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Credit Cards Reinvented

The credit card industry is an interesting space to be in right now. Consider this – Chase has partnered with select airlines to create co-branded credit cards that offer new members a unique welcome bonus against their next international flight. In India, the country’s leading PSU bank SBI has partnered with lifestyle brand Fabindia to offer a co-branded, contactless credit card for premium customers. And ICICI, another leading Indian private bank has joined hands with Amazon Pay to launch a contactless card that has already on boarded two million customers. The banking and financial services sector is witnessing an incredible pace of change and the credit card segment is no exception. As more customers move away from cash and innovative digital payment models emerge, the credit card industry must reinvent itself to retain their edge in the market.

The concept of using valueless instruments for buying and selling can be traced back to the earliest human civilizations. Since then, the idea of shopping on credit using a representative transactional item has had many permutations, till it finally evolved into the Diners Club Card of the 1950s – the true precursor to the modern-day credit card. The banking sector was quick to capitalize on this opportunity and credit cards grew to become a USD 100 billion industry by 2020 with over 80 percent of customers preferring cards to cash. But after decades of operations, it is now time for credit card issuers and banks to re-evaluate their strategy considering the current market context.1 2

The market at the moment is being driven by changing consumer behavior and preferences. Cash is almost dead as customers seek out innovative digital methods of payment. By 2016, 95 percent of Canadian credit cards had enabled contactless options and 75 percent retailers had developed the capacity to handle contactless payments.3 By 2018, 83 percent of payments in China were being made through mobile apps.4 And then came 2020 – the year when everything changed. As the COVID-19 pandemic wreaked havoc across the world, payments went through an accelerated pace of change.  Mastercard estimates that a whopping 79 percent of customers across the world used contactless payments in 2020 and 74 percent intend to continue using these payment options even after the pandemic.5

In addition to contactless payments, customers today expect considerable degree of personalization and autonomy over their banking activities, including their credit card usage. They want ease of use, flexibility and above all a seamless and relevant experience with their credit cards. They are also spoiled for choice. From digital wallets to the emerging Buy Now Pay Later service, customers today have myriad options when it comes to how they shop and manage their money. Even fintechs are getting into this space with innovative new offerings such as BlockFi’s soon to be launched Bitcoin Rewards Credit Card. Credit card companies have to ramp up their game to retain their competitive edge in this market. Contactless payments are of course a way of life now and will be so for the foreseeable future. It is a space that will see considerable innovation as wearables continue to gain popularity. Already, established players like Fitbit and Apple Watch are offering payment options. There are also fintech start-ups in the space working on purely wearable and app-based payment options. Tech giants like Amazon are offering payment capabilities via their smart home assistants and even biometric authentication-based payment systems are picking up pace.

Established credit card issuers and banks have a significant advantage over new entrants to the field. They already know their customers. Now is the time to analyze customer data to understand their preferences and requirements to offer personalized services as well as rewards. For example, if a frequent flier uses his card to book a family holiday, it would be a good idea to offer him a choice of unique recreational activities at the destination – whale watching in New Zealand, to breakfast with a Disney princess at Disneyworld. Or for instance, enabling customers to pay for their taxi fares using the accumulated reward points or a combination of reward points and credit card. Such personalized attention is welcome and highly appreciated by the modern customer. Offering the customer, a degree of control over the rewards and loyalty programs is also an excellent strategy for ensuring customer delight and loyalty. By opening rewards programs to a variety of options for the customer to choose from, credit card providers can ensure not only a superlative experience but also give them the autonomy they want over their financial transactions.

Like the larger banking and financial services sector, the credit card industry is witnessing significant disruption and must move quickly to capitalize on the opportunities in the market right now. As fintechs and technology giants establish themselves in the market, there will no doubt be many interesting partnerships and innovations that will offer customers a whole new way of buying and managing their finances. The future of credit cards is an exciting one and the world is waiting for the next groundbreaking development.

Sources

1PR Newswire
2Fundera
3Plug and Play
4Daxue Consulting
5Mastercard

The Lesson for Banks from the Makers of James Bond

Amazon recently bought over the legendary MGM studios, extending their stake in the film and television business.1 Naturally, fans asked what the future would hold for the super spy – would the franchise branch out into TV shows like the Avengers or stay true to its movie roots?  The answer came from Barbara Broccoli, co-owner of Danjaq LLC that owns half the rights to the franchise. She said, “We make these films for the audiences…Our fans are the ones who dictate how they want to consume their entertainment. I don’t think we can rule anything out, because it’s the audience that will make those decisions. Not us.” Broccoli’s statement is interesting because it places the future of 007 in the hands of his fans. It will go in whichever direction that fans and viewers want it to go.

Movies are understood to be the ultimate expression of creativity. Genius scriptwriters, visionary directors, and brilliant actors, form the faces of the world of cinema in popular imagination. But it is a business which must be profitable, and in the 21st century, this depends on understanding and delivering on customer expectations. If viewers want to see James Bond in 45 minutes episodes, then that’s what they will get. This is the crux of any business today. The customer is king and is at the very center of business strategy, roadmap, and implementation. Because business success today depends on delivering what the customer wants, when they want it and how they want it. Banking is no exception.  Modern customers expect a degree of personalization, empowerment and choice that was previously unheard of. And fintechs and technology giants operating in the financial services space are ready to give them all that and more with an innovative tech enabled customer centric business model.

Traditional banks today must relook at their vision and revamp operations to put customers at the heart of their strategy. Customers want products and offerings that are personalized to make sense for them. Empathetic banking models that respond and even anticipate a customer’s need and addresses it effectively will spell the difference between success and failure in an increasingly complex and competitive market. Relationship-based pricing models are gaining traction and banks need to leverage the high degree of customer trust they enjoy to deepen customer associations and loyalties. And to do this they must effectively utilize customer data within the organization.  Data stored across silos can only present a fractured representation of customer behavior. Banks must first break down organizational silos to consider customer data in its entirety and then use powerful analytics tools to gain intelligent insights into customer behavior across touchpoints. Armed with this information, banks can then craft hyper-personalized offers, products, service, and product bundles and even create better pricing strategies. Personalized offerings will result in happier customers and help establish long term customer loyalty.

In fact, while banking as an industry will exist in the future, banks in their current form will most likely not. Footfalls into branches is already on a decline as customers prefer online and mobile banking. And banking is increasingly getting embedded into other services. Case in point – Ikea’s purchase of 49 percent stake in Ikano Bank  that puts banking at the heart of its retail business to make shopping an easy seamless exercise.2 Customers can avail of banking services in Ikea stores, to buy Ikea products, avail of associated services and more. Banks have the unique opportunity to establish themselves as curators of a comprehensive ecosystem of allied third party services that address customers’ needs. For example, a customer taking a home loan from a bank can also avail of discounted deals on interior design, electronics, furniture, and furnishings from the bank’s ecosystem partners. Banks must move now to become orchestrators and owners of this ecosystem, or they stand the risk of becoming yet another commodity on a platform owned by someone else.

Banking today is not just about offering a static list of services. Much like James Bond, it is about delivering what customers want, how they want it. Despite the high degree of trust that they put in banks, customers want a degree of personalization and on demand access that is not possible to deliver with legacy systems and outdated business models. Banking transformation is no longer a choice, it is a business necessity. Banks must partner with Fintechs to deliver the uberized services that customers expect. Or they must work with third party vendors who can implement a technology middleware over their legacy cores to enable the advanced analytics, and AI solutions they need to power this new age of banking.

Sources

1Business Insider
2Reuters

How KSA Banks Can Transition to the New E-Invoicing Regime

The General Authority of Zakat and Tax (GAZT) of the Kingdom of Saudi Arabia (KSA) announced the mandatory roll out e-invoicing from December 2021. This initiative will help the country to reduce errors, ensure tax compliance and minimize the shadow economy. But the transition to the new system can be challenging for banks as they also try to ensure uninterrupted operations and a seamless customer experience. This is a big change for them, and they will need comprehensive technology platforms and a well thought out strategy to ensure the least amount of disruption and maximum compliance.

To be honest, the move to e-invoicing was inevitable. Across the world, there is a renewed push towards a digital economic foundation as countries try to modernize their taxation and invoicing laws, ensure better regulatory compliance, and address loopholes in their legacy frameworks. This will help KSA to simplify and streamline reporting standards between taxpayers and the authorities, prevent tax evasion and ensure transparent and fair business practices. It is a win-win for all parties in the market and will substantially boost the economy.

Listen to our experts discuss the impact of e-invoicing on banking in KSA

Banks in KSA are not new to this move to digitization and transparent taxation structures. The VAT compliance regulations that were affected a couple of years ago required a similar kind of change management and adaptation. When it comes to compliance with a new framework, the biggest challenge that banks face is that of their outdated systems. Most banks today have complex infrastructures with multiple ‌legacy‌ ‌systems‌ ‌or‌ ‌multiple‌ ‌core‌ ‌systems, ‌product‌ ‌processes,‌ ‌DRP‌ ‌systems‌ ‌and‌ ‌other‌ support ‌systems‌.  The complexity coupled with lack of flexibility and scalability make it difficult for them to quickly implement a new regimen or process. But from my experience, I can say that this is a challenge that is easily resolved.

Banks must begin with a thorough assessment of what their existing systems can deliver and map it against the requirements. In the case of the e-invoicing mandate, banks will have to integrate their systems with that of the GAZT.  The important thing to keep in mind here is that the change is not a one-time occurrence. Digitization and reform are an ongoing process and new laws & regulations will continue to emerge over a period of time. Banks must gauge if their systems can handle ongoing regular disruptions. After this exercise, most banks will conclude that existing frameworks are not up to the task. They will need an enterprise level solution that can automatically streamline the invoicing process, integrate with the GAZT, and align invoices with the regulators.

At this juncture, it is crucial for third party solution providers to work closely with banks to make them aware of the middleware and over the top solutions in the market that can help them meet mandatory regulations without disrupting the legacy core systems. These solutions typically sit over the core and ensure the agility and scalability they need to quickly address changing regulations. Banks must partner with third party vendors whose solutions can enable end-to-end e-invoicing management, compliance and help prep customers for the new digital invoicing regime. A solution that has been designed specifically for the financial services sector and can be deployed quickly is a good investment.  And identifying partners who have extensive experience of helping banks adjust to the previous VAT regulations is vital. They are familiar with the market, with the regulations being rolled out. And thanks to their in-depth expertise, they have a wealth of best practices to draw upon to standardize deployment and management processes. On going dialogue between the vendor and bank will ensure clarity on issues like integration, product capabilities and ROI.

‌The e-invoicing regulations announced by KSA is a futuristic move that will help transform how business is done and avoid revenue leakages. And of course, such a significant transition can seem overwhelming. Fortunately, today there are not only comprehensive, best in class solutions but also experienced third party vendors who can help banks make this giant leap painlessly and efficiently.

Learn more about SunTec’s KSA e-Invoicing Solution here

Sudheer Padiyar

Sudheer Padiyar is a seasoned and dynamic sales and marketing professional with over 25 years of experience in the Financial Services and Global Banking Technology Industry. He has successfully led sales and marketing functions across the Americas and Europe for the banking technology solutions from Infosys. During his remarkable career, he has worked closely with CXOs and business leaders of retail and universal banks across Western Europe in defining their transformation road map around Core Banking and Digital. His core competencies include driving customer relationships, business development, interpersonal skills, industry, and product expertise, developing value proposition and solution-based sales techniques to drive the right solutions to address client needs. He has also got an unconventional thinking ability in identifying the problem and implementing innovative solutions. He has led many corporate initiatives such as product licensing and implemented the product licensing policy for leading banking solutions from Infosys.

SunTec Recognized for its ‘Most Innovative L&D Program’ and ‘Outstanding Employee-Engagement Strategy’ by HRAI HR Distinction Awards 2021

We’re thrilled to announce that SunTec has bagged the Platinum Award for ‘Most Innovative L&D Program’ and Gold Award for ‘Outstanding Employee-Engagement Strategy’ by HRAI HR Distinction Awards 2021 that was held virtually on May 06, 2021. We won the awards after a rigorous evaluation process by a panel of eminent jury members based on six criteria, namely Innovation, Replicability, Scope, Impact, Sustainability and Execution.


The HR Distinction Awards, organized by Human Resource Association India (HRAI), recognizes Professionals and Organizations who go an extra mile to deliver Outstanding Results and show excellence in giving new direction to HR Strategy across the globe.

The award underscores our commitment towards Learning and Development as well as Employee Engagement which forms our firm foundation at SunTec. Our forward looking ‘Individual Development Program (IDP)’ focuses on personalized learning paths for individuals based on role requirement, competency level, career aspiration and industry trends which were recognized by the jury. The jury also recognized our strategies for employee engagement and welfare during the Covid 19 pandemic. This is the second consecutive year that SunTec is being recognized by HRAI for our tremendous efforts in HR.

It’s a proud moment for us. We would like to extend our gratitude to our Learning and Development and Human Resource teams and many congratulations to the entire organization!

The Exciting Evolution of India’s Fintech Space

British fintech firm Revolut is coming to India. It intends to invest USD 25 million in the country and aims to launch its app by 2022.1 That Revolut has set its sights on the Indian market is understandable. With a population of more than 1.3 billion people, India presents an incredible opportunity for growth. But the question is, is this the right time to enter this market or is the company too late to cash in on the growing digital payment opportunity in India?

India has traditionally been a cash driven market, especially across its rural populations. But we have reason to believe that this is changing. Two factors contributed to this transformation. The first was the unprecedented demonetization announcement in 2016. Overnight, Rs. 500 and Rs. 1000 banknotes were banned, leading to a nationwide cash crunch and an uptick in the adoption of digital payments. Images of roadside vendors with signs indicating they accepted digital payments went viral, indicating that people from all walks of life were open to digital transactions, even for smaller amounts. This proved to be an inflection point for fintech players in the country. Reports indicate that digital wallet transactions increased by a whopping 700 percent in the days immediately after the demonetization announcement.2 The government introduced UPI apps which saw high adoption as well. The Reserve Bank of India data shows a 134 percent increase in debit card usage at POS terminals, and 163 percent increase in m-wallet usage between October and December 2016.3 By October 2019, that is, in just about three years since its launch, UPI transactions hit the 1 billion mark. But, while there was an uptick in digital payments, the cash in circulation quickly reverted to pre demonetization levels, defeating the country’s objective of becoming a cashless economy.

Writing this now in 2021, I can say with certainty that the ongoing COVID-19 pandemic has proved to be a bigger driver of digital payments than the demonetization drive. Amidst fear of contracting COVID-19, people became increasingly reluctant to use cash, debit / credit cards or even visit physical bank branches. As a result, digital payments touched record highs last year. There were 221 crore UPI transactions worth INR 3.9 lakh crore in November 2020.4 By September there were 20,919 crores mobile app based payments worth INR 7,04,109 crores and 28.22 crores net-banking transactions worth INR 34,36,124 crores. Reports indicate that 6,660 crores transactions valued at USD 270.7 billion are expected to transition from cash to digital and card payments. This number is likely to grow to $856.6 billion by 2030.

Clearly this is a market with tremendous potential for growth and Revolut’s decision to expand operations here is understandable. The question is, are they too late? India is the fastest growing fintech market in Asia, beating China to the top spot. Over the last year, there has been a 60 percent increase in fintech investments – USD $1467 mn in H12020 compared to the $919 mn during same period the previous year.5 India also has the second highest number of new fintech start-ups over the last three years, coming second only to the USA. And a whopping one third of the country’s unicorns are Fintechs. Competition for share of wallet is fierce, and first movers like PayTM have already established customer trust and loyalty. New entrants to the field like Revolut will have their work cut out for them as they try to establish a foothold in this market and grow their business.

With its skilled workforce, emphasis on digital transformation and a cashless, inclusive economy, and increasing customer demand for digital payment options, India is a fintech’s dream market. It is no surprise to see global fintech players making a beeline for the country. But as the sector matures and grows, fintechs will need fine-tuned strategies to meet the unique demands of this geographically and socio economically diverse market. And traditional banks must relook at their operational models, technology roadmaps and strategic vision to retain customers and grow their business in this increasingly complex and competitive market. I am excited to see how this space will continue to evolve in the years to come.

 

Sources

1Technology For You
2Marsh
3Entrepreneur
4The Hindu Business Line
5Outlook India

Ecosystem for Innovation and Value Creation – To Compete or Collaborate

In this period of turmoil, corporate treasurers find it more important than ever to express what products, solutions, and services they want from their banks. Aite Group research finds that to transform the bank-client relationship and to bring corporate banking to the next level, corporate users expect a collaborative approach (i.e., co-creation) with banks and fintech vendors working together to design solutions that fit with each other’s needs. Co-creation is a term increasingly used to describe the collaboration between corporate treasurers, their banks, and technology providers on deciding the priorities, the design, and the development of new digital solutions. This collaborative approach requires a common glossary of definitions and a clear map of the constituting elements of the open banking ecosystem. Corporate treasurers tell Aite Group that they expect banks to clearly communicate their open banking strategy. Banks and fintech vendors must expect co-creation to become a key criterion in future requests for proposals.

Banks can reap the opportunity to turn the concept of co-creation with fintech vendors into a real value proposition by fulfilling their corporate clients’ demand for a better digital experience and easier onboarding to access basic and more sophisticated banking services. These are adjacent capabilities to run a business that a bank can offer to corporate executives that want to handle financial supply chain operations. With ‘start-the-business’ tools and capabilities a bank can help to launch a new business (e.g., incorporation). The corporate client can then be more effective in running daily operations with the bank’s ‘manage-the-business’ products and services (e.g., deal with suppliers and clients; manage to be paid on time; control and anticipate cashflows). Finally, a commercial client will enjoy its bank’s ‘grow-the-business’ supported practices (e.g., enter new markets; use multicurrency solutions; access global trade finance capabilities). The partner bank can also cater to the ‘exit-the-business’ phase of a business lifecycle by offering business evaluation tools in partnership with dedicated service companies.

Financial institutions (FIs) have long been expected to offer solutions rather than products. This will be even more true in the near future, with client s demanding solutions that are much more integrated with the corporate systems and configurable on the fly. Bank relationship managers (RMs) must ask their clients what they want, knowing that the counterpart expects guidance on which technologies (e.g., APIs) to choose and, even more, how to develop tailored solutions without the need for additional (and expensive) work. Bank RMs appear to corporate clients as trusted advisors if they concentrate primarily on educating and informing corporate clients on what to do with banking technologies, explaining how API-based fintech applications can help treasurers restructure treasury department operations, and suggesting APIs that best integrate with corporate ERPs and TMSs.

Corporate clients are looking to bank RMs as experts that can teach them how to create business value from open banking. All that corporate customers want is to move across bank services and applications in a more agile way, being totally agnostic about the system used to run the business. The problem is all on the banks: How can they satisfy the request without losing the client? Although the conundrum appears unsolvable, there is a solution. The likely business model that Aite Group envisions for corporate open banking will be similar to platform-driven models: The platform provider does not own the physical assets but retains the relationship with the client. Considering that the more the banks engage in developing and exposing their open banking products via APIs, the more they will have to give up the direct connection with the client, the option that banks are left with is to create an ecosystem of partnering FIs and fintech vendors and become the curators of the experience that allows the customer to bank with the FI and run business together. In partnership they will streamline operations in process areas such as accounts payable and receivable automation, improve digital experience, insights into the ecosystem to access better information and make sound decisions. It is likely that bank-fintech vendors integrated ecosystems will replace value chains globally and blur the boundaries between retail and commercial banking. A possible use case is a platform that connects buyers and sellers of real estate: through the platform the client who wants to buy a house is able to access all correlated services (e.g., mortgage, insurance, moving services, registration to utilities services) developed and offered by specialized ecosystem constituents that are best connected via APIs to the similarly numerous ecosystems of corporate users, each one with their own specific demand. Ecosystem players must think in terms of processes and with full visibility of the end-to-end journey that generates the user’s needs.

Banks have the opportunity to leverage the “landing page” characteristics that a platform offers to visitors that consume the banks’ services. All banks have a large commercial network in their core market, so a platform represents a significant distribution channel in each local market. This setting offers the possibility for an FI to curate a ‘super-app’ that can be delivered as an e-commerce feature and leverages the contributions of all ecosystem partners. Corporate users tell Aite Group they prefer to work with their bank as technology trusted partner. Banks are—hence—in the privileged position to leverage this level of acquired trust and demonstrate value in the transaction by building marketplace-based opportunities that connect professional services (e.g., small accounting practices) for business-to-business transactions. Corporate users will seek for a fintech alternative only if their bank is not fast enough to correspond to their needs. In its trusted advisory relationship with the corporate client, the bank must be ready and prepared to advise the counterpart on the use and on the business impact of technology innovation. Banks must be aware that when building or joining an ecosystem, the use case will be very diverse depending on the market. FIs must define their own priorities and match them with the cultural set of capabilities that resonate with the demand from ecosystem participants. Not all banks will want to be in every ecosystem, and the cultural fit between the bank and the participating companies represents the key deciding factor. Banks must think what cultural community environment they will encounter and what services they will be asked by the ecosystem community.

The decision must be well pondered because it is a fact that economies of platform make it possible for corporate users to consume cheaper and easier-to-access products and services from the platform rather than in the open market. In a consortium-based platform model the value is presented by the interaction between the customer and the bank services layer. As previously mentioned, banks have an asset they have grown throughout centuries of business relationships: trust.

The question that banks must now answer is how to monetize the value created through the ecosystem and delivered on the platform. The value is represented by the ability given to the customer (i.e., the treasurer, the CFO) to transact with the bank partner in the environment of their choice: e.g., via their ERP/TMS; via the bank’s portal; via the fintech’s partner multi-bank access gateway. These options and added-value interactions can be offered at a premium. Very soon FIs will realize that competition will shift from holding the user interface with the client to servicing the client by delivering API-based products and services that more closely align with its needs. It is a new era for open banking: APIs “dematerialize” the banks and separate the asset (e.g., the bank account number, the payment channel, the loan contract) from the service (respectively, the most rewarding place to hold liquidity, the most efficient and cheapest rail to exchange a payment transaction, the most economic option to access funding). A well-engineered consortium platform architecture offers features and tools that enable visiting consumers to develop their own applications on top of the consortium bank’s APIs. This enables banks—each one adopting its own sales model—to develop and leverage their API catalog to generate new lines of business and to provide a new service that has not existed before. While the producers are the banks and the fintech partners develop programs and applications by accessing the APIs and the tools made available by the consortium, soon banks will be joined by corporate clients.

These corporate producers will be charged a fee because they are accessing a community or a market that will use their solutions to exchange goods and service transactions on the platform. The opportunity and tools to consume APIs to produce new applications that the consortium platform offers to corporate clients may justify the request to apply a charge fee.

“The views or opinions expressed in this article are those of the author. They do not purport to reflect the opinions or views of SunTec’’

Enrico Camerinelli

Enrico Camerinelli is a senior analyst at Aite Group, specializing in wholesale banking, cash and trade finance, and payments. Based in Milan, he brings a strong European focus to Aite Group’s Wholesale Banking practice. He is also the author of Measuring the Value of the Supply Chain, a book about linking financial performance to the supply chain. He has spoken at leading trade shows and conferences in Europe, including Sibos and EuroFinance. He has extensive experience within his areas of coverage as well as in providing research and consulting services to clients.

Consumer Banks Must Evolve to Stay Relevant

Citigroup recently announced that it would be shutting down its consumer banking business in India and 12 other countries as part of an ongoing strategic review.1 Under new CEO, Jane Fraser, the group plans to direct its investments and resources to businesses in four key regions where it anticipates higher returns and growth—Singapore, Hong Kong, the UAE, and London.

“While the other 13 markets have excellent businesses, we don’t have the scale we need to compete,” said Fraser.

Citigroup’s candid admission comes on the heels of Spanish bank BBVA’s announcement in November that it would be selling its stateside business to PNC Financial Services Group for $11.6 billion.2 HSBC too is reportedly considering withdrawing from the US retail banking market as part of a wide-ranging overhaul of its global business.3

One could argue that these exits were driven by the banks’ need to use their capital resources better. But they also reflect just how tough the retail playing field has become. Consumer expectations are evolving faster than many banks are able to keep up with. Regulatory pressures are increasing. Low interest rates are squeezing margins, even as operating costs rise.4

Meanwhile, the competition is getting fiercer. Global banks, community banks, fintech firms, and now Big Tech are all gunning for the same customers as they strive to out-think and out-innovate each other. Add the COVID-19 crisis to this mix and you have a perfect storm.

To survive and thrive, consumer banks must do more than simply peddle their products and services. They must innovate and accept digital transformation for the future, leveraging technology to elevate customer experiences, cut costs, improve agility, and reimagine their value propositions.

Here are three ways we believe consumer banks can differentiate themselves and stay relevant:

Start with the Customer and Work Backwards

Tech giants like Amazon, Google, and Apple have raised the bar on customer service—so much so, that 49% of American consumers told Deloitte they would be willing to use mainstream consumer banking services from Amazon if available.5

The truth is that consumers are tired of their banks bombarding them with generic financial products, as well as fees that are neither customer-friendly nor transparent. They want a better banking experience—one that is personalized and seamless across touchpoints. They want to feel like their bank understands their needs and has their best interests at heart.

This requires banks to re-organize their operations, infrastructure, and channels around their customers, rather than their products. It means engaging with customers at a segment of one level, finding ways to create value for them at every step of their journey, and tailoring offerings to their unique financial needs and goals.

For instance, with  SunTec Dynamic Offer Management, banks can quickly launch hyper-personalized and contextual offers that customers love. These offers can be independent or bundled with competitive price plans for different customers. Banks can also empower customers to create and customize their own product bundles and offers through the solution. The result? Happier, more loyal customers that translate into higher customer lifetime value.

Embrace Digitalization Without Ripping Out Legacy Core Infrastructure

In a COVID-19 world, the digital transformation imperative has never been more important or more urgent. “Go digital or go bust” is the common refrain. But re-thinking entire business models, ways of working, and customer experiences from a digital perspective is a bit of a tall order—especially for large global consumer banks with complex operating models, as well as a multitude of systems, applications, and channels that have been built up over years of growth, mergers, and acquisitions.

How can these banks accelerate their digital journeys in a stable manner? With their massive legacy infrastructure, how can they become more agile and responsive to change?

The good news is that they don’t necessarily have to build a shiny new technology landscape from the ground up. Old technology can co-exist with new systems. For example, Xelerate® Digital Core platform helps consumer banks speed up their shift to digital without having to replace stable legacy core systems. The platform simply hollows out customer engagement functions from the core to be managed as a horizontal cross-enterprise layer. This allows banks to quickly adopt new technologies, offer customized products, enhance customer experiences, and yes—transform into flexible, digital organizations through a low-risk approach.

Keep Calm and Collaborate

Consumer financial needs are constantly evolving. And if banks don’t keep up, they risk losing their customers to other financial service providers who are more tuned in to what these customers want.

Having said that, banks can’t afford to build every single product or service that customers are looking for. What they can do is partner with fintech firms, digital lenders, and even non-banks that specialize in meeting specific customer needs—be it for a money management app, or end-to-end assistance in buying a car. That’s the promise of platform banking – building an ecosystem of partners to deliver value across the customer journey, and to eventually become a one-stop-shop for all customer financial needs.

With platform banking, banks can rapidly innovate and expand their product and service offerings, thus transforming from mere utility service providers to true value aggregators.

SunTec’s Ecosystem Management Capabilities make it easy for consumer banks to manage and co-innovate with partners. The solution’s APIs integrate with both internal and partner systems without disrupting the core. This allows banks to optimize their offerings, create innovative pricing models, and offer customers a wider choice of products and services in collaboration with partners.

Looking Ahead

The challenges facing consumer banks are many—but so are the opportunities. Now is the time to reimagine customer engagement, modernize legacy technology, and strengthen partnerships. Those banks that achieve these goals will be the ones to watch.

Sources

1Citigroup
2CNBC
3Reuters
4KPMG
5Deloitte

Arun Kini

Based in Singapore, Arun Kini is the VP & Regional Head of APAC for the Client Facing Group at SunTec Business Solutions. With over 25 years of experience in the Financial Services & Information Technology industry, Arun has strong domain expertise in Payments, Transaction Banking, Open Banking & Revenue Management. Prior to joining SunTec, he held various leadership roles at Finastra across different parts of the organization – Product, Sales & Account Management, Pre-Sales & Consulting, leading to extensive interactions with C-level executives across the banking industry.

Resetting Banking Strategy for an Evolving Competitive Market

The Reserve Bank of India recently opened up National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) facilities to non-banking payment operators.1 This is the first time that the RBI has opened up RTGS and NEFT to entities outside the traditional banking sector and it confirms what we have known for a while – banking is changing. No longer is the function of banking restricted to the traditional bank or even to the physical bank branch. Banking is now anywhere, any time and via any channel. And the traditional banking sector must modify its operational strategies accordingly.

There is no getting away from the fact that technology has had a tremendous impact on the banking sector. On the one hand it changed customer expectations and on the other it led to the emergence of digital native fintechs who offered customers the kind of uberized services they wanted. And for the first time in their history, traditional banks faced a crisis of eroding customer loyalty. Of course, the banking sectors picked up pace on the digital transformation front, but competition from fintechs is increasing by the day. From increased funding to the emergence of challenger banks to the increasing global scaling of operations, this sector is poised for tremendous growth.2

The RBI announcement is clearly designed to level the playing field for fintechs and to help bring unbanked populations within the larger banking ecosystem. But where does this move leave traditional banks? If anything, the competition for their slice of business will negatively impact revenues at a time when the pandemic has already slowed down growth and led to a deluge of bad loans. The truth is, fintechs are here to stay. Customers are eager to tap into the ease of use and on demand availability they offer. And their relatively easy processes and digitally powered models make them attractive options for demographics previously left out of the banking ecosystem. Traditional banks must now adapt and gear up to work alongside their digital native competition.

Times are tough for the traditional banking sector. The pandemic related disruption coupled with increased competition from fintechs has forced most banks to accelerate their digital transformation strategies. But survival and success in this vastly changed and increasingly complex landscape will depend on more than just technology implementation. Technologies like AI are a tool for banks to leverage effectively and drive greater customer engagement and loyalty.

Despite increasing competition, traditional banks still enjoy significant customer loyalty and trust, and they must build on this. It is time to revamp the way the banking industry worked so far and create empathetic customer centric business models. Data holds the key to a successful customer focused strategy. In fact, in the new digital economy, data is priceless. And banks have an advantage over fintechs in this matter because years of operations have helped create an enviable repository of customer data. Banks would do well to invest in AI solutions to leverage this for intelligent insights into customer behavior and engagement models. This can then form the foundation of their strategy and roadmap – from personalization of deals, offers, pricing and bundles to customized customer connect programs that will drive customer loyalty and retention.

The new era of banking is inclusive of fintechs, tech giants, challenger banks and traditional banks and holds more possibilities for expansion and growth than ever before. Now is the time for banks to relook at their operational models and strategic priorities with a modernized and digitally powered infrastructure.

Sources

1Livemint

2Forbes

Arun Kini

Based in Singapore, Arun Kini is the VP & Regional Head of APAC for the Client Facing Group at SunTec Business Solutions. With over 25 years of experience in the Financial Services & Information Technology industry, Arun has strong domain expertise in Payments, Transaction Banking, Open Banking & Revenue Management. Prior to joining SunTec, he held various leadership roles at Finastra across different parts of the organization – Product, Sales & Account Management, Pre-Sales & Consulting, leading to extensive interactions with C-level executives across the banking industry.

Leading with Empathy – Why Modern Businesses Must Focus on Human Centric Experiences

Empathy – Noun: The ability to understand and share the feelings of another.

Empathy or the ability to empathize with others is one of the most crucial factors that decide a person’s emotional intelligence and how they interact with others. Up until now, businesses based their models and strategies on the concept of efficiency. Empathy is the newest buzzword in the world of business and likely a trend that is here to stay.

At the heart of this shift to empathetic business is the modern customer and their expectations. On the one hand, customers want a more fulfilling experience. They want ease of use, on demand access, intuitive and personalized experiences, offerings and much more. At the same time, they are increasingly aware and conscious about ethics and values of any organization or brand they engage with. It is no longer just about which business has the better prices, but also about which business’ values resonate with their own, and who they perceive as caring. If anything, the COVID-19 pandemic has served to deepen the importance of a value driven customer experience. A Deloitte study in April last year found that one in four people strongly agreed that they disengaged from brands that acted only in self-interest.1 And more than 70 percent said they valued digital innovations that helped them connect better with others.

In a market characterized by increasing competition, organizations today must focus on delivering a superlative customer experience – both business-related, and value driven. Customer engagement, positively impacting society and retaining top talent are at the top of almost every company’s agenda today. This does not have to come at cost of efficiency or profitability. In fact, modern businesses must find the fine balance between efficiency and a human touch. Right now, most sectors across the world are accelerating their digital transformation journeys in a bid for greater efficiency. But in doing so they must not forget about the human element. Research  shows that more than half out of 16000 people surveyed said they wanted their virtual environments to deliver a more human experience.2

Delivering a seamless and personalized customer experience across touchpoints easily addressed with a comprehensive digital infrastructure. By applying Artificial Intelligence and Machine Learning to reams of customer data, organizations can gain better insights into customer behavior, and use them to formulate their customer engagement strategies. Increasingly organizations are integrating cutting edge technologies like Virtual and Augmented Reality with some key functions. For example, Commonwealth Bank in Australia launched an AR based app that allows customers interested in buying real estate to scan and explore properties near them.3 From getting all the information including median price, demographics, area profile to actually touring the property remotely, the app allows it all. Transforming digitally is no longer a “good to have” initiative. It is a business imperative for not only addressing increasing competition but also ensuring resiliency, continuity, and growth. A digital infrastructure is essential for fully understanding and delivering on customer expectations.

The question of ethics and empathy go a little deeper than just technology. From customer service to social responsibility to employee welfare, brands must now make good on their promises. If customers are to trust the brands they engage with, they need to see visible concrete action that reiterates the empathetic values and vision established by the brand. e-Commerce giant eBay did just that at a time when the pandemic related lockdowns were sounding the death knell for small businesses. eBay launched an accelerator program for SMEs called Up and Running, which provided them a free e-commerce platform to continue their business.4 The program even helps with marketing and advertising tools and offers shipping discounts to help them survive this unprecedented crisis. Sometimes, empathetic business models may require a relook at existing structures, processes, and infrastructure. For example, when the pandemic shut down life as the world knew it, Verizon stepped up to offer free data to customers to help them study, work, collaborate and socialize online. They even provided resources for online learning to educators and students. This ranged from free resources for kids, access to educational sites, tools from the Child Mine Institute and even free access to the New York Times for high school students and teachers.  Empathy led actions and initiatives like these go a long way in establishing and deepening customer trust in a brand. And as we all know, customer trust is the key to long term loyalty and business growth.

Empathy forms the basis of human connections and social engagement. And it is only natural that it is now moving into the world of business as well. After all, what is a business without the humans who power it and the people who buy from it. Discover how this empathy led business narrative will shape up at Confluence 2021, SunTec’s annual event. Do join the conversation to know more about the trends that will shape business in the future. Register here:https://www.suntecgroup.com/events/suntec-confluence-2021/

Sources

1Deloitte
2Deloitte Digital
3Route

Premjith Alampilly

Premjith Alampilly leads Product Marketing at SunTec. He has more than 18 years of experience, managing products, marketing, and partnerships across enterprise and consumer businesses. He brings with him the experience of working with some of the leading brands in enterprise technology like Oracle Financial Services, Wipro Technologies and India’s leading EdTech brand – Manipal Global. He did his MBA from Rajagiri School of Management and is certified in Digital Transformation from MIT Executive Education. A sports enthusiast, he has represented his state cricket teams before starting his corporate career.

Playing the Trust Card

In the new digital economy, customer trust will be the differentiator between business success and failure. Given the disruption of the last year, it is now fairly evident that digital transformation is a critical driver of business resilience and growth. To be truly successful in the modern business landscape, the transformation must go deeper than the mere implementation of technology. For decades, businesses across sectors operated in a unilateral way – customers engaged with them as and how they decreed. But the emergence of digital technologies turned this model on its head. New digital native entrants leveraged technology to introduce customer focused business models that delivered services and products where, when and how they wanted. And older more traditional business must now revamp their strategies to put the customer at the heart of their business. Above all, they must use technology to establish and deepen customer trust in them.

Trust forms the foundation that our social structure is built upon. It is the basis of human relationships including those between a customer and a business. When consumers trust a brand, they are loyal to it, they develop a lasting relationship with it and they even evangelize it. Yet in the modern business landscape, consumer trust in brands is eroding rapidly. Data breaches, socio political unrest, technology led transformations and perceptions around value alignment have led to customers, especially millennials, losing faith in brands. The Gartner 2019 Brand Trust Survey reveals that 81 percent of customers disengage from businesses they don’t trust. And 89 percent intend to stop engaging with a brand that breaks their trust.1

Customers want dependability from the businesses they interact with. And technology holds the key to ensuring dependable seamless service and engagements. It is not enough to merely offer personalized products and services; it is equally important to make sure that customers can seamlessly access on demand. A point to remember when embarking on a technology led transformation of strategy is that decisions based on AI powered insights may seem incomprehensible to people outside the system. Organizations must establish best practices for ensuring ethics, transparency and good governance.2 They must implement comprehensive audit processes so that decisions can be reviewed and easily explained. For example, a telecommunications provider found that customers were unhappy with seemingly ad hoc price increases and had to implement holistic measures to address their concerns and enhance brand trust.3

Data security, privacy and risk management must be at the top of any digital transformation agenda across banking & financial services, insurance, and telecom sectors as these are top drivers of consumer trust. Bad actors are leveraging technology to mount increasingly sophisticated attacks on enterprise data and the world has seen several large-scale breaches that compromised sensitive data. Not just the banking and financial services sectors, organizations across every sectors are vulnerable to breaches and must invest in end-to-end risk management and security strategies. AI powered security models that can monitor and detect threats in real time, and automated risk and compliance management platforms can go a long way in ensuring regulatory compliance. Advanced security and the guarantee of privacy is bound to improve customer trust.

At the end of the day, trust is an outcome of a supportive and mutually beneficial relationship. It is critical to ensure that customers feel that the brand cares for them when they need it. As the world recovers from the pandemic, organizations must go the extra mile to show customers they care. Insights gleaned from customer data can help them understand and address customer pain points better. And they must also stay tuned in to larger circumstances that impact customers to offer help when they can. For example, in the early days of the pandemic when grocery stores ran out of stocks, some restaurants started stocking essentials for their customers to buy.4 They showed they were capable of understanding the larger context within which the customer was living, understood their pain points and were willing to help them in any way they could.

Customer trust is a valuable asset that cannot be taken for granted. It is a work in progress and every organization must routinely take stock of their trust index and adjust their strategy accordingly. Customers trust brands that they perceive as ethical and dependable. Organizations must focus on not only delivering customer centric engagement models, but also on ensuring transparency, committing ethical practices and values, ensuring privacy and security and above all, delivering on their promise. After, all, as His Holiness, the Dalai Lama said, “To earn trust, money and power aren’t enough; you have to show some concern for others. You can’t buy trust in the supermarket.”

Digital transformation and building consumer trust were amongst the many relevant topics that were discussed, debated and ideated upon at Confluence 2021, SunTec’s annual industry event. Discover how to build trust and accelerate customer centric digital transformation strategies. Watch our on-demand sessions here: https://www.suntecgroup.com/events/suntec-confluence-2021/

Sources

1Gartner
2EY
3Gartner
4Gartner

Peter Yorke

Peter Yorke leads the marketing function at SunTec and runs global programs for the company. He comes with 32 years of experience in branding, corporate communications, marketing, high-tech public relations, training, and strategic communications consulting. Peter’s past experience covers the IT Services and Products industry including stints at Oracle Financial Services Software [formerly i-flex solutions], TCS and Wipro. Peter has a Bachelor of Arts in Economics from the University of Bombay and a Diploma in Journalism from the Bombay College of Journalism. Peter is a member of the International Association of Business Communicators (IABC).
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