Top 7 Banking Forecasts for 2017 – Part 2 of 2

Mike Togle
March 31, 2017

Part 1 of our research into the Top 7 Banking Forecasts for 2017 touches on Mobile Banking, Cyber Security, and Analytics as technologies that the financial sector is considering as one of the important trends for the year. Although not technical, banks look forward to working with Fintech companies in providing enhanced solutions and better customer experience.

Below are the remaining 3 banking forecasts for the year.

Top 3. Customer Experience

Results from a survey in the “Digital Banking in Asia: What Do Consumers Really Want?” Report [PDF from McKinsey] show that the banking customers of developed Asian markets are least satisfied with customer experience. Banks need to digitize end-to-end processes and make use of new technologies to improve customer experience.

According to McKinsey’s study, a European bank recreated the design of its mortgage process to enable acceptance of digital signatures, to automate payouts and data matching with property registries, and to digitize archives. Instead of two to five days, the mortgage offers were completed in fifteen minutes. The bank was also able to save half the cost of processing mortgage applications.

Some banks are also utilizing augmented reality to enhance customer experience. Axis Bank added an AR feature to its mobile application that allows customers to conveniently locate the nearest ATMs, branches, dining offers, cashbacks, and  pre-approved residential properties. The users can view the streets in a 360-degree mode using their mobile’s camera and see details of the location on their screen as they move around.

Top 2. APIs

Recently, banks began to participate in open banking or the use of open Application Programming Interfaces (APIs).  APIs are sets of tools, routines, and protocols for building software apps. Banks usually keep their APIs private, but they learned that open APIs can benefit them, their customers, and third party developers.

Banks can easily collaborate with third party developers when they make their APIs public. For instance, OCBC Bank opened four of its APIs that can make it easier and faster for software developers to integrate the needed information and create new or upgrade existing applications. By participating in open banking, they can then flexibly distribute and promote their products and services through third party channels.

This also benefits the customers since they can view relevant information in one channel or platform. A dining guide app that contains the OCBC ATM Locator and Smart Card Advisor APIs will allow users, who needs to withdraw money, to locate the nearest OCBC ATM from the restaurant they will be dining at. The application also alerts the user if the restaurant offers discount for OCBC card holders.

Top 1. Robotic Process Automation

More Asian banks are adapting Robotic Process Automation (RPA) in their processes. RPA is the use of software robots to automate repetitive and mundane bank processes. A software robot can operate at one sixth the cost of an offshore resource which saves 50% to 70% of the cost.

Industrial Credit and Investment Corporation of India (ICICI) Bank uses RPA in more than one million of its banking transactions for their back-end operations per day, which was able to improve accuracy and reduce the response time by 60%. These software robots were deployed in over 200 bank process functions across trade and forex, retail banking, treasury, agri-banking,  and HR. RPA can also be implemented in processes such as address change requests, ATM query resolution, and verifying know-your-customer compliance.

RPA will also have an impact on client on-boarding, mortgage lending, and compliance processes. Union Bank implemented RPA in their mortgage lending processes that led to faster time to revenue, less time on audits, and enhanced revenue opportunities. The turnaround time for digitizing load documents was reduced to 5 days from 15 days. By eliminating any type of manual work, their employees were able to focus more on customer engagement and customer experience.

RPA can also be used to support analytics in detecting fraud or identifying transaction patterns. Ernst & Young ASEAN Financial Services Managing Partner Liew Nam Soon expects to see banks adopt RPA in the next 18 to 36 months.

The Shift to the Digital Economy is Here

These trends will bring plenty of opportunities for banks to take advantage of. Instead of competing with FinTech companies, more Asian banks will be building relationships with FinTech companies to discover new business opportunities. Analytics, open APIs, and RPA will change banking processes, systems, and models to make it more cost- and time- efficient.

Banks will also be using most of these technologies to enhance customer experience. They will need to not just focus on making their processes more efficient but ensuring they can retain their customers in their intensely competitive industry.

With this, we can safely say that the Digital Economy is definitely here.

The last 5 years have pounded the banking industry with all sorts of disruptive trends, and we feel that banks need to take them head on. Our projection is that the next couple of years will bring even more technologies that shift the focus more on understanding the customer by utilizing data and analytics, and use automation to cut down the costs. Mobile banking will soon become the norm, with omni-channel banking being the new thing on the block.

If you’re a bank, ask yourself this: “Which of these trends am I already taking advantage of?”

If your bank has not looked into any of these, it may be time to check with your nearest tech company for help before it is too late.

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