In our area of digital banking and lending, there is much talk about digital transformation and the future being in technologies such as AI, Machine Learning (ML), Cloud, CX, Open Banking, Big Data, etc.  But anyone who has ever tried to arrange a house or office move, or simply communicate online with big institutions, banks, building societies, insurance companies etc, will know that their understanding of “online” processing is fundamentally flawed.  So, a call out to all financial services firms, STOP and address the basics first!

The problem

Operating “online” does not mean telling your customers where to find a form online so they can print it off and post it.  It does not mean leaving customers to trawl through endless Frequently Asked Questions so savings can be made in customer service headcount.  It does not mean providing AI driven chat bots where any question asked, prompts the same cheery but irrelevant answer!

The true meaning of “online” processing

My definition:  The customer is clearly signposted from the firm’s website home page to the area of interest.  The transaction is initiated by the customer on the site and information is captured and processed, in all aspects, online.  This includes the updating of data, scheduling of future events and communicating all necessary confirmations to the parties involved, via electronic means (email, SMS etc). Managed online from initiation through to transaction completion, and beyond, and should only take a few minutes to complete.

Recent experience

According to that definition, out of the ten major organisations that I have interacted with recently, only one managed online processing.  The worst performing took over three days, and numerous ‘phone calls, with call waiting times up to 30 mins each.  Needless to say, not all retained my future business.

Shocking conclusion

The only conclusion I could draw was that any detailed analysis of these firms’ business processes had been skipped in the technology planning.  Their online presence was just an attempt to show they were operating “online” when clearly, they were not.  This is very basic stuff. And major organisations with big IT budgets, are the primary culprits.  Surely this reflects very badly on management, the IT industry as a whole and more particularly on the software and service providers, internal or external, to these firms.

Get it done now

For the customer to have a good experience it must be simple, seamless, automated, complete, with confirmations clearly communicated.  There are some very good examples of this happening, but there are still financial services firms out there that are not addressing even the basics of online processing.  This isn’t the future, this is the minimum standard now!

And how can firms even think about all this wonderful new tech (AI, ML etc) when they cannot even deliver a basic working everyday automated online process!  If an organisation does not have the cognitive understanding of a simple process, how can they possibly attempt to set up AI?  Computers can’t think it up for themselves, they need to be provided with the cognition and guidance to then simulate the human thinking with AI.

Is “The Cloud” causing confusion?

I am also concerned that “The Cloud” is being marketed as “essential for” and “providing” digital transformation.  This is adding to the confusion being planted in the minds of executives.  I’ve seen headlines and events with titles similar to “The Cloud, Essential for Banking and Financial Services!” Just not true!  The Cloud is one of many ways to offer “online” services and therefore work towards digital transformation.

So, in addition to understanding what “online” means, let’s please also understand what “The Cloud” is: “enhanced web hosting”.  It seems to me that organisations are being led to believe that if they somehow put their current (legacy?) systems into “The Cloud” that they suddenly become “Digitally Transformed”!  Clearly wrong!

What needs to happen

Software providers, like Madiston, need to demonstrate detailed processing capability.  We need to show that all aspects of the online customer and transaction journey have been thought through and automated to the maximum.  That is not limited to the straight-forward standard path of a transaction but the real-life variables, of which there are many in our area of digital banking, lending, buy now pay later, employee salary-deducted loans and payments processing.

For example, the pandemic has shown us we need to have technology ready to modify the terms of individual loans, requested online.  This could be requested by many customers simultaneously or it may be individuals forced to make multiple requests over the course of their borrowing.  Each brings its own processing challenges.

One standard online lending path, automated well, is often a great leap forward for traditional lenders or those setting up new digital lending businesses.  But the real win comes when multiple routes, with their many associated variables, can be triggered automatically when changing environments or circumstances demand.  

All these routes should be protected by dual authorisation, automated checks and audit trails.  Automating the variables (online obviously) is where enormous value can be delivered.

Applied to digital banking and digital lending

Software service providers in all aspects of financial services, need to think wide and deep to uncover the areas where true online processing can deliver those rewards.  Digital transformation is not just about automating manual processes but really seeking out operational advantages, particularly in areas like financial services, where margins are often tight.

Digital lending is a hugely complex area but automated processing remains the key to happy customers (and regulators), profitability and long-term sustainability.

Banking and lending particularly, come from decades of traditional processing.  “It’s the way it is always done” is the mantra that Fintechs were born to challenge.  Firms must move away from the goal of “just automating what we do” and instead look for the improvements that technology can bring. 

“Customer experience” quite rightly is now a key driver and many firms have successfully focused on the front-end interface with their customers.  The “experience” doesn’t stop there though and any warm-glow that customers may have felt in their initial interaction with a firm, can soon turn to frustration if the processing or communication starts to falter.  Many cracks appear when the back office, often given less budget to do more of the work, fails to deliver expectations.  This is where gaps in technology have to be filled with more staff.

Automated digital technology should become an integral member (or several members) of your team but to make that work for customers, detailed analysis of the business process must be done well, so it reflects customers’ needs and delivers customers’ objectives.

“Automating what we do” was clearly the approach that the major institutions that I mentioned earlier have adopted, without really getting to grips with the technical benefits, to all, of true online processing. 

Conclusion

As a financial services firm, when you are looking for new systems for digital transformation, take a deep dive into the business processing, analyse potential gains, open up to new ideas. 

Ask your technology provider detailed questions about what they can offer you to enable you to deliver customer friendly, revenue generating, cost saving, truly online processing in your line of business. 

Do this before you spend any money on digital transformation or ask your customers to print off an “online form”!