Banking is changing and majority of the changes incorporated in the industry are tech and customer requirement driven. The pandemic and its ongoing effect have a larger role to play in these transformations, which are significant as well as fast. To understand how technology is improving banking lately, Rashi Aditi Ghosh of Elets News Network (ENN) interacted with Riddhi Dutta, Regional Head of ASEAN and South Asia, Backbase.
During the conversation, Dutta said, “There are a variety of elements that lead a bank on the path to success in the engagement banking era. The first key to drive success into 2025 is creating a value driven roadmap, to ensure all stakeholders are aligned on the main goals of the company. This also leads to working with a one-platform approach, with a complete holistic overview of the customer.”
1. The COVID-19 outbreak has challenged all sectors across the globe. What opportunities do you see amid the uncertainties for digital transformation in the banking sector?
The pandemic has undoubtedly caused dramatic changes to the way we work, interact, and live. However, it also acted as a catalyst in accelerating digital transformation and change in the banking industry. This acceleration towards digitalization has also increased customer expectations when it comes to their financial needs.
For instance, India has some of the most pro-innovation regulations in the region. Despite this, banks in the country are still struggling to meet high standards of availability, reliability, and quality that neo-banks are providing.
There’s also a huge gap in service and reliability, with as many as 3% of bank transactions not going through. While there’s a need for continued investment in seamless operations, including core engines and automation of back-office infrastructure, the priority mindset needs to shift. Banks should start focusing on improved customer-facing digital service designs including customer onboarding, loan origination, and credit checks. Adding to this, is also the pressure to meet expectations of digital-first experiences. 60% of Indian banks admit they’re struggling to offer intuitive, relevant, and personalized content through newly launched digital channels.
Looking ahead, a modern and modular platform architecture can support banks in achieving the agility needed to evolve and keep up in the engagement banking era. These platforms also allow the integration of third-party functionalities and offer features, without adding extra spend on core banking system transformations.
Banks could also opt for strategic partnerships with a technology provider to ensure they don’t fall behind in the competitive landscape. This will then allow the company to leverage their specialized expertise to expand and innovate their banking ecosystems, which could result in improved customer experiences.
2. How is Backbase assisting banks to accelerate their digitization to meet the high online and mobile customer demand?
Backbase has partnered with more than 150 financial institutions globally, helping them drive improved banking strategies and empowering them to become a bank that people love. From our experience, the most successful banks are those that can successfully match and exceed customer demands while maintaining a close eye on their competitors.
It’s evident that digital banks are growing customer bases three times faster than traditional banks in 2020/2019. As a result, financial institutions that have invested in digital channels are seeing advantages in acquiring new customers, improved loyalty, and expanding the number of products each customer holds. But, there’s still a mismatch between the services consumers want from their financial institutions and what is being prioritized – highlighting a distinct lack of understanding of customer needs.
Through the Backbase Engagement Banking Platform, we aim to enable banks to create unified, integrated experiences, and assist them in orchestrating personalized customer journeys. This allows banks to not only have a holistic overview of the complete customer experience, but also optimize costs and enhance product value for a future-proof business.
In the past 12 months, we’ve also seen an increasing number of banks investing in digital banking platforms across all lines of business, including SME, Corporate Banking and Wealth Management. A number of banks are taking advantage of the state-of-the-art technology that Backbase Engagement Banking Platform provides. It offers an unparalleled solution, being a one-stop shop for financial institutions to move away from silos and deliver clear and concise insights to both the customer and employees of the bank. Be it through digital or physical channels, the Engagement Banking Platform has the necessary technology building blocks to help financial institutions customize and build their digital brand all while meeting the increasing demands of customers.
3. Do you see an increased demand for cloud services from banks? And how is Backbase-as-a-Service helping them in deployment?
Cloud technologies have been a game-changer in empowering businesses to reduce costs, increase agility and innovate at speed. IDC recently reported that nearly 80% of corporate banks in India are forecast to run their trade finance and treasury workloads via cloud technologies by 2024. Rules and regulations have also been changed to support the use of cloud computing technologies within India’s financial service sector.
We see industry players such as Microsoft Azure and Amazon Web Services (AWS) riding this wave, expanding their data centre infrastructure to cater to growing data consumption, and banking is no exception.
Through Backbase-as-a-Service (BaaS), we aim to provide financial institutions with the agility to leverage the best in cloud technology for developing and releasing new services at speed to stay ahead. BaaS not only fastens the time to market while eliminating upfront capital investments on maintenance of aging technology and hardware, but is a true innovative partner. The service also takes into account banks ability to grow – so they can increase or decrease computing capacity as needed. Overall, this leads to higher business flexibility and a better seamless experience for customers.
4. Backbase offers solutions pertaining to retail, Small and Medium Enterprises (SMEs), Corporate Banking and Wealth Management. Which of these is reporting higher acceptance in recent times?
Although banks are usually focused on the retail end of their digital transformation journey, there has been a noticeable rise in investments and innovation in the SME digital banking space. For instance, Facebook recently launched its Small Business Loans initiative for SMEs across 200 cities in India. Another consideration is the improved efficiency neo-banks and technology partners are able to offer when it comes to the lending process and making loans more accessible to both Micro Small and Medium Enterprises (MSMEs) and SMEs.
While these initiatives help support SMEs, only a handful of corporate clients currently have access to a single platform that allows them to have a comprehensive view of their financials.
These increased customer demands have exposed the need for financial institutions to focus on technology-led customer engagement innovations for high-impact business processes such as initiation, origination, servicing, and sales. This is extremely important when maintaining strong relationships for corporate clients who use a particular bank and also Wealth Management.
In recent times, we see an increasing number of banks reaching out to Backbase for production origination journeys such as new customer onboarding and loan origination. One of the success stories is Mauritius Commercial Bank (MCB), a leading full-service financial institution, noticed that the manual collection of loan statements, cash deposits and check payments were far too long and fractured the customer experience. MCB decided to unite with Backbase to launch a brand new mobile app for SMEs in just six months. This led to over 85% of its users actively using the app, each signing into the app around 14 times a month. The app, powered by Backbase, also significantly reduced the time needed to register a customer to just four simple steps that can be completed in less than five minutes.
5. What does success look like for Banks in India in 2025 and how confident are you in the value of partnerships between financial institutions and technology providers?
There are a variety of elements that lead a bank on the path to success in the engagement banking era. The first key to drive success into 2025 is creating a value driven roadmap, to ensure all stakeholders are aligned on the main goals of the company. This also leads to working with a one-platform approach, with a complete holistic overview of the customer.
Another element of successful digital transformation is creating a customer-centric culture. Traditionally, banks have been structured around their products and operated with high-friction processes that end up being frustrating and tedious for customers. In the engagement banking era, the availability of digital services, fast turnaround times, and empathy have been cited as the top three factors driving customer loyalty. With that in mind, financial services must start adopting an outside-in view for being customer-obsessed to deliver seamless and tailored experiences.
Secondly, banks must adopt a digital-first mindset, a concept that goes beyond implementing new technologies. Often, we have banks requesting to move their existing business models into a shiny new mobile app and labelling it as ‘digital transformation’. Instead, banks should focus on improving their customer experience using the Engagement Banking Platform, all while leveraging digital technology in creating tailored experiences that are both meaningful and engaging.
On the final point of the recipe for success, financial institutions must ensure that they identify the right technology partner that supports their operation strategies. While numerous solutions in the market can reduce go-to-market time in the interim, business leaders must ensure that their selected partners can provide scalable and flexible solutions to future-proof their business for years to come.
If we look at some of today’s innovative technology companies, like Netflix and Amazon, most have started adopting a single platform approach. For instance, you expect to be able to pick up the remote for the television and continue watching that binge-worthy series where you finished off last time on your mobile. Similarly, banks need to expand their mindset when it comes to the overall customer journey and experience and make sure there are no gaps in the service they provide that could potentially frustrate the customer.
Overall, banks in the region and globally can achieve improved success in all lines of business if they continue to improve their way of working and offer enhanced engagement banking services. Knowing that there are technology partners, like Backbase that are able to enhance and assist with this incredible journey is definitely something many banks are utilizing.