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Creating Practical Differentiated Digital Banking

Financial Institutions around the world are spending big on “Digital”, but what return on investment are they really getting?  What real innovation are they offering?  To me, all the mainstream offerings look very similar and yet deliver little in terms of value add.  Many banks have a mobile APP with payments, statements and some simple alerts, but generally these APPs do less than their web sites, whilst still requiring additional log in credentials.  To compound the problem, the digital revolution is not only lowering the cost of entry, but actually enabling the new entrants to leap frog the legacy players at the same time. 

Perhaps I have a different view of what is thought of as “digital” to the established banks.   I look at it as the combination of Social & Mobile (new world channels) and Big Data, Analytics & Cloud (new world back office components) - so it is no surprise that budgets are increasing.  But, let’s look at some concepts that might actually deliver real innovation for the customer – yes, the customer. “Digital” strategy must be driven by customers needs not just by the business.  It must be innovative and not restricted by underlying legacy core systems. 

I am a fan of high quality mobile APPS.  However, I am still of the opinion that phone screens have been too small for the more complex applications.  Phones are fantastic for email, simple Internet searching and many other simple functions such as doing a quick payment or transfer, but they have not been suitable for more complex financial planning.  But, as screens continue to grow and more consumers move to “Phablets” this is changing, and changing fast, confirming that mobile is definitely the future.  So let’s have a look at what next generation APPS might look like as the screens continue to grow.  

Obviously next generation APPs must include all the current Bank APP functionality such as making payments to contacts, viewing transactions etc., but if they were extended to include a proper off line money management and modelling facility like those provided by the Mint or iBank APPS, many new options for innovation would emerge.  Fundamental therefore is that they need to work offline, but with a “secure sync” for data updates, like current email APPs. 

This next generation APP would automatically connect to the bank server securely when a network connection was available and download new transactions, or perhaps at a frequency set by the customer – hourly, daily, or weekly, enabling the information to be much more real time than with digital/paper monthly statements.  When a customer has new data available, they could get a notification on their device; in much the same way as content is delivered through the excellent McKinseys APP or indeed Facebook notifications. 

Notifications could then be used in many ways, but would provide a useful method of reminding users that data was available and hopefully start to get customers into a routine of checking their data regularly.  As the data would then be downloaded into the APP it would enable the user to review it anywhere/anytime, (on a plane or train for example).  This would then enable modelling and other functions to be completed locally but with the huge advantage that adding functionality to and rolling out new versions of the APP would not require any changes at the host banking system. This approach would surely assist financial institutions struggling with delivering a digital strategy with a lot of underlying legacy core systems.  

The possibilities for the bank to then to add value through this APP are endless.  For example, automated analysis of transactions highlighting any items, which appear unusual, (e.g. direct debits which are outside of x% of the last 6 month average) so that instead of just getting a list of transactions, the APP could perhaps present certain types of transactions highlighted in different colours. 

Being able to review and model the data offline may also increase the ease and acceptability of managing data on screen, which as highlighted by research published by London Economics ( in February 2015, seems still to be a major challenge for many customers. 

Through the use of social tools and analytics/big data the bank could also use the APP to push personal relevant marketing content to individual customers, such as advice, saving ideas, best buys, tax changes etc.  Perhaps alerting customers who had not changed their power providers for x years with a link to comparison tables. Again the content would be available to the customer to read and digest off line when they have time, for example, during their daily commute.  

Above all, the APP also needs to make checking your bank account convenient, simple and worthwhile.  So if a customer wants to create a new payee or payment why not enable the use a strong biometric confirmation rather than a traditional password or card reader which you can either never remember or don’t have to hand when you need it.  Using strong biometrics to secure access to the APP and getting the APP to communicate directly with the host could also improve the end-to-end Cyber Security protection for both the customer and the bank. 

As new digital start-up banks being to emerge, I am sure that we will see more of this type of functionality become reality and the norm, but what will the mainstream banks launch?   Time will tell, but I am pretty sure that as each generation of new consumers select their first banking provider, they will be doing their research and selection based on the “digital” offerings available.



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