When banks first started introducing digitisation through innovations such as cellphone banking, it might have simply been a matter of moving existing processes into a digital format. However, as the digital world evolves at a rapid pace, this is no longer good enough and banks need to recognise that consumers are demanding faster, simpler, more efficient digitisation processes.
What is digital banking?
Don Bergal, senior vice president of corporate marketing at Temenos, notes that digital banking allows customers to tailor their banking experience to fit their needs. “This might mean making a transaction on their cellphone while sitting on the couch at home or initiating a loan application. They can call the bank or the call centre for live assistance when they reach the point where they need more info. That’s a customer-centric approach as opposed to a bank-centric approach,” he says.
However, Bergal notes that banks need to revise their viewpoint to consider the digitisation process from the customer’s standpoint. “The banks need to ask themselves what the customer is trying to accomplish and how the bank can make it easier for the customer as opposed to ‘what can my bank software do and how can I force my customers to fit into the intricacies of potentially very old legacy bank software?’”
Digitisation must be streamlined
Bergal says traditional banks starting out on the digitisation path often fall into the trap of taking their existing traditional banking systems and slapping a thin digital wrapper on it.
“If all the bank does is build a digital front end that is as complicated as the old traditional banking system – they are not going to meet the expectations of the new customer who has the choice of going to a digital bank that’s been built from the ground up that may only do a few things but does them very well. It’s a streamlined experience whether you’re opening an account, moving money or planning your budget. All of that has been built with the customer in mind and the traditional bank has to be able to offer that same level of convenience, that great experience, if they are going to compete,” he says.
Another example of banks failing to translate their existing processes to digitisation can be found in the fact that banks traditionally used different systems for different functions – for example, one system for current accounts and another for credit cards.
“If you try to take these systems online without an overhaul of your thinking, the banking interaction comes across as very disjointed to the customer. The idea behind a unified digital experience is that it hides the complexity of the different bank process behind a single simplified interface.”
The future of digital onboarding
Digital onboarding is the idea that you can open an account or apply for a loan – and do it completely digitally without needing a face-to-face or paper interaction with the bank.
“If you think about the process of applying for a personal loan or a credit card, it involves a number of things,” says Bergal. “First, the customer provides some basic information including their proof of identity. The bank needs to check the information provided, look at their personal history, look for any history of fraudulent activity, check their credit record, and see what their payment history is with other creditors.
“In a digital onboarding world, that whole process is done automatically by the bank through interconnected systems without the customer seeing any of it and without any paper interaction. There’s a fair amount of interaction that takes place behind the scenes and it’s all done digitally in real time and an answer is given to the customer very quickly.”
The road is long
In South Africa, we have seen some steps towards digital onboarding. For example, First National Bank allows customers to set up a new bank account by uploading a selfie on their cellphone banking app. In addition, South African banks have been cutting jobs, closing branches and encouraging customers to use digital channels as part of their efforts to lower cost-to-income ratios.
However, Bergal notes that internationally consumers are able to process a credit card application and give a consumer authorisation in real time, allowing the consumer to leave the digital experience with a credit card number and an account ready for use.
“That’s a full digital onboarding experience,” he says. “If the customer still has to go into the bank and produce their identity document, then the bank hasn’t fully embraced digitisation. Ideally, the whole process should happen without you having to depart from the convenience of your mobile phone or your home.”
Brought to you by Temenos.