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Expert opinion

Digital transformation: context and convenience key for banks looking to take the lead

Wednesday 15 March 2017 | 09:01 AM CET

Herber de Ruijter, iGTB: To capitalise on digital transformation, banks must leverage historical client data and offer convenient and, above all, contextual services

We’ve all heard it ad nauseam: income and regulatory pressures, compounded by ever-increasing customer expectations, mean digitalisation is the immediate “must-do” for banks. But instead of being driven purely by compliance and threatening competition, banks can take the initiative by playing the ace up their sleeve – namely, the vast quantities of historical client data that can be leveraged to offer entirely new services and enhance bank-client interactions.

APIs open doors

Indeed, the model for bank-client interactions is changing. Simple, direct user interfaces are being supplanted by open Application Programming Interfaces (APIs). The increasing use of APIs won’t fundamentally change bank operations, but capitalising on their potential to promote agility and innovation, and create new revenue models is paramount.

Since APIs represent a data interchange between corporates and banks, they provide banks with an abundance of historical client transaction data that can be leveraged in meaningful ways. Becoming service providers or utilities that develop advanced APIs around enriched, granular client data is one option, but this surrenders ownership of the primary relationship with the client. The question becomes how to continue to own and expand this relationship – and monetise access to this data.

Real time as enabler

The shift to real-time is one answer, making bank-client relationships more “in the moment” and contextual, and opening up a raft of new capabilities for banks to offer their clients – and not just in payments. For instance, real-time payments will mean corporates have to deal with intra-day liquidity squeezes – opening the door for banks to provide automated services such as in-the-moment invoice factoring, FX hedging and dynamic account limits to avert the risks.

And, while corporate banking is still fee- or transaction-based, providing the client with significant and actionable data – with applications in treasury and beyond – promises new revenue streams for banks.

Client conversations, delivered conveniently

Retail banks are purposefully integrating themselves into their customers’ lifestyles, and corporate banks must become a similarly integral part of supply chains by understanding customer needs and automating tailored recommendations. A relationship banker might forget to ask a client the right questions if he’s having a bad day – a service that utilises machine learning, predictive analytics and up-to-the-minute client data, won’t. These client interactions should still be a two-way dialogue, but with the potential to be more meaningful than traditional human ones.

Convenience, too, must remain at the centre of any offering. Digital self-service capabilities have been a leading use-case, but adoption rates have been limited by cumbersome front ends. Fortunately, there are a lot of “last mile efficiencies” to win. Strong user interface practices and user experience (UX) design, for example, are critical to increasing self-service adoption, which will drive down operating costs for the bank. Capital One’s acquisition of Adaptive Path, and BBVA Compass’s acquisition of Simple –which both focus on UX – attest to banks’ awakening to convenience’s competitive edge.

Both initiatives aimed to reduce complexity in bank-client interaction. Indeed, by reducing complexity in client relationships, and introducing meaningful, contextual services and capabilities, banks can grab the bull by the horns rather than be swept along by the tide of digitalisation.

About Herber de Ruijter:

Herber de Ruijter is head of digital for corporate banking at iGTB. Before joining iGTB, de Ruijter was at Digital Banking Technology provider Backbase, where he was responsible for product strategy and development as well as leading the company’s American business and operations. Before that, he worked for customer experience management vendor SDL Tridion, where he was head of operations of North America. He has more than two decades of experience in product strategy and business development.

About iGTB:

iGTB is the world's first complete Global Transaction Banking Platform. With a rich suite of transaction banking products, we are an authority on vertical and integrated products that enable banks to meet their ambition to be the Principal Banker to their corporate customers.

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