Digital Banking 2021: Tech Talks 1

Travers Clarke-Walker, Chief Commercial Officer, Thought Machine; Sam Niro, Product Marketing Manager, Acquire; Tim O'Connor, Principal, Deloitte; Gys Hyman, Principal & GM, ConvergePROSPERITY, Deloitte

Transcription:

00:00:07:03 - 00:00:34:00
Travers Clarke-Walker

Hello, Anne-Marie. Let me start by painting a picture with numbers. 90% of people in developed Asia-Pacific markets are now active users of digital banking. 80% of Americans prefer online banking over visiting a brick and mortar establishment. And due to the increased popularity of fintech retail banking, younger millennials will on average visit their bank branch only twice a year from next year onwards.

00:00:35:01 - 00:01:17:11
Travers Clarke-Walker

So now let's explore what those numbers reveal about the relationship between technology and banking. I’m Travis Scott Walker, Chief Commercial Officer at Thought Machine. Today, I'm going to double down on the key theme of this conference: building innovative foundations for recovery and beyond. And the word I want to stress here is foundation. As we gather to talk about the future of banking, focusing on collaboration between fintechs and banks, the rise of digital banking and the critical aspect of data protection and security, I believe it's necessary to ask the question, do financial institutions possess the necessary foundations to build the bank of the future?

00:01:18:11 - 00:01:48:23
Travers Clarke-Walker

The reality is that many banks will find, if not already, that their digital transformation ambitions are facing many constraints, many of which have to do with the foundation that powers their day to day operations, the core banking systems. Based on a recent survey jointly conducted between American Banker and Thought Machine, merely 8% of U.S. banks, including tier one and tier two banks with significant international operations, are operating on modern core banking systems.

00:01:49:15 - 00:02:21:00
Travers Clarke-Walker

About 30% are on a core modernization journey, and the rest have not even started. Among those who have completed or started their core modernization journey, they state that their ability to respond to customer or market demands is the most common reason to modernize their core systems, followed by better data security. So why is this a problem? The reality is that legacy core banking systems pose serious constraints to a bank's innovation efforts.

00:02:21:21 - 00:02:49:27
Travers Clarke-Walker

There are countless stories of banks facing serious challenges as they attempt to enter the digital age: unreliable services, planned and unplanned maintenance data breaches, and more. Banks running legacy core systems face a wide range of problems as they attempt to compete in the fast moving digital banking landscape. So how do outdated core systems contribute to this issue? Firstly, legacy core systems offer extremely limited capabilities.

00:02:50:25 - 00:03:15:18
Travers Clarke-Walker

Many tech savvy fintechs are launching into the market with new products and services, and banks have a very limited option if they wish to integrate or partner with these services. Secondly, core systems designed to run on mainframe hardware, on bygone architectures, and in dying programing languages are simply not capable of innovating. They just can't build the products that their customers are demanding.

00:03:17:06 - 00:03:42:19
Travers Clarke-Walker

And as banks strive to develop their own digital offerings, the lack of an open architecture often means maintenance upgrades and modifications to these systems are extremely expensive, both in time and cost. Data, the new oil of the digital age, if you like, poses another serious challenge. With legacy cores, data is processed in batch and rarely exposed to third parties.

00:03:43:14 - 00:04:07:19
Travers Clarke-Walker

This approach simply isn't compatible with the 24/7, always on banking approach of today, an approach which has been taken for granted by consumers and further cemented by the pandemic. Instead of dwelling on the past, I want to make clear that banking does not have to be this way. There is a prosperous future for banks that are powered by modern core systems.

00:04:08:18 - 00:04:35:06
Travers Clarke-Walker

So what would this future look like? Thought Machine was founded on the vision to revolutionize core banking, liberate banks from the shackles of legacy systems and do it entirely with one universal banking engine. I want you to imagine a future of banking that is digital only available anywhere and at all times, one that is customer centric, powered by personalized products and services that operate in real time.

00:04:35:21 - 00:05:06:23
Travers Clarke-Walker

One where consumers receive actionable insights driven by AI and data analytics, where banks can easily launch innovative products and services at speed. One way banks can maintain a low cost to income ratio. This is not beyond the realm of possibility. This future is here today. Advancements in technology have revolutionized entertainment, Internet services, retail and healthcare. Banking is next, and we're making it happen. For banks to enjoy these benefits, we know that their systems must possess certain qualities. They must be cloud native, built for the cloud, not simply shifted into it. Everything in these systems must be real time. They must connect with other systems and expose their data through APIs and build the microservice architecture to ease scaling and development. Even better, these systems should contain everything within one universal platform for all of the bank's needs.

00:05:39:18 - 00:06:04:22
Travers Clarke-Walker

From retail to corporate banking, from card processing to payments, drastically reducing the cost and efforts in deployment and integration. What can we all do to expedite this change? Remember, the time is now about change. Not in ten years, not in five years, not even next year. We have the necessary tools in our hands right now to bring banking into the modern era.

00:06:05:16 - 00:06:32:02
Travers Clarke-Walker

Modern banking experiences require modern banking foundations. If the foundations are not built for change, the bank itself can't change. Banking modernization journeys will be transformative. Requires a concerted effort from all stakeholders, but it doesn't have to be long winded or indeed risky. There are proven, highly effective, successful approaches to core system migration as proven by banks of all sizes around the world.

00:06:32:24 - 00:06:55:00
Travers Clarke-Walker

Whether or not it's a big bank migration, a coexistence of old and new systems, or a bank testing new technologies in a greenfield initiative, there is always an approach to suit every bank strategy. Let's begin to have these conversations more broadly, engage your peers and leaders in banking and make them understand that the time has truly arrived for modern banking. Thank you.

00:06:56:10 - 00:07:43:12
Sam Niro

Thank you Welcome, everyone. Thank you very much for joining this tech talk, “CX You Can Bank On, Building An Omnichannel Tech Stack for Financial Services. My name is Sam Niro. I work for a startup called Acquire. We offer customer experience solutions that help financial institutions connect with their customers wherever they are, particularly across digital channels. And digital experiences for our consumers have become extraordinarily important, especially as more and more households are using digital banking as their primary banking method.

00:07:43:26 - 00:08:09:16
Sam Niro

Last July, 91% of Americans used some form of virtual banking and this has been the trend over the last five years. We've really seen this uptick. Our more reluctant consumers have gone and finally joined the digital era and that's something that really means our digital experiences and our customer service has to be top notch. Otherwise, we're going to start having customers go elsewhere.

00:08:09:24 - 00:08:32:15
Sam Niro

In fact, 70% of consumers under the age of 55 are willing to switch banks just for a better customer experience alone. That's not anything to do with better offers or interest rates, ATM locations or the convenience of a branch being next to their office if they're still going to one. It's really about how do I get the service I want, need and deserve?

00:08:32:15 - 00:08:52:21
Sam Niro

And if we're not offering the level of service that a customer wants, they're going to be gone and we're going to get beat out by challenger Banks and all of these mega-banks who are continuously innovating the online experience. So what can you do and what's most important for creating experiences that your customers are going to love? First, you have to offer access.

00:08:52:22 - 00:09:13:28
Sam Niro

How easy is it to get a hold of your company? Second, it's really about speed. How fast can I get the help I need on the channel I prefer to use? Lastly, connection. Building relationships used to be one of the most primary drivers of loyalty in banking because we got used to, these are my tellers that I see every week when I go to cash in my paycheck.

00:09:14:09 - 00:09:41:04
Sam Niro

So because we've really eliminated a lot of that, I know my local branch, they know me. We still have to think about how can we build these types of relationships and connections through the digital world. So let's double click on access for a moment here. Access is really about offering the preferred channels for your customer base. For instance, if you don't have a younger consumer base, perhaps you don't need all of the social channels.

00:09:41:08 - 00:10:07:27
Sam Niro

That might not be something your bank needs to offer. On the flip side, let's say you have high demand for being able to check your account balance through text messaging. That's probably something you should investigate. But preferred channels also does not mean being on every channel. This talk has omnichannel in its title, but really it's a misnomer because omnichannel is more about being where your customers want you to be and less about being on every channel available to you.

00:10:10:03 - 00:10:30:29
Sam Niro

Second, when it comes to access, convenience is extremely important. We all know how important it is to have an ATM available to you or somewhere you can go to deposit cash, for instance, into your account. Now it's really thinking about how convenient is it for my consumers to get a hold of somebody through a digital channel? What's my phone queue time look like?

00:10:31:12 - 00:10:51:03
Sam Niro

Am I available through text messaging? How long is the live chat wait time? Think about all of these things and what you can do to make it even more convenient to get a hold of somebody. Perhaps it's one click to get into the live chat queue from your mobile app. Another key important thing about access is providing self-service.

00:10:51:11 - 00:11:13:22
Sam Niro

A lot of consumers want to be able to help themselves and not reach out to a human. So this includes developing things like FAQ pages, knowledge bases that walk through common issues people encounter, like how to unlock a debit card. It even includes building out intelligent chat box that can walk people through things like activating a debit card.

00:11:14:04 - 00:11:36:19
Sam Niro

Self-service is hugely important too because it will help alleviate your team from doing a lot of these simple tasks they're inundated with every day. When it comes to speed, the one thing I want you to take away from this is that no matter which channel somebody comes through, whether they're physically in your branch, through your desktop app, your mobile app, any other channel they're coming through, speed to service and the time they're left waiting should be roughly the same. The more you can equalize these, the happier your customers are going to be at the end of the day. We all know how important queue and handle times are both for customer satisfaction and employee engagement. And this is one thing we have to watch. Lastly, the third key pillar is really about building those connections and their relationships.

00:12:01:06 - 00:12:21:00
Sam Niro

Online and in branch, you try to give every single person that chooses you as their financial institution the VIP treatment. They should all feel like they have a seven figure bank account with you, no matter what's in their checking account. Know what products they use, know who they are. After you've verified their identity,

00:12:21:06 - 00:12:46:28
Sam Niro

do something as simple as greeting them by name or using their name in the conversation. These little touches are the types of things that get people to go, you know what? My financial institution really gets me, I appreciate them, I know they're going to help me out. The other great part about thinking around relationship building is we now have technology like video chat where we can connect one to one with somebody without having to be in our physical branches.

00:12:46:28 - 00:13:26:09
Sam Niro

And this is really important because it'll help folks choose the right products and find what works for them. Which I always think about is hugely important, because if you have a first time homebuyer who has never had a mortgage before, they're unfamiliar with the process. They're going to want somebody to walk them through all of the options they have, the step it takes to complete their loan application and being able to do that face to face through video chat and collaboratively on screen with co-browsing really creates this relationship and builds that trust that's so important for long term loyalty Lastly, let's talk through what your ideal techxt actually look like.

00:13:26:09 - 00:13:44:08
Sam Niro

I'm not going to make specific vendor recommendations here because I think it's really important to look at what works for your business. But I do want to have you think about these four elements: Convenience. How easy is it for your customers to reach you and how easy is it for your employees to quickly find resolutions for your customers?

00:13:44:08 - 00:14:05:09
Sam Niro

If they have to dig through a ton of tools or they don't have the data that they need in front of them, it's going to be a lot harder across the board, and it's going to impact customer satisfaction at the end of the day. Secondly, collaboration. Help foster those relationships and also think about, how can we do something like improve loan application completion rates?

00:14:06:03 - 00:14:34:06
Sam Niro

Doing collaborative, on-screen co-browsing together helps consumers and agents walk through the complex processes or places where they get stuck. Context is critically important. Like I've mentioned before, making sure your employees have access to data is going to improve your handle times, improve overall satisfaction, and really show your consumers that you know them. Lastly, consolidation. We've all seen what happens with tech stock flow.

00:14:34:07 - 00:14:55:21
Sam Niro

There's so many different options out there. You can get a different tool for chat. You can bring in a new company for chatbots, you can have all of these tools, but if they don't work together in a synchrony, you're going to run into this long term issue of, how can we actually use all of these together to the best of our ability and reduce clicks and tab switching for our agents,

00:14:55:28 - 00:15:09:10
Sam Niro

because that then leads to a better customer experience. I hope this all has given you some food for thought and that you'll be looking at how can you streamline and optimize your customer experience tech stack. Thank you for having me.

00:15:24:03 - 00:15:36:12
Gys Hymon

Hi, everybody. My name is Gys Hymon. I'm a principal in our Deloitte consulting business and I also lead our solution business for financial services called Converge Prosperity.

00:15:37:03 - 00:15:47:12
Tim O'Connor

Tim O'Connor. I lead our next-gen digital banking solutions here in the U.S. for Deloitte. So I help banks of all scales really drive forward with innovation in on the edge digital solutions.

00:15:47:16 - 00:15:47:11
Gys Hymon

Today we're going to focus on a solution for the banking industry called our digital banking solution. And really just going to spend some time unpacking some of the value proposition benefits and also how to address some of the key themes and challenges in the market today.

00:15:58:16 - 00:16:10:11
Tim O'Connor

So externally, our clients are under a lot of pressure, right? They have to be able to compete with rising expectations from customers. They have to be able to deliver differentiated experiences.

00:16:11:00 - 00:16:45:18
Gys Hymon

So customers are asking, can we have more sort of emotional experiences with that application or with that digital channel? And that means not just have a balance or account listing, but how does a bank integrate other services, value add services into that single experience for the customer? So to give an example, in a small medium business customer, yes, they are interested in actually having access to their bank account, the ability to pay bills, the ability to invoice customers.

00:16:46:01 - 00:17:21:12
Gys Hymon

But what they also want to know is they say, how does a bank going to help me in that single experience manage my money better, help me with my tech services and help me with my budgeting services? So it's more of an integrated experience than just the banking services. But there's also an expectation from the customer that banks are more innovative around their products, the type of products that they launch, but also because it's now a complete app experience and sort of a mobile first experience is that those features are continually sort of enriched and that additional customer capabilities are added to those mobile experiences on a more regular basis.

00:17:21:24 - 00:17:43:14
Tim O'Connor

Yeah, the biggest problems our clients are facing today is they obviously need to innovate. They need to be able to rise up to meet this challenge in the marketplace. And part of it is there is obviously the legacy technology they've been dealing with for decades. Right. Secondly is how do they really do things different digitally? Right. So how do you think about new propositions, new innovations?

00:17:43:24 - 00:17:57:12
Tim O'Connor

And it’s solving those things is where we see our client spend most of the time.

00:17:58:24 - 00:18:14:12
Gys Hymon

And then the third key driver that we're seeing in the market are really around competition. And the competition is from the traditional banks, the sort of fast movies that are adopting some of these new technologies. But it's also coming from nontraditional players, nontraditional players in the sense of fintechs, where they are really integrating their banking services and products into other customer and consumer experiences with other app experiences at which the banks are not satisfying at the moment.

00:18:15:05 - 00:18:39:29
Tim O'Connor

Our digital banking solutions are for everyone in the marketplace. You know, we approach this architecturally in a way that focuses on composability, right? From a microservices standpoint, how do you do smart things about how you can assemble these solutions? And so what that means is, again, we offer tons of optionality so that every bank can have something unique about how they then take this and extend it and shape our propositions.

00:18:40:17 - 00:18:49:01
Tim O'Connor

And the way that we think about this is there's pieces that can work for the biggest banks in the U.S., and there's pieces that can work for the smallest banks in the U.S.

00:18:50:17 - 00:18:58:01
Gys Hymon

We've enabled the banks to really innovate at the product level again. That's a savings product with some with unique features or capabilities or whether that's a lending product.

00:18:58:28 - 00:19:11 :21
Gys Hymon

But what we've done is we’re working with these next generation core lines partners of of ours to take these solutions and do pre-configured products on their solutions. So it really saves time to market for the bank. They don't have to think about, oh, we've got to configure the entire solution. We've done the heavy lifting already.

00:19:12:28 - 00:19:52:21
Tim O'Connor

The key design principles for our core banking solution first and foremost start with everything's going to be digital native, cloud first. We're designing for the future. And so when we think about what we build to the experience layer, all the way down to the infrastructure layer is with that paradigm that this is for the future of digital commerce. Right? The second is that everything should be in a composable architecture, right, to take advantage of the marketplace and to be able to craft these unique solutions for our clients that line up where they're at, the propositions that are going for them and their clients.

00:19:53:08 - 00:20:12:21
Tim O'Connor

You have to be able to give them the flexibility to be able to select different vendors that fit their profile for the market they're going to serve, as well as to be able to work within a coexistence model with their legacy to state. And so that composability and that ability to be agile within integration is critical for us. As we think about this,

00:20:13:07 - 00:20:51:12
Tim O'Connor

there's three lenses of where kind of the real intersection of the witness for everybody is finding the thing that's desirable, the thing that is market viable and is technically feasible is through Deloitte's methodology, we work very deliberately through that exercise to balance out the propositions that really are going to resonate for our clients: unique opportunities, the things that are economically viable, operationally viable, given who that institution is and what is the realities of their marketplace and the financials and feasibly from a technical standpoint, balancing out with what they might have today from a legacy standpoint, and the things that are really going to enable those visionary pieces, on the proposition standpoint.

00:20:51:12 - 00:21:10:22
Gys Hymon

We've spent years within Deloitte using our industry knowledge, our deep industry knowledge, coming up what we call sort of the blueprint designs, what we believe are industry based practice designs across the core platform, the integration platform, and also the front end experience and the infrastructure of how you put it all together from a cloud perspective.

00:21:11:07 - 00:21:46:01
Gys Hymon

We've taken those blueprint designs and what's really exciting as we've built that into a real solution. This is not a proof of concept or a prototype. This is a production level readiness of solution that we've built out there in the market, making it real and really exciting. But as we have the opportunity where we work with our ecosystem, strategic ecosystem of partners out there to aggregate and bring all of their unique solutions and differentiating solutions and aggregating that into a single solution, which we then use to build our digital banking solution for the customers out there.

00:21:46:17 - 00:22:22:11
Tim O'Connor

We're going to get you there faster because we've been there. We've built the muscle around these really complex, you know, massively challenging digital first transformations and we're going to bring that experience first and foremost, how we're going to help you solve these problems to take advantage of the opportunity in front of you. Secondly, through the experiences and that muscle we've been deliberate and we've really invested in building out product components that accelerate your time to value, de-risk delivery and give you the foundation elements that you're ultimately going to need to get into market fast and to scale your business.

00:22:22:19 - 00:22:46:27
Gys Hymon

We would welcome the opportunity to engage with you further on our digital banking solution. We would love to spend some time with you unpacking the exact value proposition and show you how each one of these layers can bring value to either your digital banking transformation initiatives that you have in the bank, where you want to create unique customer capabilities, or whether you are thinking about certain core modernization activities, how it can bring value.

00:22:47:11 - 00:22:58:21
Gys Hymon

So please reach out to us, spend time with us understanding how the solution has been put together and how it can actually be integrated into your environment and delivered into your environment.