A billion dollar commercial bank stakes its differentiation on personal service, having built its business on long-term customer relationships forged by visits to branch offices, lunches at local cafes and outings on golf courses. But as their business owners transfer responsibility to the next generation, the bank must replicate those personalized experiences to connect anywhere, anytime with the next generation of business owners who grew up in a digital world.
Recognizing those behavioral shifts, the bank uses open banking to adopt a digitized customer experience strategy that produces that same level of differentiated experience as in-person interactions.
How open is your organization to making that same digital transformation?
To fuel innovative personalized experiences and meet consumer expectations, financial institutions are faced with difficult decisions involving strategy, technology, and how data is produced, managed, stored and shared. Using open APIs and flexible technology platforms to create differentiated experiences becomes increasingly compelling as financial institutions work to survive and compete in such an unpredictable environment.
Digitization grays the lines between industries, services and products, affecting all aspects of the supply and demand chain. It's also accelerating transformation across the financial services industry, changing the delivery of services in very personalized ways. To keep pace with this disruption, financial institutions are turning to several strategies: in-depth data analytics, extended multichannel experiences, and integrated value chains, including business to business to consumer (B2B2C).
Using open APIs and flexible technology platforms to create differentiated experiences becomes increasingly compelling as financial institutions work to survive and compete in an unpredictable environment.
Individual, flavor-of-the-day digital experiences consumers crave are spreading into the financial industry. Paypal, Venmo and Rocket Mortgage have changed the consumer experience, and other nonfinancial competitors are also preparing to take a chunk of your market share.
Nimble payment competitors thrive on digitization because they excel in creating a compelling and memorable experience. But what those competitors lack is the deep insight financial institutions have gained based on years of customer interactions – information nonfinancial companies would love to use. The ability to access and securely share data from those interactions is the leverage – the secret weapon – financial institutions can use to remain integral to the money movement process.
As they establish their digital priorities, forward-looking financial institutions are making serious investments in extended banking strategies to cost-effectively expand their market share. They're creating innovative digital business models, products and services, implementing digital technologies, and in the process, discovering an increased need for connected, open systems.
Greater personalization of the user experience, unpredictable disruptions from yet-to-be-discovered personal devices and increasing consumer demands create a high degree of uncertainty in the market. Since predicting the next big thing is so challenging, financial institutions will likely need to rely on flexible technology and innovation. In addition, a digital strategy that decouples the user experience from limitations of any specific technology or banking process enables individualized and memorable financial services experiences.
Technology can extend a platform and help convert ideas into business logic and then transform that business logic into financial services that enable one-of-a-kind experiences.
That kind of differentiated experience can help fortify institutions against disrupters and nonfinancial money movers. Prepare for what is known – and unknown – with flexible, extensible technology platforms, a solid strategy and engaged employees.
Many in the industry see opening APIs to banking technology as a cure-all, but much more will need to be done to create extended, personalized experiences. It's not just the technology, it is technology combined with effective strategies and banking savvy that will deliver differentiated experiences.
Open APIs are a means to an end, facilitating investments in digital priorities, creating new digital business models, products and services, enabling cost efficiencies, helping to capture of new markets and market share, and securing digital assets.
Open APIs offer transformative opportunities, but also significant challenges, such as a need to ensure data privacy and cybersecurity. Additionally, adopting open APIs without a strategy can lead to an architecture that is more akin to a bowl of spaghetti than one that effectively delivers exemplary experiences. Every organization will go through its own transformative journey, but maintaining the status quo is no longer an option. Digitization won't stop – not now, and certainly not in the future.
What are financial institutions options as competition from nonfinancial payment players continues to gain traction? Successful strategies start with getting out of the legacy IT mindset and connecting with a decentralized, open and flexible ecosystem that extends banking in collaboration with employees, business partners and, most important of all, customers or members. Collaborative innovation can successfully transform an organization into a digital business that is prepared for the future and resonates with consumers.
There are many ways financial institutions can strategize to extend services. One powerful way is with an integration solution that allows data sharing between technology solutions and with customers or members.
As digital experiences replace face-to-face interactions, financial institutions must find ways to project personal service into their digital experiences. For example, easy mobile and online account boarding processes enable consumers to open, fund and use an account the same day. New customers or members can be invited via chat or notification to add other accounts for easy access, resulting in a personal financial landing page, branded and housed by the financial institution but with a look and feel that suits the consumer.
The key to keeping pace with digital disruption is not what financial institutions do, but how, when and why they do it. Because the future is always uncertain, being nimble, creative and business savvy – and adopting a technology architecture that supports those qualities – are key. Technology, by itself, does not dictate innovation nor can answers to digital disruption be purchased off the shelf. Instead, collaborative innovation and extended, personalized banking are integral to a successful business model.