Return On Investment is not a black and white topic around software, especially regarding digital transformations within Banks and Credit Unions. In addition to direct impacts noticed, there are many indirect financial benefits that can be realized. For now, let’s focus on the trackable and measurable impact on ROI…
Resource Type: White Paper
ROI of Digital <br>Banking
Forward-thinking and the
Right Technology Can Drive Success
ROI of Digital <br>Banking
Forward-thinking and the
Right Technology Can Drive Success
The three co-hosted sessions brought together 100 plus delegates to hear experts from across the industry deliver insightful presentations and participate in in-depth discussions. The aim of the seminars was to examine in detail the options for financial services firms as they reshape their business models and reinvent their technology approaches in response to digitalization.
Since January 2018, when the revised Payment Services Directive (PSD2) came into force, the concept of open banking has become a reality. This has made it possible for new competitors to enter the fray, offering innovative products and services and excelling in customer experience and intensifying the pressure on established banks to leverage the data they possess to match the customer engagement levels achieved by the new entrants.
To stay relevant, financial institutions now need to execute their strategies for responding to this fundamental market change. They must implement the new business models on which they are betting their futures – along with the technology architectures required to support them.
At the time the Finextra/Temenos sessions took place, the new world of open banking was fast approaching, and attendees’ minds were clearly focused on achieving compliance, fending off new sources of competition, and making the most of the opportunity presented by the changes: to deliver a better service to their customers, and to drive revenue growth for their own businesses.
In this context, the three seminars examined in turn the role of cloud computing within a digital strategy, progress by financial institutions in harnessing data and analytics to improve customer experience, and options open to them to reinvent their business models for open banking.
ROI of Digital <br>Banking
Forward-thinking and the
Right Technology Can Drive Success
What’s it like to be a customer of your financial services institution? Would your customers say your digital application experiences are intuitive and quick?
If your customers find it at all difficult to fill out a product application with your financial institution, how many do you think to walk away and never complete the application at all? How much business are you losing as a result?
If you can create a customer experience that makes the product application experience easy, you’re going to reduce abandonment rates, acquire more customers, and develop profitable long-term business relationships.
A human-centered design approach is the key to building an optimal experience for your customers and unlocking your business growth potential. Read this white paper to learn more.
Download the white paper today to find out more:
ROI of Digital <br>Banking
Forward-thinking and the
Right Technology Can Drive Success
The online onboarding process is the first customer experience your business prospects have with your institution, so the experience has to be positive. This guide will help you understand how to build an optimized online business customer onboarding experience and get it to market fast—based on lessons learned by banks that got it right.
ROI of Digital <br>Banking
Forward-thinking and the
Right Technology Can Drive Success
Credit unions, also known as savings and credit co-operative societies (SACCOS) or financial co-operatives, make a hugely important contribution to social and economic development. Unlike many financial market interventions over the past 30 years aimed at increasing access to financial services, credit unions monetize local assets and distribute them to qualified borrowers. Local distribution is fundamental to local economic sustainability.
These community-based, co-operative financial institutions have been operating in emerging markets for at least 50 years and have become local institutions. The relationships they have built are real and tangible, including teaching financial literacy, thrift and investment in community. This is important because their work leaves a positive long-term legacy to members, members’ families and the communities in which they live.
Historically, they have been found in rural and remote areas of many emerging economies and are often the only financial institution available to the community. Private, member-owned, they offer high social value by keeping the economic benefits of their lending activity within the community – all profits are returned to members and/or are reinvested into the communities in which they operate.
Credit unions arose to provide the common person with access to financial services and a self-help alternative to predatory money lenders. Credit unions still have a role in providing lower-cost access to financial services and an ethical alternative to predatory lending via easy-access payments
Brian Branch – president and chief executive officer of the World Council of Credit Unions
In most developing countries, credit unions are the predominant providers of external financing for micro, small and medium enterprises (MSMEs), which contribute up to 33 percent of national income and create four out of five new jobs, according to the World Bank.
In Kenya, for instance, SACCOS has been reported to contribute more than 45 percent of gross domestic product and it is estimated that at least one in two Kenyans directly or indirectly derive their livelihood from these co-operative organizations. In Tanzania, cooperatives (including SACCOS) contribute about 40 percent to the country’s GDP and employ 94.7 percent of school leavers every year by financing SMEs, the majority of which are located in rural areas and wholly depend on the co-operative system for external financing.
The challenge faced by credit unions today is the ability to scale and retain their community-based attributes.
ROI of Digital <br>Banking
Forward-thinking and the
Right Technology Can Drive Success
Author: Cornerstone Advisors, Ron Shevlin
Digital identity is a problem for many financial services organizations because there are no standardized formats for digital credentials, and there are no standardized methods to verify the source and integrity of digital credentials.
The meteoric growth in smartphone adoption over the past 10 years outstripped any industry’s or government’s ability to address digital identity challenges.
What’s the path forward? This report explores three avenues:
- Technology developments in digital identity management;
- Best practices in digital account opening and authentication
- Forces shaping digital identity management.
Download the white paper today to find out more:
ROI of Digital <br>Banking
Forward-thinking and the
Right Technology Can Drive Success
This paper argues that the widespread uptake of open banking globally, accelerated by the Revised Payments Services Directive (PSD2) in Europe, will lead to new opportunities and challenges for banks. Expected to come into force by late 2018, PSD2 is intended to increase competition and innovation within the European banking industry in order to improve the banking experience for the end-customer. For this reason, it has implications well beyond Europe. Accenture has described PSD2 as an “open banking laboratory” that will be closely watched by the rest of the banking world.
PSD2 prescribes the opening of account information to third parties, such as aggregators of customer financial information across multiple institutions, or payment providers. In order to protect themselves from the consequent risk of losing their direct relationship with customers (disintermediation), banks are likely to respond to the directive by not merely complying, but by exploiting the directive to create new business models aimed at creating new and deeper relationships with customers and at generating new revenue streams. Some banks may become account aggregators and/or cross-institutional payment providers themselves. Others may choose to become back-office manufacturers of banking products leaving the customer relationship to others.
Beyond PSD2, open banking could lead to the rise of platform models for banking services where banks act as market intermediaries connecting customers, manufacturers and distributors. In all cases, open banking and PSD2 will place new demands on the underlying technology architectures of incumbent banks such as the need for real-time 24×7 support for open Application Programming Interfaces (APIs) and messages, performance and scalability to deal with the higher and less predictable query and transaction volumes expected, and enhanced security and authentication. Many European banks are not equipped for this change because of the limitations of their aging legacy systems. Interestingly, modern API-based architectures are beginning to appear in the industry to address these challenges, brought to market by both, agile new entrants and banks that have recently overhauled their IT landscapes.
The Temenos solution architecture enables our clients to not only be easily compliant with the directive but also to provide the necessary support for any of the new business models that our clients might choose to embrace.
Where Europe and PSD2 lead, we expect much of the rest of the world to follow and have therefore designed our solution from a global perspective.
Download the white paper today to find out more:
ROI of Digital <br>Banking
Forward-thinking and the
Right Technology Can Drive Success
Over the next 10 years, a new banking business model will emerge: the banking platform.
In this context, a platform is: “A plug-and-play business model that allows multiple participants (producers and consumers) to connect to it, interact with each other, and create and exchange value.” Successful platforms attract both producers and consumers, match producers with consumers, and provide seamless integration among participants.
Download this free white paper, written by Ron Shevlin, of Cornerstone and Gonzo Banker, to learn more.
Download the white paper today to find out more:
ROI of Digital <br>Banking
Forward-thinking and the
Right Technology Can Drive Success
Since the original directive was passed, there have been a series of rapid technological and business advances that have brought new challenges to the use and protection of personal data. As a result, there was a desire to produce an updated set of regulations to reflect the new technological and business landscape.
GDPR will require banks to know who in their supply chain receives personal data, where and how it is processed and who has access to the data. This will be an onerous task and banks will need to partner with their technology providers to provide solutions.
In addition, the Lisbon Treaty created a new legal basis for a modernized and comprehensive approach to data protection, including the free movement of data within the EU.
Furthermore, the GDPR was designed to resolve three issues that have become apparent with the implementation of the original legislation:
- There has been an inconsistent approach to the application of data protection across the European Union which has created barriers for business and public authorities due to legal uncertainty and inconsistent enforcement.
- Difficulties for individuals to stay in control of their personal data.
- Gaps and inconsistencies in the protection of personal data in the field of police and judicial co-operation in criminal matters.
As part of the free movement of data within the EU, the GDPR gives data subjects (typically EU citizens) a series of enhanced rights with respect to their data. The cumulative effect of these rights means that companies need to understand what data they hold and why they hold it. This is important as fines for the most serious data protection breaches will be 4% of worldwide turnover, or €20 million (whichever is higher).
This regulation will require banks to know who in their supply chain receive personal data, where and how it is processed and who has access to the data. This will be an onerous task and banks will need to partner with their technology providers to provide solutions.
Data security will be vital, as any data breach will need to be reported to the regulatory authorities within 72 hours and to inform their customers of any data breach that affects them; resulting in both reputational as well as financial loss.
The key dates for the General Data Protection Regulation are the following:
- 27th April 2016 – The GDPR is adopted
- 25th May 2018 – GDPR comes into force
One key point to recognize is that to ensure a consistency of approach across the European Union, the GDPR is a regulation and not a directive. As it is not a directive, it does not need enabling legislation by national governments to come into effect.
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ROI of Digital <br>Banking
Forward-thinking and the
Right Technology Can Drive Success
Acquiring new account holders is widely known to increase revenue and support the growth of a diversified portfolio. While attracting more account holders is necessary, financial institutions can also benefit from expanding their relationships with the existing pool of one-time account holders, or those who only maintain one or two product relationships.
Like many financial institutions, you may be faced with the struggle of converting your account holders with only one or two relationships, to account holders that hold three products or more at your institution. Your organization may find cross-selling effectively to single-transaction account holders challenging at times, but addressing this problem through an approach like the scientific method can clearly establish the steps needed to define the basic method, guidelines, and system by which we originate, refine, extend and apply knowledge.