How Banks Are Using APIs To Unlock Omnichannel Value

A customer looking to open a new bank account is often in for a somewhat bumpy process. There are a lot of redundant forms and, in some cases, a few venue changes. For example, the process might start online, but then the customer is forced to visit a physical branch to verify their identity. It’s an omnichannel experience of sorts, and not the good kind – more of a funhouse mirror version, where the customer is forced between channels, instead of flowing between them by choice.

Onboarding on the whole, as most consumers experience it, is a cumbersome process that turns consumers off, NovoPayment CEO Anabel Perez told PYMNTS in a recent conversation – but it doesn’t necessarily have to be that way.

“Customer acquisition is a great example of a case where any FI can overcome the relevant challenges,” she said.

The key, Perez noted, is tapping into the expanding world of API offerings and building new secure connections and value chains. Processes that today are friction-filled and full of uneven handoffs between digital and physical channels, she noted, can be streamlined, digitized and smoothed into something that stops taking away from the customer experience and starts actively adding to it.

“An API can connect different processes to streamline the delivery of services and improve and elevate the customer experience,” Perez noted. And from that starting point, she added, FIs can start really leveraging their API building blocks to continually enhance that customer experience across their banking relationships.

Onboarding as a Competitive Advantage

An API-based onboarding eliminates a bad experience for both the customer and the FI. Previously, the consumer was more likely to be trapped in something tedious and rigid, while the bank was stuck with a high-cost process that earned them more irritation from their customers than anything else. The API-based streamlined process essentially puts channel control back in the consumers’ hands, while offering up more automated options. Instead of a physical appearance at the branch, for example, an API can capture and verify information like phone data or scan a “selfie shot” as a method of authenticating consumers – no physical appearance is required, but their identity is still securely confirmed.

“That gives the bank an increased ability to retain that customer,” Perez told PYMNTS, noting that smooth, streamlined processes tend to be sticky for customers. Moreover, she noted, that better experience is actually more secure, because in building an online onboarding experience, the FI is forced to create an automated and fully documented AML/KYC process.

“Because there is no way to get outside the process, there is no way to skip or miss a step,” she pointed out. “In using APIs to automate the process of creating a new customer, all the norms and procedures can be executed in regard to ‘know your customer’ and in the prevention of money laundering. It also creates the records in real time that those processes were managed.”

Moreover, Perez noted, apart from being safer and more secure, API-enhanced onboarding also serves as a starting point for deeper and greater engagement with customers once that new account has been created.

“This is also a place to gather important information that may help you to immediately and contextually offer additional products to cross-sell,” she said. “That helps our client banks engage their customers and significantly reduce their cost of sale.”

Doing More

Embracing APIs for onboarding or otherwise isn’t always an easy decision from an organizational perspective, Perez noted. It requires a deliberate, organized effort on the part of the bank to provide the conditions for success – and that effort has to come from the top of the organization, and be pushed hard and consistently by “internal champions.”

As Perez pointed out, most FIs are not of sufficient size and scale to do this all on their own, so will need to forge partnerships with trusted, third-party technology operators and develop a clear vision of their goals. Getting that much internal and external support isn’t a small effort.

The good news, she said, is that in many ways, the operational challenges outstrip the technological ones. What can be done via API to streamline and strengthen the customer journey – for onboarding and beyond – is much larger than what is being done.

For most FIs, the main challenge right now is finding the first step – taking on that first consumer issue, like onboarding, and putting the API building blocks, necessary middleware and orchestration in place to address it. The journey of a thousand miles begins with a single step, Perez said – which means they need to start with a customer’s problem or project, and then solve it.

“They need to get a quick win and learn from it – and learn to build on that,” she said.

From those starting points, FIs can start taking those API building blocks they put in place for one solution, and start building the infrastructure, or utilizing Banking-as-a-Service platforms to solve a range of pain points within their consumer relationships, without having to overhaul their legacy systems or break the bank.