In 2015, major banks around the world continued to invest in modernising their core infrastructure as well as focus on delivering services through digital channels. Competition in the banking landscape has intensified as the wave of FinTech start-ups, digital challengers and tech giants present a threat that is unlikely to go away soon.
Until recently, most customers banked through going to branches to access products and services on offer, and using an Automated Teller Machine (ATM) to withdraw money. These habits have been transformed, and everything now is dealt with online, including payments and money Transfers.
The technical advances made in the Internet technologies during the past decade are groundbreaking. Mobile Internet, self-learning algorithms, predictive analytics, humanoid robotics, holograms, 3D printing, drones and hot air balloons that transmit open Wi-Fi2 to Earth are evidently just the beginning of digital and societal change. Needless to say, this wave of technological innovation has contributed to the digital ecosystem of banking too.
One of the most striking examples of innovation in banking is the different ways in which to banks are serving their customers as well as the real-time transactions initiated by their available channels. In many countries Peer-to-Peer (P2P), as well as instant payment solutions are flourishing. Many banks are already offering a real-time system that offers a shared application for Peer-to-Peer Transfers.
In the customer experience ecosystem, the value of the bank will be about how useful and relevant the bank is in day-to-day interactions. For instance, mobile payments work not because customers can use their phones as a credit card, but before they make the payment – they can see their account balances, and when the transaction is completed, they immediately see a newly adjusted balance on the screen. And this gives birth to many contextual opportunities that banks could capitalise on. For instance, when a customer is about to buy a fridge, his smartphone may show that if he buys it he will default on his mortgage payment, or if he uses a particular credit card, he might be entitled to an interest free line of credit.
This year, across a dozen countries, MasterCard plans to launch “Selfie Pay” – its facial recognition payment services as part of a range of new services designed to improve identity verification for mobile phone payments. Customers could choose to scan fingerprints or snap selfies to validate their identities, in a system designed to let them complete an online purchase without the need for pin codes, passwords or confirmation codes.
In the payments space, Google is not deliberately trying to enter the payments business with Google Wallet, but the advertising messaging business surrounding payments. Google understands that payment is contextual, and they can send you a message to change your behaviour – their entire business model is simply charging for that messaging architecture.
To bring in expertise in contextual commerce, PayPal recently announced the acquisition of Modest, a mobile commerce company that allows businesses to create their own app or integrate their stores within existing apps. This may just be the next frontier in making commerce simpler, easier and seamless through leverage of data and circumstance, as PayPal moves deeper into digital and mobile commerce, and adding value through tighter integration of the merchant and consumer point of interaction.
Banking today must be contextual to satisfy the demands of the new mobile customer. Its services must be offered entirely at a customer’s convenience, without causing stress or hassle when a purchase needs to be made on the go. It is only going to get harder for banks to engage customers if they don’t have a competent digital strategy that happens in real-time and is based on customer behaviours.