While digital banking revolution is mostly spoken about in context of Retail, digital revolution of Wholesale banking has been nothing short of phenomenal in its own right.
"Your most unhappy customers are your greatest source of learning" – Bill Gates
As head of Business Technology Group for more than 17 years, it was an extremely fulfilling period of learning and being part of some of the most crucial, creative projects in banking industry. It was quite an experience.
For over 2 decades, initiatives and mandates, often the result of rapid technology changes, customer adaption and a resultant demand, has kept not only the organization that I was associated with, but the entire Banking and Finance Industry.
Technology became the mainstay and backbone of BFSI industry, specifically for players who wanted to create a difference for their customers. Technology enabled a better delivery channel and the information available within the organization equipped business heads with more visibility of customer needs that fueled a near revolution.
Retail received attention first
Retail customer, with larger number of units with BFSI, was the first to receive attention. The business managers and IT solution partners turned their complete focus on Individuals.
In earlier days it was Net Banking that took the load of becoming the alternate channel and soon gained maturity with transactions such as Payment, Bill Pay, FundsTransfer and Credit Card Payments, besides more common Cheque Book Request, Stop Payment, Balance and Statements. Mobile was not far behind, especially with advent of Smart Phones that soon became part of everyone’s persona.
Mobility has been the biggest disrupter
Mobile Banking changed the landscape for Retail Banking and this interaction channel of customer became the real confluence point for collaborators.
Fintech driven market that quickly boarded the Social Media led bandwagon on Mobile Usage, started to offer plethora of services that Banking and Financial services started deploying on their Mobile and Net Channels.
Next came the aggregators and Mobile Wallets. Uber, Ola, Swiggy, Zomato and PayTM shook up the market with seamless experience to customers, and banks were forced to collaborate with this Fintech Players.
With AADHAR, CIBIL and scores of bureau being made available seamlessly, Fintech and Financial Institutions (Banks, Insurance, MFs or AMCs, NBFCs) quickly created the ecosystem that worked seamlessly at the front end while various API and Web-services integrated other participants providing specific services at the back end. “Your Movie Ticket for 6:30 PM is booked, enjoy the show”, or “You paid 293 Rupees for your last ride, thank you for using OLA”, became the norm.
Demonetization in 2016 further accelerated the Digitalization.
National Payment Infrastructure provided level playing field to Wholesale Segment
While most of the BFSI participants concentrated on Retail Business, especially the banks, few were clearly the outliers who looked at this opportunity to include the Wholesale Banking Customers or Non Retail Segment in the Digital revolution.
Decade of 2000 was still the period that saw the maturing of payment systems. And there existed a strong need for technology to move funds quickly, across vast geographies. Cash Management Services, as the product was all along known, was one big area that catered specifically to segment that had wide business presence and needed to move money around.
Efficiency in Funds Management was the need. Money locked in clearing houses at small locations to big cities like Mumbai and Delhi was badly needed.
HDFC Bank, which even now dominates the CMS segment, even in new form of eCMS, was one of the early starters and provided a separate platform called ENet. The platform provided ease of transacting to large customers, where they could issue their Cheques (digitally signed and delivered by banks), Funds Transfer, Bill Discounting, Payable At Par Instruments and Draft Printing and dispatch. This made Payment Products a big success. On physical instruments collection, Bank rapidly increased the branch network and started to collect instruments from various locations for its customers and started collecting them in local clearing. This was a more conventional CMS space where the bank quickly dominated the market with tie-ups with other bank.
With RTGS introduced in 2004, large value transactions moved to Electronic Channel and customers were given option to initiate payments from Enet platform itself. Then came the NEFT (National Electronic Funds Transfer) which placed India as one of the economies with multiple payment systems.
UPI (Unified Payment Interface), NACH (National Automated Clearing House – replaced ECS), APBS (Aadhar Payment Bridge System) changed the entire payment landscape and provided 24/7 movement of funds. Even collection went electronic with UPI collect & NACH Debits.
Conversion of electronic payments on Net enabled interaction was soon rechristened to eCMS.
Digital experience is not a choice, it’s a differentiator
A user is a user, does not matter he is consumer of your services or products an employee accessing your application. While banks and other organization attach lot of importance to providing Digital Experience to actual customers, it is equally important to provide Digital Experience to your internal customer. While the former helps you get more business and provides for higher customer satisfaction and stickiness, latter ensures your employee is able to return higher productivity. This could be in form of more throughput, as well as lesser mistakes.
Digital Experience for your actual customer (wholesale segment)
As an individual, each one of us is on Social Media, experiencing excellent Digital Experience, be it on eCommerce Sites, aggregators or simple social media interaction. Same individual is now used to equally capable Social Media akin experience even on Financial Interaction, both on Website and Mobile Banking. The latter has seen more investments by entities as the preference shown by customer is clearly and completely tilted in favor of Mobile. In such a scenario, it is natural that Financial Institutions are also upping the ante.
Some of new technologies (or improvements gained by them) have higher usage for Wholesale customer segment. And it is for variety of reasons.
Firstly, a wholesale segment customer does not deal with the institution as an individual, but through its representatives or employees.
Secondly, there is multi steps processing involved in transaction processing.
Thirdly, nature of transactions also varies from customer to customer &
Lastly, wholesale banking transactions require higher degree of feedback loop; an advice, a confirmation, a rejection processing, a reversal, a view before authorization, multi layered authorization and so on.
Now, the technologies that are deployed for Wholesale banking customers can be very different, such as Documents Upload and AI engine reading the information to create “Submission for an A2 Remittance” or “Export Bill Regularization”.
So how do you provide Seamless, Secure, Intuitive, Intelligent, Channel Agnostic, Privilege Driven, Inclusive and 24/7 Digital experience to your customer?
The newer platforms by major players take into account these very aspects while they deploy a solution that keeps customer at the centre.
With India’s payment system infrastructure providing multiple options to customer, and round the clock, the customers are demanding higher availability of transacting system. Secondly, with Digital gaining ground even in wholesale transactions such as Documentary Credit or Trade Finance, more customers desire to move their transactions to digital channels, resisting a visit to branch for physical interaction.
The Corporate or Wholesale Banking platforms now provide plethora of services including Trade, Treasury, Credit Cards, Bill Payments. Tax Payments, Virtual Accounts, Account Aggregation, Cash Management & Account Services in seamless manner.
Privilege and Access control has matured so much that a Corporate can decide what rights it needs to assign to its users, even on the basis of Amount, Account, Transaction Type, Value Restrictions, Currency type, Authorization Matrix, so on and so forth.
Banks have also deployed multi-stage transaction processing capabilities that allow customer to complete its part and bank can seamlessly take over from there. It may apply to transaction such as opening of LCs, Bank Guarantees, EDPMS (Export Documents Processing and Management System) and IDPMS (Import Documents Processing and Management System).
Mobility is also in the game, even in wholesale banking segment.
HDFC Bank Limited, was the first bank to provide Mobile Banking to its wholesale customer for Trade Finance Transactions. The new platform under release by bank, will have plenty of transactions that can be processed on Mobile platform. “Swiggy, deliver my Pizza with no pepperoni and extra cheese”, while he toggles to execute the office transaction “Transaction Authorized, USD 3,45,193 sent to JP Morgan for benefit of Amazon, US”
Then what about your internal customers?
As head of Business Technology Group with a well-known bank, our unit always faced the music on customer (internal, user) expectations. Slow application was a sure Death Warrant, but better processing capabilities, which necessarily means better UI and UX was a constant and valid demand.
A gospel truth – A good functionality rich system does not necessarily mean a UI or UX rich platform.
It may happen that an application, while is extremely well designed to capture all the requisite elements of transaction, is far from satisfactory on ease of usage.
One emphatic learning that we had in a big Core Banking Migration project was that there is a need to have right representation of stakeholders. And The Experience requirement should be part of the program.
While we created the platform, an upgrade to existing one, ensuring everything that the customer needed was covered well, we were quite taken aback by feedback of unsatisfied users who hardly participated in the project. Application fell short on expectations, not that it did not do as expected or misbehaved, it failed to give an Experience that is intrinsic to Customer Expectations.
Poor experience will result is low acceptance of platform
Pushed back by severe user feedback, the bank, committed to meeting user expectations, decided to change the front end to provide superior user experience. We soon realized that transformation of that scale on front end of an Enterprise Application was not easily achievable even through the solution provider.
We decided to hire a separate UI / UX agency which worked with the vendor who managed the frontend for the customer, The Corporate Net Banking, and embarked on a project to harmonize and integrate the ‘Customer Front-End and The User Processing Space’
The Core Banking vendor partner, similar to others in the space, was more than willing to provide the APIs for each service or sub service, were we to create the frontend outside the application platform. ***
What resulted with this exercise was a major reduction in Data Entry activity, elimination of duplication, enabling collaboration between customer and back-office and reducing pressure on Core Banking Platform.
The learning reaffirmed my own belief on power of UI and UX, if this element is ignored, user will desert the platform
One of my industry colleagues from IT, once shared the statistics on acceptance of application to say, 60-70% of applications in the world die down on account of poor user experience. Now that’s a large number!! “Siri, what was the final score between Bayern Munich and PSG. Who scored the goal and at what point of time in the game?”
*** With more and more transactions moving to electronic and initiated by customer himself, channel integration, often beyond Net Banking and Mobile, such as ERP or Web-services, necessitates exposing APIs from bank. Core Banking providers and other big enterprise application vendors are offering API framework. They are protecting the Transaction processing Core and allowing Channels, Aggregators, Internal Calls to use the API and interact with core.
Should bank institutionalize UI, UX & Analytics as a practice?
I do not think this question has a yes or no.
Banks providing solution to customers, both internal and external, are no less than Fintech themselves. And a seamless Experience is minimum that they have to provide.
IT structure of most of the financial institutions, in particular banks, which are by far the biggest spenders on technology ++, may not be able to support a resident UI and UX team. But that’s no excuse.
Even Analytics, as a full-fledged practice is not that common. Banks churn data on demand but analytics at customer interaction level is not that popularized. It can give invaluable insight into customer behavior, particularly on Channel utilization.
Time is right for major players to look at this aspect more seriously. Customer retention is a key critical parameter for a healthy balance sheet, and Digital Experience can turn to be a big differentiator whereas all others products and services are fast becoming normalized.
++ 40% of all IT spend globally is in Financial Industry. Again 40% of this spend is done by Banking Industry.
“Just having satisfied customers isn’t good enough anymore. If you really want a booming business, you have to create raving fans.” ― Ken Blanchard