In my previous post I shared with you my concept of digital seamless banking which is more than just developing a few cool mobile apps and establishing a “digital” strategy but really developing and providing customers a different kind of bank. This bank needs to be very simple on one hand however provide his services in ways that would ease the usage from a customer perspective.
The main aspect is the seamless factor, meaning blending the bank services into existing day to day processes the customer is already doing without the need for the customer to separate the financial need from the action itself. Examples would be:
- Providing cashier (Deposit & Withdraw) services via existing merchants (like supermarkets, convenient stores and more) that would enable the customer to have better coverage together with blending it into his natural processes.
- Providing payments options via widely used social networks
- Providing funding capabilities as part of product or service purchasing process without the need to approach the bank separately
- Providing social funding options
You can read more on my previous post however in this post I would like to share how I see this bank from both the services it should provide and how the services should be provided.
The financial products & services a Digital Seamless Bank should provide
In digital seamless banking the statement “more is less” fits perfectly, because if you look at the main reasons today’s bank fail to serve its new generation of customers is exactly because it is not focused on them and their needs. The complexity of offering so many different banking products and services drives high costs, regulation & operation complexity that at the end provides poor service to all customers.
Therefore one of the main success factors that would decide whether a bank would succeed in becoming a true digital seamless bank would be the simple set of offering this bank would provide. In my view looking at the most common banking activities most of us need, these are the main banking products a digital bank should focus on:
- Current account (also called checking account) : which is the most basic type of account that enables a customer to transfer his salary , deposit and withdraw money , transfer money to other accounts, make payments and so on.
- Simple loans : the term simple loan could be confusing as in the loans business there are so many variations especially in the names however I mean low risk loans (10-15 K ) with simple interest types and calculation options for short/medium periods (up to 3 years). These loans could be offered in different manners from “loan for any purpose” to “fund your cell phone purchase” however their basic product is simple loan.
This is it from financial products perspective which could set the ground for a lot of different types of financial services offerings most customers use on a frequent basis like:
- Deposit their salary to this this bank
- Deposit and withdraw cash for different purposes
- Send money to friends & family
- Make payments and pay bills
- buy products & services on line and on regular stores
- Get funding for paying their study tuition, buying their car, purchasing products and so on or even starting a small business
these services does not require too much complexity and actually do not require direct interaction with the bank, therefore it could be seamless and embedded into existing processes the customers already doing. All the more complex banking products and services like: Mortgages, Investments & Savings , Financial advisory /consultations , Commercial banking , Other , should be kept out and stay with the traditional banking as they require much more customer specific adaptation, they have more risk to both the customer and the bank and they are much more complex.
Knowing the current way of thinking of today’s banks, I know for a fact my proposed approach would be something hard for them to accept at first, because they want it all and for them doing less seems like losing potential business, however I see this as a crucial step in establishing a truly different kind of banking experience I call “Digital Seamless Banking”.
the second aspect of the Digital Seamless Banking offerings I would like to touch is the high level set of IT setup such bank would need to have in place in order to fulfill his objectives:
The first set of IT solutions the bank would need are the customer serving channels from which the customer would consume the bank services. For Digital seamless banking I see the following channels:
- Standard e/mobile banking – the simple applications we know that allow a customer to enter his account , monitor its balance and transaction history, conduct simple actions like bill payments, transfers, get reports and so on. this could be done from his home computer and/or his smartphone.
- Cashier applications – here the bank would need to provide several options for its customers to deposit and withdraw money from their account. The Digital Seamless Bank would need to develop an add on that could be embedded into different retailer applications so its customers could leverage the retailers (supermarkets, convenient stores, other merchants) for deposit and withdraw directly from their account. For the customer it should be transparent how it is done, when he enters a retailer he just ask to make a deposit or withdraw and the retailer clerk , sales person, provides him this service. enabling his customer to use Automatic Money Machines would be another option even though I believe with proper retailer coverage this one could be removed and save the bank significant operational costs.
- In store payments – here the bank would need to develop and add on that will enable all sorts of stores (physical and on-line) to offer its customers to pay for a service or product directly using their digital seamless bank account as part of the natural sales process. It could be to pay for the groceries in the supermarket , or pay for the TV I orders from the online store together with offering me the option to fund it in case I need / want to do this.
- Social network payment transfer – set of add-on’s for relevant social networks (Facebook, Twitter, etc.) and common mobile apps (WhatsApp, Skype, etc) to enable the bank customers to transfer money to his friends without the need to step out and use the bank dedicated app or require any special details from his friend that needs to receive the money.
- Crowd funding apps – the digital seamless bank would need to offer a crowd funding platform as this is an emerging business in which banks must find the way to step into. Today the concept is that 100% of the funding is coming from the social network which brings and advantage together with limitations, the advantage is that you don’t need a bank as you collect the funding from the social network however the limitation is the amount of money you can raise. A Digital Seamless Bank could change this and offer different models that could join both worlds and offer a bigger opportunity for funding (I might expend on that in future posts…).
- Customer support – any Digital Seamless bank would have to have some sort of customer support application which could be a combination of chat, phone and virtual apps however their purpose is not to provide banking servicing but only technical support for problems.
The second set of IT solutions a Digital Seamless Bank would need is the back-end solutions required to operate and support the business like:
- Core banking solution – to manage the Digital Customer account (current/checking account) and loans to cover the funding aspects.
- Payment hub – to manage different payment processes between customers, between banks and possibly between partners. in some cases this functionality would be covered by the core banking solution in combination with the integration capabilities and in some cases a dedicated solution would be required.
- Data capture and analysis – to enable the bank to track important activities and analyses usage patterns. I also include here functionality to enable the bank to create special offers to customers based on their needs and the bank business aspirations
- Channel integration – as the main aspect of the bank is to offer its services via different channels mostly third party , this will require some sort of specific integration layer to manage and monitor this aspect of the bank.
- Customer Relationship Management (CRM) – to capture and manage the customer data and ability to use it for different purposes from very basic reporting and operations up to marketing and sales campaigns relevant for such business.
there could be more back-end functionality needed and some might classify them differently however these are the main functional requirement to explain the concept. there are more things like accounting and billing, reporting and more that I did not include in this post.
That’s it in a nutshell how I see the Digital Seamless Banking setup from both banking products & offerings and IT setup required to support it. If we look at the market today we will see that the “Digital Seamless Banking” is implemented today in fractions by a combination of several Fin-tech, Technology, Retail and Banking companies which requires the customers to have different solutions depending on the type of service they want, having one “Digital Seamless” Bank could simplify their day to day life and be attractive over the existing service providers.