Digital-First Banking

Entersekt: The COVID-Led Future Of Digital Banking

In one of the signs of where we are and where we are headed in the warp-speed transformation of digital banking, consider the internet meme that poses a multiple-choice question and series of answers.

“Who led the digital transformation of your company? A) CEO B) CFO C) COVID-19.”

Nothing spurs a leap to new behavior like a global emergency and for banks there is an urgency to meet the demands of changing consumer expectations while grappling with the limitations of legacy tech infrastructure.

In an interview with PYMNTS, Mzukisi Rusi, head of technology delivery, North America at Entersekt, said the stage has already been set for the great shift to digital.

 

 

“Even in pre-pandemic times,” he said, “some of the key initiatives from financial institutions were focused on improving the customer experience, while at the same time focusing on fraud prevention.”

Admittedly, financial institutions (FIs) were not bringing all their efforts to bear on pivoting to mobile and online channels. That’s due in part to the fact that before the coronavirus, consumers had the flexibility to walk into branches and perform transactions in brick-and-mortar settings — which meant banks could extend their digital roadmaps a bit longer into the future.

The timeframes have been considerably shortened, as branches have been shuttered, he said.

“The projects that were related to digital banking that had been planned for later in the year are being moved forward,” he said, adding that Entersekt has been “receiving more queries from companies that need a solid digital security solution that can enable them to launch all those digital services more quickly.”

Along the way, he said, FIs must take into consideration the changing consumer expectations, while at the same time addressing the existing weaknesses in legacy systems that may not have been apparent when there had been multiple points of contact.

Drilling down into what individuals expect from their day-to-day banking interactions, Rusi said the majority of consumer banking bases are familiar with, and use, the offerings of tech giants such as Apple, Amazon, Twitter and Google. The behemoths set the pace, in other words, when it comes to digital engagement.

As Rusi told PYMNTS, larger tech firms use personal data to tailor the engagements they have with their customers. Those end users expect the same level of customized interactions with their FIs, measured in terms of speed and streamlined transactions.

FIs may have — for now — a digital presence that trails the likes of Amazon. And, as Rusi maintained, the current channels of engagement are not adequate in banking’s new digital age.

By way of example, he said that sending an SMS or email can backfire — chiefly because those are the methods that pretty much everyone uses, including fraudsters. With so much information landing in their inboxes, according to Rusi, consumers may be a bit fatigued and miss important communications from their banks. Against that backdrop, some fine tuning is necessary: “For example, if I’m logging into my mobile banking app,” said Rusi, “I would not want to get generic messaging that talks about what promotions the bank has.”

In that scenario, he said, in the event a consumer has applied for a home loan (perhaps through a channel other than mobile), upon logging into the mobile app he or she could be engaged across the mobile device with other offers that take into account the consumer’s data, credit score and purchasing behavior.

In this way, the FI can engage in “smart messaging,” which he said combines the benefits of instant messaging, sensitivity to real-time banking needs and strong security.

“All of this can happen within the trusted platform that is one’s banking app,” he said.

Security, of course, is top of mind for all stakeholders across the financial services ecosystem. Asked about EMV 3-D Secure, which is the industry-wide messaging standard that merchants and issuing banks must follow as they verify cardholder identities, he said, “It’s a big improvement compared to its predecessors. It’s focused on improving the consumer experience, which leads to reducing cart abandonment rates.” The risk-based authentication process eliminates the need for most cardholders to type in passwords or other means of authentication.

“With smartphones becoming more capable, it’s imperative to offer authentication experiences that consumers are really used to, and they use on a daily basis,” such as through biometrics, Rusi said.

And though it may be “crunch time” for FIs, said Rusi, “digital banking is the low-hanging fruit already. Consumers are digitally engaged already and it’s imperative that financial institutions start to beef up those channels and offer more services.”

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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