In banking where service providers are under pressure to deliver anywhere, anytime solutions, the need to scale out digital services is a business priority. Modern applications allow banks to empower users with a new level of end user self-service that is critical at a time where branch visits are considered a health risk, and allows for more sophisticated data analysis that results in an increased understanding of customer needs.
By Tony Nkuna, senior solutions consultant and integrations specialist at TechSoft International
Building applications is the easy part, making sure these applications are relevant and solve a specific customer need is where the magic happens. One could argue that banks are ahead of the curve when it comes to digital transformation as Internet banking has been a de facto standard for more than a decade. But there is a new and more pressing need and that is customer retention which calls for a better understanding of who the customer is, what they want, and how you can better serve them.
Drawing the Parallels
To gain this understanding banks need to get a better handle on their data. They don’t need data, that they have, but it is the processing of this data where the challenge comes in. And by processing we don’t just mean slicing and splicing data, we mean ensuring that the underlying data is firstly the right data, it can be reused across multiple environments, it is clean and it is up to date.
Now if we factor in that in South Africa, the Protection of Personal Information Act (POPIA) has come into effect from 1 July with significant financial fines and reputational damage awaiting those who are non-compliant. In banking, with this wealth of personal identifiable information, compliance must form part of the building blocks of becoming more data-centric, more digitally transformed, and more data-enabled to deliver on the customer value proposition.
This is easier said than done especially in a sector that is built on legacy infrastructure, traditional practices, and cultural views of how things are supposed to be done. Today, the banking environment is a strange mix of innovative solutions and high-end security on the one side and siloed data and aging infrastructure on the other.
That is not to say that change has not been happening.
Banking apps, chat bots, and other mobile services have become the order of the day. Tech-literate customers are pushing banks into effecting the internal changes needed for this digital world. And while the pandemic and lockdown are considered the catalyst for many of these changes, it has been the retail-driven push that is resulting in banks becoming more data aware and translating that into practical customer solutions.
While there are concerns that this is not happening quickly enough, the emergence of more agile fintechs that do not have to contend with legacy issues will see more of the incumbents start to accelerate their digital initiatives. Admittedly, much of this was window dressing in the pre-pandemic days. But this is changing as there is a growing appreciation of the business risk associated to customers migrating to start-ups that are seen to be more adept at dealing with their immediate needs.
Reinventing the base
The onus is therefore on banks to review their underlying infrastructure and focus more on enhancing this and less on rolling out new features on their mobile apps. Once the ‘new’ more data friendly infrastructure is in place, it becomes possible to compete in a digital world without the limitations of legacy environments tying them down.
This means banks must combine a singular focus on removing legacy systems, emphasise customer interaction, and injecting data analysis into everything they do. To move beyond survival mode and thrive in an environment that will reward digitally-first businesses, banks must start disrupting themselves and remain relevant for an increasingly connected customer base.
But getting the data right
The first step in a long list of requirements however is getting the data right. You can have all the systems in the world, but in order to turn data into assets and applications into customer experiences – you need to have a framework in place that supports clean, clear data that is compliant and accurately sourced.
Fintech development teams do sit with a challenge in that these teams are often stuck between the needs of the business owner or divisional head and the limitations of the data and even the database. Working with banks locally we are seeing the need to first clean data, create well-structured source data, and then create an environment where data can be pooled from multiple sources and integrated across multiple environments.
Without this in place data analysis projects fall flat. Applications will continue to limp along and innovation gets throttled.