To bring digital transformation to banks, and to help them bring their assets to the “digital-first” consumer, look to the platform.
In an interview with Karen Webster, Douglas Brown, senior vice president and general manager of NCR Corporation, said the growth of mobile banking adoption and financial inclusion means traditional financial institutions (FIs) must re-examine how they deliver new services across the connected economy, how they partner with other firms and even how they can bring the branch experience into the 21st century. That’s a challenge, as banks have traditionally plied their trade through face-to-face interactions.
The conversation came against a backdrop where NCR has been moving more deeply into mobile and online banking. Brown said the company has been working to become a software company, with digital-first banking firmly in the crosshairs. Among the key focal points for NCR looking ahead lies expanding card management and commerce capabilities.
“It’s really about extending out the capability of your card to the commerce ecosystem,” he said. That means integrating the Google Pays and Apple Pays of the world, but also going beyond those consumer-focused wallets — embracing merchant rewards, as well as promoting tighter integration between FIs and various incentive and loyalty programs.
The Benefit For Smaller FIs — At The Branch, Too
In the bid to bring the customer journey to the digital realm, Brown noted that one of the stalwart features of banking — the branch — can play a vital role in the creation of a digital-first bank. In a sense, though, the clock may be ticking, because consumers expect that same level of personalization at every point of financial services and banking, regardless of the channel.
“The branch is a digital ecosystem in and of itself,” he said, “and it should be connected to the digital banking, self-service ecosystem,” as the footprint — including the ATM — is not going away. However, the branch experience does need to evolve, he noted, as FIs see their own customer demographics shift toward younger, tech-savvy millennials.
Conventional wisdom may hold that millennials want a purely self-service experience when it comes to their financial lives. Yet, even as they wield mobile devices to conduct all manner of daily activities, there’s room for a bit of human touch as the financial journeys get more complicated — as these younger customers move beyond Venmo, and start considering the finer points of taking out a mortgage.
Partnering with firms like NCR, aimed at forming a holistic view of the customer, is especially helpful for smaller FIs, he said. Faced with limited resources in terms of staff and money, these smaller companies are unable to achieve that level of sophistication on their own as they seek to rethink, refashion and mine the potential of an expanded, tech-enabled digital experience.
Looking At Open Banking
Offering a continuum of digital banking services, of course, brings to mind the advent of Open Banking. Here, geography plays a role. As Brown said, “In markets such as the EU and the U.K., we are seeing some different applications, and are designing things a bit differently” because of data security and account access. Open Banking is taking root in the U.S. as well, he noted, as evidenced by the California Consumer Privacy Act.
There are also efforts at the company level to standardize data sharing, as seen in The Clearing House templates designed to foster joint efforts between FIs and FinTech firms. For example, Visa bought Plaid as 2020 dawned.
Webster asked if challenger banks really have a future, even with the tailwind of Open Banking — with a nod to the fact that many consumers have not voted with their feet to move to these digital-only upstarts.
“They definitely are disruptive,” said Brown of the Neobanks. “And they’re doing an amazing job of rethinking experience, but it’s not just about experience. Trust still matters.”
Profitability remains elusive in the Neobank model — which touts 5 million users, but has yet to see heavy transaction activity across direct deposit accounts.
FIs should take note of the companies that have been truly disruptive across certain verticals, he cautioned, those firms that seek to make the leap into direct banking relationships. Uber comes to mind, he told Webster, as does PayPal. These firms have value propositions that work for large segments of the population.
Adding Marketing And Context Into The Mix
Banks, of course, can expand their own value propositions, building on the trust and loyalty that have become staples of traditional banking relationships. Add marketing into the mix, and FIs have the advantage of marrying that stickiness with digital offerings, all with the aid of data — fostering what Brown termed “the right message at the right time.”
Done well through data analytics (via, say, artificial intelligence [AI] and geolocation working in tandem), he said, an FI’s customer engagement program can anticipate what the customer wants and when they want it in real time.
Context is key, he explained. It’s not enough or effective to know that a consumer is at the car dealership, and to use that basic bit of information as impetus to send them digital promotions for an auto loan. Instead, putting some context around the situation, and observing that the cardholder is at the dealership for only an hour, might give the indication that they are, perhaps, waiting for services to be performed on their vehicle.
“We know the optimal way to do this is based on patterns,” he told Webster, while adjusting for a consumer journey that will demand different financial services and products at different times.
There's not going to be a “Venmo that rules them all” for anybody, said Brown. “Reality and life are [a] little bit more complicated. ... The ‘digital-first bank’ approach is a platform that’s open, that’s helping select and integrate relevant partners. Banking will always be one of the cornerstones of a connected financial ecosystem.”