The next phase of digital banking is upon us. Banks and fintechs clamor to deliver unique and differentiating user experiences built upon the latest “API-first” omnichannel banking platform, but realize that it’s still difficult to stand out and be distinctive
in a crowded field. Even the most sleekly designed front-end quickly starts to look like a copycat of many others in the digital banking space. For banks to win the hearts and minds of new and existing customers, they need more. They need a 360-degree view
of each customer’s financial life and be able to anticipate and respond, in real-time, to the customer’s needs and aspirations – across any channel – to deliver timely and meaningful customer insights that will nurture and feed their banking relationship.
Key elements that help to achieve this: Events and Event Streams
Understanding Events and Event Streams
What constitutes an event? An event is simply a change in state or an action taken within a system. A sequence of events is called an
event stream. So, putting this into the customer context, every time a customer has an interaction with a bank’s digital channel, an event is created. For example, today I signed in to my mobile bank app, retrieved a balance, performed a transaction,
and traded stock – and meanwhile the back-end systems performed the associated Know Your Customer (KYC), fraud checks, risk checks etc. – each of these are examples of an event. These events, in a time-ordered sequence, are an event stream.
There’s No Time Like the Present
Banks can now leverage powerful technologies that utilize elusive “moment in time” data – data that is live, and able to deliver continuous customer engagement. The foundation for this is
event-based architecture (EBA) and event streaming. With an EBA approach in the technology stack, banks can deliver digital experiences tailored to their customers' interactions (events) as they occur. With instantaneous availability of event
data, banks gain keen insights into customer behavior, in real-time, translating into a better understanding and an immediate ability to service their customers in an impactful way. Making events available across the enterprise can become the lifeblood of
the bank’s digital architecture, and the bank’s business.
Financial institutions have spent fortunes on data warehouses, data lakes, data hubs and data marts. They’ve collected vast amounts of data on just about everything imaginable, such as how long customers bank online, call center metrics, abandonment rates,
spend analytics, ATM transaction times and even social media habits. Banks had hoped to use this data to influence customer interactions and outcomes in real-time. However, while this data collection is valuable, it’s not all that timely – traditional data
analytics relies on accumulating data, grouping data, arranging data and then querying the data. By the time you’ve amassed and mined the data you need, the opportunity to drive an outcome with a customer has passed, as these systems are looking at data from
the past. With EBA and event streaming, data can be segmented and analyzed as it is happening. There’s truly no time like the present!
Connecting the Dots
As banks adopt an event-based architecture with their back office and front-end systems, they can interconnect all data sources and centralize all customer events in real-time. Their banking system can access and analyze the event streams and react to customer
events, immediately. By doing this, the job of customer-focused innovation becomes easier and far more effective.
Real-world examples of applying this technology in the banking industry include an events-based fraud detection system for online banking, various machine learning and artificial intelligence (AI) initiatives and applications, expedited transaction access,
and improved data resiliency. Each bank will have its own vision and strategy, and this will help them stand out from their competition.
In my next blog we’ll examine how banks are using events to create better user experiences, and why event-based architecture is a cornerstone in the future of banking.