Moving to digital banking – with API first

Digital business presents real challenges and opportunities for financial services organisations, but where to start? The obvious place is the mobile channel with an omnichannel approach and breaking traditional channel silos.

However, focusing on the 'access to services' does not solve the challenge of creating innovative services: pushing traditional services, even with great omnichannel access, is not enough! To be a true digital leader, it’s all about bringing it all together and leading with innovation.

Let’s look at what this means in practice.

How about a personalised loan on the fly?

Long standing customer Anna is visiting an area with a view to buying a house -- she’s looking to make her first property purchase. As she wanders down a much loved road and finds a house for sale, she asks herself, ‘Is that dream possible? What would that cost me?’ Anna doesn’t want to visit the web and identify which product might work for her or make an appointment in a faraway branch, she wants to know now.

If her trusted bank gets the context information such as the local real estate cost at that moment, they can cross them with all the information about income and spending habits Anna has and they can make a fit-for-purpose personalised offer before she reaches the end of the road.

With this 'simple' case, what are we learning?

Nurture all channels

So the first imperative is an omnichannel strategy. Today customer interactions must happen consistently across a wide variety of channels, each with their own distinctive nuances – these include: mobile, website, call centres, branches, and ATMs. Customer interactions can start anywhere. Today, many start on a mobile app, such as in the above case, but customers may move to the web site or visit a branch to continue or complete the process. To ensure that customer interactions are effective, generating positive outcomes, all channels must offer integrated and consistent service levels. Channels need to be seamless - an interaction through one channel needs to be visible and accessible in all others. With an API strategy, banks can create the points of openness, ensuring consistency across channels, whilst also fulfilling security and compliance requirements.

But omnichannel is just that – a channel. It’s not a service itself, it’s a beginning.

Use what you have

For traditional bank and financial services players, the foundation of a digital business strategy must be to leverage existing services. Success will involve securely exposing a multitude of back office and core services to new applications to deliver added value and an improved experience for the end customer. From the technical perspective, APIs are the best way to do this whilst also securing access to core services and information.

Always walk in your customers’ shoes

Today, when you walk into a bank or visit the website, you’re greeted with a portfolio of different services: account management, loans, shareholdings, wealth management, the list goes on. Actually, the focus is on products, not on customer needs -- banks still push their offer. But digital business is provoking an important shift: banks are driven to start helping customers with their financial journey – rather than peddling a list of products they may not want, need or understand. To operate in this new way, financial services players must understand the customer at each particular moment in their life. They must predict, or in the worst case, respond to, customer needs and propose tailored services at the right time; through the right channel. The good news is banks have all this information and can utilise APIs to interact with applications to make accurate customer need predictions a reality.

Innovation, innovation, innovation

Traditional players will achieve innovation by proactively engaging with a wide range of external ecosystems. There’s a plethora of app based services, partnerships to capitalise on, and more outside their internal operations. Working in an open and creative way, with services you may not initially expect to be relevant, actually leads to the development of entirely new services that bring added value to the end customer. Combining data, information, and content from various elementary services with their own in real time creates something totally new -- a mashup. In this new landscape traditional services need to be available, but not pushed in the same old way. API management play a big part in digital because they enable the innovation layer; the integration between internal bank information and the broader customer ecosystem.

Bring it all together: the mashup

In the above example, through embracing an API strategy and management to create the right interactions, Anna’s bank can answer her needs before she reaches the end of the road.

The bank interface requests authentication credentials as Anna signs in on her smartphone. Anna’s also prompted to enable location services on her device. Now her bank can leverage all the knowledge they need. From their back office systems, links are established between loan services, risk and screening apps and external housing market data for that specific area. Within seconds Anna knows how much a mortgage would cost her per month and she knows it’s the best offer because her bank has considered all the variables. APIs have enabled the bank to integrate easily, smoothly and securely their traditional services with the wider ecosystem, in real time.

This is true innovation and it’s how banks must evolve; creating a totally new service with high value and relevance for Anna. Voilà, a mashup.

Take the lead

In digital business, traditional banks and financial services players could actually have an enviable head start. They must leverage the wealth of data, information, customer experience and knowledge they already have, adopt an omnichannel strategy and then engender digital openness and integration with the wide external ecosystem. This approach will create an environment and culture that delivers true innovation and digital leadership with a low cost to income ratio.

Bruno Cambounet, VP Banking and Financial Services at Axway

Image source: Shutterstock/Oleksiy Mark