Fintechs understand the importance of being customer-centric. In fact, 90% of organisations cite enhanced customer experience as vital to their competitive advantage.

By Clinton Scott, MD of TechSoft International

Differentiation is therefore not about the products and service offered but rather the end-user experience delivered.

People are quick to complain about service delivery more than cite good banking or insurance products. Sadly, only 17% of traditional bank executives feel well and truly prepared for a customer-centric model.

 

Open banking matters

Traditional banking companies risk losing profits to tech-savvy competitors if they do not innovate and embrace new technologies. In South Africa, banks are under pressure to act fast, given the emergence of several digital upstarts and the accelerated adoption and acceptance of digital financial services by customers because of the pandemic.

Fortunately, South African banks have responded positively and aggressively; many have shifted and taken bold steps to disrupt themselves. There is increasing evidence that the traditional banks are evolving and innovating at an ever-increasing rate, which bodes well for the future of South Africa’s financial services industry. Beyond the competition, there is also significant regulation driving changes, especially when it comes to providing consumers with access to, and control of, their own data.

It doesn’t, however, stop there. More and more people and organisations are starting to explore options for a freer financial world and breaking down borders for international banking and infrastructure. Most banks the world over realise there is a real opportunity to monetise work being done around the concept of open banking – the use of open APIs that enable third-party developers to build applications and services around the financial institution. But this requires significant focus on the likes of security, data management and API management, and the digital experience in general.

There are three key areas that banks must consider when venturing into this new era:

  1. Quality of data. Access to data across hybrid environments is an essential component to delivering better experiences. But if the quality is not there, then the outputs will be worthless. Data management, therefore, becomes critical to ensure the information is ‘clean’, secure, and in the proper format while still meeting compliance requirements. Putting in place such a data management layer dramatically assists in managing the data governance process. Even though the Protection of Personal Information Act (POPIA) set for 1 July this year introduces an additional level of complexity, banks will still be looking to eliminate data silos and manage their data more efficiently than in the past.
  2. Securing partner access via APIs. APIs have become instrumental building blocks in the move towards open banking. These specify how software components are assembled and provide a secure way for data to be communicated. Furthermore, APIs result in more agile development environments by providing standardised interfaces to external developers. For open banking, this is vital as banks require a complete lifecycle API management solution that can deal with everything from planning and design to implementation and testing. APIs are the glue that helps create an integrated network for partners.
  3. Getting value from data. Quality and accessibility are two legs of the triangle. The third is where the magic happens – identifying how things can be improved, and customer service enhanced. By gaining insights from the data available, banks can identify the services, products, and aspects of operations requiring optimisation to become significantly more customer-centric.

All three of these elements rely on data. And when that data is available, opportunities for digital transformation and advanced analytics emerge. This includes real-time offers to customers, fraud detection with anomaly detection, and automated decision-making. Open banking opens the door to many more opportunities to innovate and deliver greater value to customers and partners.

Even in insurance, these concepts can be applied to implement products like continuous underwriting, where policies can be adapted in real-time to reflect customers’ life stages, health factors, and so on. Again, the secret sauce to all of this is data.

 

Cloud enablement

When it comes to open banking, the cloud is a critical part of a banks’ IT strategy—helping them dynamically scale as demand for new products and services increases. The cloud has become more than just a platform to store data and collaborate with a distributed workforce. The cloud’s high-performance computing capabilities unlock technologies like artificial intelligence, machine learning, robotic process automation, and data analytics.

When all of these factors are combined, it gives FSIs and others the means to unlock their data’s true power to create a truly differentiated customer experience.