similar issues collaborate better to greater a stronger force to tackle issues?

My third wish is for Innovation to address more segments that are in need of financial assistance. As banks move towards methods like Design Thinking to improve customer experience, can some of these sessions be used to identify and address more segments of customers in need so that banking is helping make life better for those that most need it.

In my 30 years of focusing on customer experience solutions for banking, this is the most exciting period of change driven by technology, regulation and customer behaviour. Let’s work together to make life better for everyone and not forget those that need banking most.

Merry Christmas everyone, I also wish you all a well-deserved break and happy holidays with your loved ones and thank you for reading my posts.




20:20 or blurred digital vision?

December 21, 2017

Forecasts for the upcoming year have become an industry staple, but how often are these predictions correct? In this post I review forecasts made at the start of the year so that you can judge who got 2017 right and who needs to brush up on the research.

Customer Experience – One of the most discussed topics expected to play a key role in 2017 was not the latest digital innovation or trend but a core banking concept essential to a customer-centric approach – providing a seamless customer journey. To meet customer expectations, The Financial Brand stressed the need for banks to improve their core journeys from front-to-back in order to deliver a seamless digital experience and improve customer satisfaction. This sentiment was echoed by Forrester, expecting banks this year to increasingly build and buy real-time core banking solutions to ensure end-to-end digital banking can be supported in the hope of mirroring the quality of the customer experience present in other digital sectors. Ovum also highlighted the importance of this for 2017, predicting the removal of complexity and data siloes to be key projects for improving customer experience. Ovum cited modernising legacy systems to be an aim for 57% of retail banks in 2017, reflecting the view that banks utilising batch processing will face increased pressure to alter their systems to remain competitive. This was an easy one to get right.
Blockchain – Took the banking industry by storm in 2016 as we collectively mused over the fascinating potential of this new technology, and consequently was a notable presence in 2017 forecasts. But the predictions for the role of blockchain this year were considerably less ambitious, mindful of the time it will take for blockchain to have a compelling role in banking services. While Chris Skinner suggested 2017 to be the year blockchain proof of concept would go mainstream, querying how long we can continue to test it, Business Insider concluded the trend of prototypes and innovation labs will continue, with initial use cases emerging in internal bank processes, transactions and trade finance. A similar point of view was expressed by Forrester, expecting blockchain to mature and understanding of its potential to become more realistic and focused, with banks considering use cases such as trade finance and cross-border payments. Elsewhere, Gartner suggested blockchain prototypes are too immature and risky to see replacement of current business flows in 2017, offering meagre improvement on existing services with minimal impact on improving cost and profit. It looks like they were on target with this prediction too.
AI & ChatBots – Chatbots were a staple of 2016, showcasing how individual customer interaction can be successfully executed through digital channels. But the forecasts for 2017 moved beyond this to the potential of AI technology in general, and how machine learning and analytics can further improve customer experience. Forrester forecast AI to enhance digital experiences in 2017, expecting banks to improve their understanding of how to best deliver valuable AI services. Business Insider predicted AI would progress from a buzzword to an important driver for improved client outcomes, personalisation and bank efficiency in 2017, deployed by many banks across 2017 and 2018. Business Insider also put forward that more complex AIs able to utilise large volumes of data would be developed. This sentiment was also offered by Ovum, suggesting big data generation, connected systems and automation to lead to wider use of AI analytics and machine learning. Looking back now I feel this was reality of AI in the field was well behind the hype, and although there was wider adoption of chatbots, we’re really only seeing a couple banks, like DBS, on the cusp of real revolution in service.
APIs and Open Banking – While APIs did not generate huge amounts of interest in early 2016, the concept was anticipated to become an influential and important trend during 2017, as interest in open banking and the role of PSD2 turned attention to API opportunities. The Financial Brand noted the importance of APIs in delivering innovative solutions in 2017, with competition and regulation pushing incumbents to take heed of the importance of APIs this year. Forrester put forth the view that APIs are a “must have” for 2017, noting banks must plan for their impact and their role in meeting the requirements of PSD2, in order to remain competitive while also accelerating the role of APIs worldwide. Ovum largely echoed this view, expecting PSD2 pressure for APIs to aid identification of digital opportunities, as well as having global ramifications through global banks active in the region becoming compliant and encouragement of other regulators to develop similar initiatives. For API’s we have seen a huge amount of activity with many API marketplace launches. What we haven’t seen, and probably won’t until 2019, is banks realising benefits of API ecosystem investments.
Fintechs – No annual banking forecast would be complete without some mention of the role of Fintechs, though the expectations for their position during 2017 differed from the competitive threat Fintechs are often portrayed to be. In fact, for 2017 the Financial Brand believed collaboration between fintechs and banks to continue to be explored and an important element of the year, as Fintechs may require additional investment to achieve scale and profit, while also reaping the benefits from API development. Business Insider reiterated this view, putting forward that most fintechs will need bank partners to successfully compete in 2017, seeking out banks themselves to partner with. Gartner expected fintechs to continue to generate publicity but were likely to struggle to grow their customer base, creating acquisition chances for banks. Ovum also anticipated partnerships with fintechs to continue, fuelled by the opportunities created by API development. Again we have seen few acquisitions or partnerships really paying off for banks or FinTechs so I believe this was overhyped.

No doubt forecasters play an important role in helping banks to plan the year, but their digital maturity increases, a digital strategy needs a multi-year business plan which will need longer range forecasts. The problem is with these is nobody really reviews a 5 year forecast ;o)

Happy Holidays Everyone…

The evolving landscape of bank-to-customer interactions

November 8, 2017

The history of banking interactions

When banking began, banking interaction started physically by visiting a bank, and it was not until the 1980’s that telephone banking came into play. Around the same time, Bank of Scotland launched Home-Link a service on Prestel’s View-Link system which could be accessed on a microcomputer. Although very crude, this was the first self-service channel for banking customers in the comfort of their home.

It was not really until the start of the 90’s that staff enjoyed similar capabilities in the branch, and this time it was the birth of the PC revolution that drove this trend. I was lucky enough to work on a project for Lloyds Bank to roll out 40,000 PC’s running Windows for the very first time in branches.

10 years later Stanford Federal Credit Union Bank launched the first online bank on the Internet in 1994. In terms of interaction we moved from Character User Interfaces (CUI) to Graphical User Interfaces both for staff and customers. Both of these required users to know the language (action and objects) of the bank e0g. New (action) Bill Payment (object). These applications were role or task driven. Apart from the changing technology, very little has changed in the way all users have interacted with the bank, although screens size varied more greatly with the advent of mobile and tablets in the 2000’s.

What do banking interactions look like today?

Some 30 years later we are now seeing a revolution in interaction with banks. This year has certainly been the year of the chatbot and start of the conversational banking era. A generation of WhatsApper’s and WeChat’ers find this new banking channel much more convenient with their lifestyle and general interaction. Certainly chat has taken over from SMS texting. One of the key benefits is that advances in Natural Language Processing have made it possible for users not to have to navigate screens, menus and buttons, they can use their own language, in their own time. Some of these NLP engines are not only incredibly smart at matching a customers’ intent to a banking action, but they also reflect the customers’ language in their responses to build a better rapport with them. Some are adding AI to get a better understanding of the customers profile and even emotion, again to not only execute the users wishes but to build a relationship with them with a more conversational approach that empathises with them.

This conversational banking has already found its way into mainstream Personal Assistant platforms like Amazon’s Alexa and Apple’s Siri. However, today they are far less popular than chat banking assistants, and there may be a good reason for that. Voice is a “public” medium, i.e. Someone close by can hear the conversation, which is not ideal if you ask for your balance in front of your kids. However, chat is a private medium and overcomes this issue. Plus, chat allows the “multitask generation” to bank while doing other things, where voice requires more focus and attention. This doesn’t mean that voice is dead, but that banks will need to look at how this could be used, embedded into different customer journeys rather than pure banking transactions.

Another set of channels of interaction have also appeared on the scene and are due for growth, these are “ecosystems”. These could be third- party apps driven by open banking initiatives, or devices (IOT) like Fitbit’s used for payments. Both are enabled by API’s and set for huge growth in usage. Ecosystem interactions therefore are UX-less, they are a technical interface not a user interface. Beyond millennials, the code generation (since 2013 a world-wide initiative was launched to teach all kids an hour of code) will script their own banking interactions. They will string together events and data from different systems to manage their money in a way that no-one bank will ever provide! For example, they will use orchestration or voice platforms to instruct money to be saved every time they exercise/walk, they will change limits and access on different accounts based on their location, and quite possibly they will even configure financial products to suit their own needs (longer credit terms exchanged for higher fees). And they will make this happen with advanced orchestration platforms, today sites like If This Then That and Zapier are fairly basic.

We also already have far richer visual interfaces for banking interactions through Virtual Reality and Augmented Reality. Here we are seeing interactions again moving away from standard windows, menus and buttons to much richer and often natural interfaces. VR and AR will have different use cases, but there are great examples already out there from house buying to stock trading.

The banking interaction landscape of the future

There is a saying, “The best way to predict your future, is to create it.” Banks have an opportunity to design the way they interact with the general public, and create new experiences for their customers. The challenge they face is to choose the forms of interactions they want to support directly. Open banking is taking hold of the industry and transforming the banking landscape, and banks can now use API’s and entice third-parties to provide an even broader range of interactions without being disintermediated. Do you have the technology in place to create your bank’s future?ChannelsLandscape

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.