This post aims to join the dots and provoke some initial thoughts on the topic of transaction banking. Corporate, institutional and investment clients are driven by a number of factors that create a compelling case for self-service.
These factors include:
- Digitisation of the financial supply chain: Corporates consume banking services as part of their integrated processes, instead of as separate data integration silos.
- Standardisation of business processes and technology: Each bank tries to differentiate itself from a product and services perspective, thus creating standardisation ‘loose ends’ for the corporate to deal with. Self-service is perceived as an area of flexibility corporates can leverage to bridge that gap with their business processes.
- Increased ‘consumerisation’ culture: While straight-through processing (STP) and host-to-host (H2H) integration are cornerstones of a banking relationship, corporates still require key individuals in their organisations to have liquidity and transactional visibility, together with approval controls. The world of mobile banking in retail is setting high expectations with these individuals.
- Downwards segmentation of corporate banking: Upper mid-market companies are increasingly adopting H2H channels, as opposed to business online banking. Many wholesale banks are seeing growing numbers of mid-market companies adopting corporate channels, leaving behind the realm of online business banking.
How could these compelling drivers manifest themselves and what could ‘self-service’ look like for each case?
- Digitisation of business on-boarding: Collecting business information, structured and unstructured, is usually the first hurdle on both sides. ‘Know Your Customer’ (KYC) data – such as signatories’ passport information, reference information, and contractual artifacts – are gathered and maintained over time through a manual process. A content management repository is only half of the solution; the biggest opportunity for client self-service is to enable customers to share business and personal information in a nimble, automated, scalable, and user-friendly manner.
- Technical on-boarding automation: The collection of connectivity, application programming interfaces (APIs), digital certificates and other IT reference data is something done manually nowadays, with a bank’s client implementations team having to both educate and collect information with spreadsheets and email. Self-service is about on-boarding workflow portals, which validate the structure and quality of the information share by the customer, automating a huge part of the mundane on-boarding tasks. When one adds a provisioning facility that leverages that data to prepare the channel and front-office technology, self-service provides the banks with exponential scale, ensuring the on-boarding teams are able to focus on high-value activities.
- Readiness and compliance testing: Historically, banks maintain expensive and complex ‘staging environments’, also known as pre-production Client Acceptance Testing (CAT) setups. This effectively duplicates their entire banking architecture and staffing to flush out any issues with the client’s data and processes during on-boarding. Replace all of this with a smart, partly unattended self-test tool, with channels and front office rules replicating the production environments, and you get a digital self-service experience that can achieve tremendous business outcomes for both clients and banks.
- Unattended relationship housekeeping: Over time, people, processes, and technologies change on both sides. Client information becomes outdated; people change roles and contact details; digital certificates may expire or become revoked; the client may lose track of the bank’s decommissioning notice for their file transfer protocol (FTP) backup connection; and so forth – the list is endless. Self-service comes with a number of artifacts, such as collaborative workspaces and community management tools. It may start with simple things such as regularly prompting clients to validate or repopulate their contact details, or to revisit their reference documents and important correspondence.
Is everything and anything good for a ‘self-serve’ model?
- Self-provisioning: Enabling clients to manage and change their integration setup sounds great on paper, but it could cause significant disruption if left unsupervised. To employ an analogy: The Engine Order Telegraph (also known as ‘chadburn’) was a communications device used on ships. The pilot or captain would move a lever from ‘stop’ to ‘full ahead’, which would in turn move a needle on a dial in the engine room. This way, the captain never actuated the engine components (what we would call ‘provisioning’ in terms of banking technology), but instead provided a prompt to the engine room’s crew to act upon. The ‘self-serve’ client tools should be largely based on a web or mobile version of this device, together with ‘engine room SLAs’ at the bank.
- Exposed data normalisation tools: While readiness and compliance ‘self-tests’ are great value-adds for both clients and banks, some terrible ideas have also emerged that would allow clients to create chaos during an on-boarding. For example, clients should never be allowed to develop their mapping algorithms on their own on an application exposed by the bank. An equally bad mistake would be to grant them visibility into middle-office systems. Last but not least, clients should not be given control over amending their submissions after the bank has received it in the payment processing chain (fix/repair functionality in middle-office exposed to clients).
So, what stands in the bank’s way to achieve self-service?
In two words: digital transformation. Self-service has to be part of a consistent and coordinated strategy, executed in conjunction with other areas of transformation. For instance, it takes a consolidated and smart channel to build self-service for ‘any product over any channel’, a degree of customer-centricity awareness, as well as further IT automation.
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