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October 31, 2012

And the award goes to.....

Posted by Kenneth Kundis (View Profile | View All Posts) at 9:34 AM

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The 2012 BAI Finacle Global Innovation Awards were recently held during the BAI Retail Delivery Conference, held in Washington, DC October 8-11. In their second year, the awards reached a new level of excitement, participation and industry buzz. The event was broken into two sessions. The first was an Awards ceremony, open to all conference attendees, where each finalist was recognized and the winner joined Debbie Bianucci, Executive Director of BAI and Sanat Rao, Global Head, VP Client Services for Finacle on stage to share some remarks about their winning innovation and to accept their award. Debbie and Sanat also engaged in a lively discussion on industry trends for the standing-room-only audience. Winners, finalists, key bank contacts, media, and analysts were then invited to a special VIP luncheon to celebrate the awards and network with one another.


The Awards ceremony was attended by more than 170 conference attendees, including bankers, media, analysts and solution providers, a 125% increase over last year's session. The Awards Luncheon, a new addition this year, was limited to 80 VIPs. In total, more than 200 media outlets posted the BAI Finacle Awards news release or provided more detailed coverage. Most notably, the Awards were included in the Wednesday, October 17th Bank Technology News print issue and show daily report onsite at the BAI conference. Additionally the news release was posted on Yahoo Finance, MSNBC, CNN Money, Bloomberg, CBS Marketwatch, the LA Times, and Chicago Tribune.

The following is the list of winners:

Product Innovation Award
OCBC Bank of Singapore for Frank, their holistic approach to serving Generation Y

Channel Innovation Award   
DenizBank of Poland for their fully functional bank on Facebook

Most Disruptive Innovation Award
Alior Bank of Turkey for their virtual bank called Alior Sync

Most Innovative Bank of the Year
First National Bank of South Africa (FNB)

October 29, 2012

Relationship Based Pricing, a win-win for the bank and its customer

Posted by Ganesh Parameswaran (View Profile | View All Posts) at 2:09 PM

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In the commoditized, competitive world of banking, where products and positioning jostle for space, pricing is a key differentiator, even a determinant of survival. 

Relationship Based Pricing (RBP), as the name suggests, is a concept in which the price a customer pays is determined by his relationship with the bank. The pricing is based on the customer's portfolio of products and services. This is contrary to the conventional approach of charging a fixed pricing for each service rendered.

Retail banks have to not only fulfil customers' product needs - for a savings account, credit card, loan, demand draft, and so on - but also meet their price expectations. Until now, they've achieved this by bundling products, applying different pricing strategies for different customer segments and services, or offering discounts to their best customers. One example is the Flexi Fixed Deposit which pays a higher interest on savings accounts.

Technological advances have led to the creation of RBP solutions, which help banks integrate with their core banking platforms to serve customers better. Such solutions help banks identify customers' usage pattern through data mining or predictive analysis, and thereby suggest the optimal pricing strategy for each customer segment.

What's in it for the bank? As is the case in any business, in banking too the cost of acquiring a new customer is far higher than retaining an existing one. Effective bundling can result in cross sales, higher revenue and new customers.
What's in it for the customer? Bundled products with extra benefits, a total cost of acquisition that is lower than the sum of the cost of individual products, the need to only pay for services used and faster turnaround time. 

What could go wrong? Pricing is a sensitive issue. If the bundling strategy is not well conceived, it could impact customer sentiment negatively, and in the worst case, drive away customers. The presence of legacy systems could prevent banks from realizing the full value of their pricing initiatives.

October 25, 2012

Are you being served?

Posted by Sathish Krishnan (View Profile | View All Posts) at 11:54 AM

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Are banking customers happier using self-service than being served? Well, according to a study of nearly 27,000 customers of a U.S. retail bank, the answer to that is...an anticlimax. Apparently, users of self-service channels are neither no more nor no less satisfied with service than their branch banking brethren. That being said, self-service customers are less likely to change banks, if the move comes at a high switching cost. That's a double-edged sword, if there ever was one!

So, self-service channels aren't quite the driver of satisfaction they're made out to be; au contraire, evidence says that they are hygiene.  Check out these facts:

  • In a survey of U.S. customers by NCR Corp., 2 out of 3 said they wanted the self-service option while shopping. 
  • A survey of 1,200 customers in Germany, Austria and Switzerland identified the use of direct and self-service channels as the behavioral change with the greatest impact on the immediate future of banking.
  • Research shows that great service on self-service channels doesn't necessarily bring customers back, but poor service definitely drives them away.
What does this imply for the banking industry? 

In my view, banks have no option but to go with the flow, or shall I say, tidal wave of self-service. This means upgrading existing self-service channels with the latest that technology has to offer - ATMs with more options; touch screen devices in kiosks and branches; remote video tellers; full service Internet banking; and mobile apps to accomplish most banking and financial tasks, from account opening to check deposit to digital wallet or tap and go payments. At the same time, they should not ignore the importance of assisted banking, which is still the go to option for customers looking to make an important decision, and one of the biggest drivers of customer satisfaction.

October 24, 2012

Want More from Big Data? Get Real!

Posted by M.A. Kishen Kumar (View Profile | View All Posts) at 1:45 PM

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I know it sounds ludicrous, but there are banks which indeed process several thousand transactions per second! Blink. The counter notched up another 5,000 transactions. Oh wait, that's an additional 20,000 in the time you took to read this sentence.

Welcome to the reality of Big Data, which is growing at a scale that is almost unreal. Being part of a highly information intensive business, banking institutions are among Big Data's biggest stakeholders. So the fact that most banks process the bulk of their Big Data offline, outside of real time, by which time another million events have gone by, is most perplexing.



Sure, there are "good" reasons for this, including systemic inadequacy and the seeming impossibility of mopping up data as it occurs, from a myriad of channels. But they don't matter. What does matter is that the lack of online real time intelligence is denying banks several advantages - agility to respond faster to changes in customer behavior; deeper insights into operational, customer and counterparty risks; the ability to test and fine-tune marketing campaigns; optimized mapping of customer type and communication channel; proactive fraud management; and higher operating efficiency. 

A few banks have seized the initiative by deploying high-performance analytics solutions, which act in real time on their Big Data. There's a Minneapolis-based bank, which uses analytics extensively to identify changes in customer behavior, and leverages that insight to sell more or prevent attrition. First Tennessee Bank uses customer analytics to test assumptions and build product propensity models. It also uses predictive analysis to forecast revenue and Return on Investment on marketing campaigns before putting them out to market. A retail bank in South Africa uses customer analytics to improve debt management and collection. And another U.S. institution has dramatically reduced fraud at its branches with the help of facial recognition technology and video/ customer data analytics. Way to go!

October 23, 2012

The Mobile to Bank the Unbanked World

Posted by Rakesh Aggarwal (View Profile | View All Posts) at 7:47 AM

Today, mobile banking is the toast of the banking world. 

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Why? Because it is more than just a channel, an interface, another window to customers. Indeed mobile banking has the potential to change the future of banking itself. And the lives of those excluded from the mainstream of branch banking. 
Consider a market like India, where 40% of the population is unbanked, but 70% will have access to a mobile phone by 2016, as per Gartner. The mobile has emerged as a viable tool of financial inclusion. What it needs is support, in the form of government policymaking and product innovation, to realize its potential.

For instance, a way to link mobile subscriptions to KYC requirements. Or innovative products and services, which can be accessed even by those who don't have smartphones or 3G connections. 

A banking transformation project from Colombia serves as a good model. There, banks use special POS machines to reach the unbanked population, even in the remotest areas. These POS machines, which are installed inside small stores across the country, are linked to the banks' core banking systems. They are used widely by store customers to access accounts, make deposits and withdrawals, pay bills, or complete account to account transfers, etc. 

Can we borrow the concept to create conveniently located banking outlets, not as POS terminals, but as mobile banking applications, a "bank in a phone", if you will, at every merchant establishment, however small? 

Here's another idea - mobile banking that's not only for banks. In countries like Kenya, mobile network operators have demonstrated that they are more than capable of providing financial services such as remittances and bill payments, to a massive customer base. Non-banking entities, such as consumer product companies (with their extensive distribution networks) or local businesses (which are rooted within the community) can also participate in mobile banking, in partnership with telecom operators and banks.

Indeed, the success of companies like PayPal has proved that payment services need to fall within the domain of banks only. Non-bank entities like PayPal add to the competitiveness and efficiency of the financial system. More such mechanisms are needed, especially in unbanked areas.

And what about mobile banking that's more interactive and easier to use by customers who aren't very tech savvy? Countries like the U.S. have interactive ATMs; developments such as Siri hold out the promise of a similar journey for mobile banking.

Last but not least, is the mobile wallet. The wallet has every chance of revolutionizing banking for the masses, who have neither bank accounts nor deposit lockers nor credit cards, but do have a basic mobile phone.

Let's drink to that.

October 16, 2012

Personalized online banking experience: Does it get better than this?

Posted by Sudha Annie Saigal (View Profile | View All Posts) at 6:16 AM


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 It is the age of 'personalized customer experiences'.  Businesses all over the world are trying hard to custom-create customer experience, and banks are no different.

Yes, there is immense effort put into making your banking experience 'personalized'. Banks want to give you that 'wow' experience every time you login to your online account. But what is the extent of personalization? Would you like your banking page to reflect personal preferences and aspects of your life? Well, that day might not be too far away. Experiments with perceptive media are already a hot trend in other fields. How it works is, perceptive media adapts itself based on available information of the user. I recently read about BBC's efforts to bring perceptive media to television sets. What it could mean is, when you see a photo frame in a scene on TV, it just might be your picture! Or the background music you hear on a scene might change to suit your tastes!

Now imagine your banking portal providing you that kind of an experience.  Say,

  • The advertisement for a home loan on the bank's page shows a picture of your family
  • You take a holiday to the Caribbean and your banking page displays a beach theme
  • The page 'remembers' whatever you have accessed and uses it to tailor the display. Remember how tiresome it is to see the same pop-ups or messages again and again? Well, what if the page could remember that you have seen a pop-up in the past and decides not to show the same pop-up again but shows you an entirely new one.
  •  How about if the portal knows your level of knowledge about a product and talks to you intelligently? So that if you have taken a home loan previously, it doesn't bother telling you basic things about another home loan, but instead tells you how it is different from what you currently have.
  • The portal continuously 'learns' your preferences over time and changes the widgets accordingly, so that you are logging into a page that is slowly evolving from just a banking page to a one stop shop for all your preferred widgets and apps.

And these changes may not even be sudden - the portal would bring in subtle changes according to all the information available out there about you. Would that make you feel happy that your bank knows you well or would you feel like it is unnecessary? Well, like it or not, things are likely to get more and more interesting on your banking portal.

October 10, 2012

Re-engineering? But isn't that so yesterday?

Posted by Balwant C Surti (View Profile | View All Posts) at 8:37 AM

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If you believe that "change is the only constant" then you will not find it difficult to accept that "re-engineering is the response to change that keeps you going".

It is assumed, may I add very wrongly, that re-engineering business processes is a one-time exercise. If we did live in a static world, then yes, we could arrive at the perfect process in a few iterations and stick with it forever. But our world is a very dynamic one. Today, technology is the one big change, which keeps the need for re-engineering constant! Here, I'll digress a bit to remind you of a biology lesson from school -species which do not adapt to their changing environment perish and disappear forever. It is no different in the business world. Corporations, which fail to keep up with change, are doomed to extinction.

Re-engineering is a major change. It is often a reactive response to other changes, such as a shift in customer demand, competitive challenge, government regulation etc. Or, it may be a proactive move to, distance oneself from competitors who are catching up, re-invent a corporation in a dying market, or build an altogether new one. Proactive or reactive, any re-engineering will not give benefits and competitive advantage forever; because competitors will respond, customers can change, and government may suddenly decide to impose tough regulations.

That being said, the answer is not to keep re-engineering without pause. After every re-engineering exercise, process optimization by way of continuous and incremental refinement of processes, will often extend its lifetime. But there will come a time when the benefits of process optimization will be outweighed by its cost. That's the time to re-engineer afresh.

Re-engineering is not new. It was the silver bullet of the 1990s, which like other silver bullets has lost its sheen with the passage of time. But has it also lost its effectiveness and relevance? Not one bit! Today more than ever, we see a need for corporations to adjust themselves to the new normal environment. Re-engineering is the answer to many of the challenges that come with this adjustment!

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