Key factors to consider when selecting a Digital Banking Vendor

Over the past few years, the banking customer journey has been re-engineered courtesy of the rapidly advancing technology landscape. With this, banking incumbents have had several dimensions of change running in parallel. Customers today have been accustomed to increasingly digital experiences across several facets of their daily life, and hence they have come to expect a frictionless experience all around – especially in their banking and financial services. Regulators have increasingly tightened their noose around financial institutions and levied huge fines for non-compliance. Non-traditional players with the likes of Amazon, Google and Alibaba have not just ventured into financial services but are defining new norms. The emergence of FinTech has begun to redefine the way customers consume financial services by enabling several innovative business models (think P2P lending, Wallets, and PFM). The rapid growth of eCommerce and the on-demand economy has resulted in new-found customer demands of always-on banking on their fingertips.

But things are not as bad as it seems. While customer-facing FinTechs and TechFins are looking for ways to eat-away banks’ customer share, there are several innovative, forward-looking technology players who are working towards enabling banks battle these waves of change and drive banking to a digital future through several measures towards digital transformation.

Digital transformation has been the buzzword for almost over a decade now. While the objective has largely been the same – to match (or even better) the level of frictionless, digital experiences for the customers, the scope of this transformation has continued to expand. For the longest time, innovation for banks has always been about cost reduction, efficiency, and productivity of the workforce. The narrative has since shifted to customer experience, seamless transactions, digital concierge and data analytics driven personalized engagement and recommendation. Amidst all this transformation, banks today have hundreds of enablers helping them in their digital journey through their products, platforms and piece-meal offerings. These vendors include established technology players as well as newer FinTech startups. 

“Digital is not a channel — it’s a way to shorten the distance between what your customers want and what they get. That means you must invest in technology that unifies the customer’s experience along every step of their journey.” – Ted Schadler, Forrester.

The above quote by Ted Schadler, Principal Analyst at Forrester, highlights the fact that the scope of digital is much beyond just design and user experience. Digital needs to be a means to access customer intelligence, shorten the distance between bank and customer, provide a means for customers to avail round-the-clock banking services on their fingertips. 

To ensure a comprehensive digital transformation across their value chain, banks today need to ensure that their digital journey has been duly supported through an able, robust and innovative digital banking vendor. In this blog, we will talk about some of the key features banks must focus on to choose the best vendor for their digital banking strategy.

If you are unsure about which digital banking platform vendor to choose? Has the vendor had experience in your region and is agile? Let us help you identify the checklist which you should be looking at before talking to a vendor or evaluating it. 

To set the context, here are some of the key features an ideal digital banking platform vendor must possess:

1. End-to-end digital: A digital platform should enable banks to digitize all their processes across front office, middle office, and back office functions. By digitizing onboarding, KYC, transactions, security, documentation, customer service, and engagements, a digital banking platform should be able to provide a comprehensive digital experience to the bank – thus delivering an inside-out transformation and not just on the front-end.
2. Omnichannel Experience: Over the years, banks have worked to expand their customer touchpoints with mobile apps and online banking having the highest strategic priorities. In this mad rush of banking apps, a channel specific mindset has often resulted in silos of innovation focused on one channel more than the other. This, in the end, results in broken customer experience when the customers switch from one channel to another. 

With the growing smartphone adoption and innovations in IoT devices (wearables, smart home hubs), more and more devices are now being used to access banking services and have thus blurred the boundaries between customer experiences across these channels. Customers have now begun to expect a seamless transition between channels in such a way that they may be able to initiate a transaction in one device and conclude in another one. 

The ideal digital banking platform should be the one which can deliver a seamless omnichannel experience with a client-centric view of their interactions (beyond transactions) with the bank. 

• Open Banking – Probably the biggest banking buzzword of today and the most realistic scenario of tomorrow – especially in European and select Asian countries – readiness to open banking and open API led architectural mandates is one of the most important parameters banks should look in their digital banking vendor. With the impending changes posing a compliance risk for the banks, they must look for an open architecture driven digital banking platform with API based plug and play abilities. The underlying objective of enabling customers to choose different piece-meal services in banking (e.g. Remittance by TransferWise, PFM by Mint, Payment Initiation by Google etc.) requires such an open-API driven banking platform. Apart from providing an assorted and customized financial experience through several FinTech third parties, this open architecture will also enable the bank to easily integrate its legacy, core systems with the digital platform.

• 360-degree view of the customer – Incumbent banks have always been sitting on a vast pool of customer data gathered across several touchpoints and channels – especially post the emergence of digital. However, what they have really struggled with is using this data for gathering adequate customer intelligence. With the advent of advanced analytics and customers’ affinity towards contextualized recommendations, banks today have an opportunity to make the most of this data to understand customer preferences and thus get close to them. A comprehensive, 360-degree view of their customers can enable banks to be closely associated with the customers through effective interventions at key life events – e.g. Recommending a joint account to their customers upon learning through their social feeds about their marriage. This will help them to be seen as a true financial advisor. Thus, a digital banking platform must make the best use of advanced analytics to gather 360-degree view of customers.

• Innovation in the DNA – Automation, over the years, has evolved from being an over the top, wow factor to an essential capability that must be deeply embedded in the processes. In the digital banking platform of this age, automation should be embedded bottom up, thus serving as the basic DNA of the banking core as well as channel elements. 

• Regional regulatory expertise – Post global financial crisis, regulators around the world have come down heavily on financial institutions and have imposed stringent penalties on non-compliance. As highlighted in the below chart, the intensity of regulatory changes has increased drastically over the years, and banks need to stay in sync with the changes in order to prepare for the new realities of regulatory needs. 

A digital banking platform by a vendor such as  Tagit, who possesses adequate expertise on the regional regulatory landscape, and keeps the systems compliant with the latest requirements, is the need of the hour.

With the above features being crucial in making a digital banking platform future proof and robust, here are the key boxes the banks need to check while selecting their digital banking platform vendor –

1. How open is the vendor’s technical architecture? How seamlessly can it integrate with any core-banking system?
2. How deep do the vendor’s digital capabilities go? Does it deliver an inside-out digital transformation?
3. How strong is the vendor’s omnichannel game? Does it deliver a frictionless experience across multiple channels?
4. How secure is the vendor’s technology platform? Does it conform with the evergrowing need for Strong Customer Authentication across all channels, ensuring a strong counter-fraud strategy?
5. How rich are the contextual insights and recommendations delivered by the vendor’s platform?
6. How well does the vendor understand the regulatory complexities and requirements of the regions in which the bank operates? 

With the above checklist of attributes in place, a bank can assess the relevance, robustness, and alignment of a digital banking platform provider with its own strategy and thus, select the best partner in its journey of digital transformation. 

What will differentiate the bank’s interactions with their customers is its ability to contextualize the interactions and respond seamlessly across the multiple digital channels.