FinTech

Finternet by Nandan Nilekani- Teknospire
FinTech, FinTech Content, Fintech Regulation, FinTech Trends

Finternet: Revolutionizing the Future of Finance

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In the rapidly evolving world of financial technology, a new concept is emerging that promises to reshape how we interact with money and assets.  Finternet – a term coined by Nandan Nilekani, the visionary co-founder and chairman of Infosys along with Agustín Carstens. But what exactly is Finternet, and why should it matter to you? Let’s dive in. What is Finternet? Finternet represents the next leap in financial systems, blending the best of regulated finance with revolutionary tokenization technology. It’s not just another buzzword, it’s a paradigm shift that’s already underway. The Three U’s of FinternetNandan Nilekani describes Finternet using three key characteristics: The Power of Tokenization At the core of Finternet is the concept of tokenization. Imagine being able to represent any asset – be it land, bonds, artwork, or traditional investments – as digital tokens. This opens up a world of possibilities for how we manage and transfer value. Why Finternet Matters? The Road Ahead While Finternet might sound like a concept from a distant future, Nilekani asserts that it’s already taking shape. Labs worldwide are working on bringing this vision to life, implementing it step by step. Conclusion As we stand on the brink of this financial revolution, it’s clear that Finternet has the potential to transform how we think about and interact with our assets. At Teknospire, we’re excited about the possibilities this brings for financial inclusion and empowerment. Stay tuned as we continue to explore and innovate in this exciting new frontier of finance! Are you ready for the Finternet revolution? Share your thoughts and let’s discuss the future of finance in the comments below!

Why-should-banks-go-digital
Data Banking, Digital Banking, FinTech, Mobile Banking, Neo Banking

Why Should Banks Go Digital?

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First, it was customers pushing banks to adapt to the digital wave, and now non-bank enterprises growing as competitors are pushing traditional banks to become digital enterprises. And why not – when data shows retail banks that digitize could achieve a 20% increase in revenues and a decline in expenditures by 30%. On the other hand, for wholesale-banking digitization plans can reduce the cost-to-income ratios by 12%. The data seems intriguing? Isn’t it? Let’s take a closer look at some of the other reasons of Why should a bank go digital? Banking Has Evolved The customer of the modern era is not satisfied with a withdrawal and deposit services; he is looking for customized banking like daily interest on saving bank account, 5-min loan approval, or trip-based insurance. All these features cannot be provided via a physical-only branch. And so to meet customer’s expectation, you need to go digital. Banks aka business Well, a hard known fact that irrespective of you calling yourself as Bank, NBFC or anything, you are running a business and business means revenue. Revenue could be generated either by getting more clients or board or cutting the operational cost. And adapting to a digital strategy provides you an advantage of doing both. With digital branch you don’t need to setup a physical branch, recruit new employees, buy office furniture, etc. but still can board a new client on customer’s devices [more like BYOD(Bring your Device)] like a smartphone or desktop. In fact, globally, many banks are shutting down their bank branches with digital channel initiative. Banking needs to speed up to 5G The traditional banking is not at all fast, flexible, and scalable. They need to integrate with 5G speed, or they die. In fact, one of survey 80% of the technology effort in the bank’s digital program was spent on integration, and this was because the current systems are not able to cope up with high-speed digital applications. So better to adapt now. Banking is a fundamental right I often repeat this, but banking is not legally but humanely a fundamental right to every person living on this earth. I mean you think about a person in some other country, but he has a bank account, wouldn’t things be so easy for him/her to shop, travel, pay bills, get a loan, invest and exposure to hundred such services. Setting up a branch, getting each person on board physically is a challenge only banks via digital means could make it happen. Banking is Fun Think about it, a guy every 1st day of the month with his passbook goes to the bank, waits patiently, meets the cashier, withdraws cash and returns. You need to provide some options to your customer. Isn’t it? I wouldn’t be surprised if riding on a national highway in India or any other developing nation I stop by at a tea point and the owner asks me to pay via a card or digital wallet. Let your customer connect you via a video call? Or how about offering your customer a customized credit card. It’s all possible if you decide to sail on digital wave. After reading our post, if you feel you have made up your mind and looking for a technology provider, we are just a call away. Teknospire, a technology provider, is helping banks, NBFC’s, and other financial institutions across the globe to ride the digital transformation wave smoothly. Our Digital Banking, Mobile Banking, Data Analytics, Reconciliation, and Neo Banking are just a call away.

Sahamati
Data Banking, Digital Banking, FinTech, Mobile Banking, Neo Banking

Sahamati and Data say – I Do! A match made on earth for fintech, banks, and customers

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Data the new Oil has been under scrutiny these days. When Microsoft bought LinkedIn or when Facebook acquired Whatsapp, the speculation was that they were eyeing the data these acquired company have gained in recent years. Then recently I saw a video floating on WhatsApp [authentic or not no clue], but it claimed that every time you get a copy of your identity proof from Xerox shop they keep a copy of it that is sold in the market at some x rate. Even the boarding pass that we simply dump in the dustbin can be scanned, and the credit/debit card information could be extracted. And lastly, if you have seen “The Great Hack” documentary trending these days on Netflix, you would know the story of how Data helped in targeting individuals during US elections. Scary isn’t? But with all this floating around, we still provide consent to third-party apps to read ourdata, would regulation help? Would a legal entity manage our data? How could customers trust any service provider withtheir data? To all of this Nandan Nilekani, came with a solution named as Sahamati – the financial account aggregator. Our post of today would help you understand Sahamati in detail and how it is a helping hand to customers,banks, and fintech. What is Sahamati? | Define Sahamati? | Financial Account Aggregator in India Image src – sahamati.org.in As mentioned on their website – Sahamati is a Collective of Account Aggregator[AA] ecosystem being set up as anon-Government, private limited company (With the new Companies Act of India, not for profit companies are governed under Section 8). It’s an initiative to collate and share data digitally and legally with no strings attached or no conditions apply, i.e. assuring the safety, security, and privacy of the data for the user. Ideally, the AA[account aggregators a new class of NBFCs approved by RBI] would provide a digital platform for easy sharing and consumption of data from various entities with user consent. So what’s new in this? Aren’t we already providing consent to any third party apps/products? Yes, we are doing it, but users do not have a control on How is privacy handled? Is data reaching out to third parties or spammers? Is data only seen by whom it is intended to? What’s the duration for which data is accessible once the user provides the consent? What about the data sharing transactions? Are they traceable and auditable in the future? All of these questions would now be answered via Sahamati, as the concept of data sharing and collating would be human-centric rather than organization-centric and is backed up by RBI and Financial Services Regulators (FSRs). To adopt a human-centric approach, data management is targeted via a new consent framework called as DEPA [ Data Empowerment and Protection Architecture ]. DEPA open the doors to trusted sharing of data by giving them control of their data, thus enabling them to become economically rich. DEPA opens up whole new models for privacy protection, and auditing data flow while keeping the user in the center. For more details on DEPA, click here. So, Sahamati would store my data? And could be prone to hacks? The AA are “Data-blinds” and while processing a request made by Financial Information User[FIU]to Financial Information Provider [FIP] with user’s consents, the data would be encrypted and can only be processed by the FIU for whom the data is intended. As AA would not be storing any data, probability of misuse or leakage may not be seen. Again, as the whole model is designed keeping the user in mind, the timing, access rights, and feature to audit the data transactions would also be available. How would Sahamati help Customers? With Account aggregators in place, users could Open a bank account in the paperless mode as relevant KYC can be processed digitally reducing turnaround time. Access multiple third-party apps for investment, Spending, Mutual Funds, Taxor GST and make an informed decision without the fear of data leakage/theft. Control on “what to share” with whom and in case of violations could take action against them. Empower themselves with AA expansion to other domain like healthcare and telecom that open access to better financial, healthcare, and other socio-economically essential services in real-time while preserving the safety, security, and privacy of the user. How would Sahamati help Fintech? Regulation of any form brings “discipline” to a process. The financial industry that is now moving on digital channels was in dire need of this initiative. It would not only streamline banking processes but also would open ways for banks to access quality and authentic data. Banks and fintech can design and innovate more data-rich products to help consumers in wealth management. As Teknospire and Hylo Founder, Vishal Gupta says – AA (account aggregator) licensing is another step forward by RBI, building a highway for aggregated financial data access. Today the FinTech’s like us have to work with tens of different financial institutions to get limited access of user information, with massive spends on integrations and ensuring data security. With an initiative like Sahamati, and through the user consent driven model AAs will be great avenue to get secured access to the data while we focus on solving the use cases for consumers! With Sahamati, we are a step closer to data democracy.The new wave would not be about banks, fintech, or NBFC’; it’s about using the data effectively to provide an enriching banking experience to your customer. And we all should work towards it. If you are a Bank or Fintech firm and looking to explore more about Sahamati, they are conducting workshops, and you can enrol here

Neo Banking - Banking beyond physical walls
Digital Banking, FinTech, Neo Banking

Neo Banking – An exclusive Digital Bank

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Image Credits – cryptohead.io The post first appeared on linkedin. To get more such insights, please connect with me here. Could a bank without the physical walls exist? If you had asked me this, a few years back, I would have said – may be, but in 2019 I feel proud to be associated with many of these initiatives by Financial Institutions, across the developed and developing markets, who are extending  Banking beyond physical walls, trending with the name Neo Banking or Challenger Banking or Digital Banking. Welcome to the new age Banking – Neo Banking What is Neo Banking?| What is Neo Bank? Neo Banks is a type of bank that does not have any physical branch but offers all its banking services through digital/mobile channels like a smartphone or via web interface. As Wikipedia stats – The term neo banking was first coined in 2017 to describe fintech based financial services providers that were challenging traditional banks. So, Neo Banking is – Banking beyond physical walls Neo banks are the digital extension of traditional financial institutions via web / mobile interfaces in the hands of the users. Neo Banks / Challenger Banks identify their customer / target market very closely and solve their day to day needs / transactions with integrated banking and payments. Examples could be diaspora / immigrant banking or student banking or MSME/SMB banking. If you look at daily use cases of these customer segments they would need different kind of products and services from their banking partners. A student is looking for ease of receiving money, using it in/around college/university, loans etc, while an immigrant expects banking to delivery easy remittance, lighter KYC / on boarding etc. This is where Neo Banks deliver a great value to the end user as well as the financial institution. Banking Digitally Neo banks are 100% digital; that brings down the costs packed with great customer experience. At the same time given its all-digital, there is a lot better transactional data details with trails allowing the banks to think of more innovative products and services. Banking at your convenience Neo banks are all about customer choices, accessibility, and any time services.  Banking @reduced cost With a reduction in CAPEX, customers enjoy competitive pricing with more significant savings. Banking that is technology driven Neo Banks open doors to seamless integrations into open APIs provided by other platforms as well as offering APIs from their Neo Banking platforms for other institutions, making them a complete solution to all banking needs. Are Neo Banks Licensed?| Different Types of Neo Banks  Well, certainly yes. Any firm which wishes to provide Neo Banking could align their legalities in one of the following way – One with Banking License If your start-up willing to offer banking services, you can secure the banking license and start offering your services. Some of the examples could be Paytm in India ,Atom bank and Revolut Ltd in the United Kingdom and N26 in Europe. One in collaboration with a licensed bank If your start-up/firm wishes not to get into owning of a banking license, collaborate with an incumbent / regulated financial institution, and start offering banking services. A quick example would be Monese, a bank from UK who do not have a banking license but works with banks across Europe who hold customers’ money, and holds an e-money license, issued by the UK’s Financial Conduct Authority. As Monese stats – keeping an e-money license helps them in showcasing them as bank’s partners rather than their competitors. Another flavour that exists in this collaboration is where a bank has a subsidiary or a joint venture, and the subsidiary gets an opportunity to launch neo banking services while existing banks being the central owner. An example of this would be Simple a startup from Portland, Oregon, which was acquired by BBVA and now Simple is offering 100% digital banking services across the US. A Traditional Bank expanding its services under Neo Banking umbrella Lastly, the traditional banks to keep up with the pace of modern technology and innovation launch their services as a new product/offering – Neo Banking. Kotak Mahindra Bank in India launched their neo banking services as 811 [ a digital bank], even SBI has its neo banking offerings pinned under YONO. And in Australia ING Bank has a digital bank named as ING. What are the Advantages of Neo Banks?  While experts may argue that in-branch services offer reliability and a “human touch,” there are certain benefits neo banking or digital banking offers like – Real-time Tracking from anywhere anytime Gone are the days when a credit or debit to reflect into your account would take days, with instant fund transfer you can track your financial portfolio and bank accounts in real time from anywhere at any time. Reduced Costs Agree to the fact that with no expense on a physical branch, the CAPEX can be significantly reduced that means competitive prices and better savings for the customers. Integration with innovative technology for a better experience With a bank in your hand, you can integrate with fascinating apps like Artificial intelligence or a Virtual reality to make spending and saving a fun experience.  Banking may have transformed from Cheques to Demand drafts to Mobile banking to invisible banking to connected banking to Digital banking, but the underlying statement remains intact and, i.e., – Customer need to be valued. And Neo Banking is just the right offer to its tech-savvy customer who attracts savings in time and money.  If you a Bank or NBFC looking to use technology and innovation in expanding the business and enable Neo Banking or Challenger Banking, we are here for you. Teknospire a fintech firm offers Bank-in-a-box solution with omnichannel, agent/digital branches capability. The 360-degree banking solution reduces the CAPEX for a bank to set up a physical branch, but yet opens doors to expand their business. Our Neo Banking, Mobile Banking, and Agent Banking solution could help regional banks and cooperative banks to push Banking beyond physical walls. For details, please contact us here 

Digital Banking, Finance, Financial Inclusion, FinTech, Internet Banking, Mobile Banking, Online Banking, Open Banking, Rural Banking

DIFFERENT WAYS TO BANKING – DIGITAL, ONLINE, INTERNET, MOBILE BANKING, NEO, E-BANKING

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Editor’s Note : This post was originally published in [January, 2019] and has been updated for freshness, accuracy and comprehensiveness. What is Online Banking Accessing Banking services via internet Also Called Internet Banking or Web Banking Conducting financial and non-financial transactions via web interface or a smartphone Ability to access all financial information of your bank on your computer or mobile What is Digital Banking Banking services delivered over internet Digitization of traditional banking activities and programs In technical terms, full digital transformation of front-end, back-end , data collection and everything What is Internet Banking Facility to a customer to transact/access financial data via a net banking account Internet banking is same as Online banking Manage your money online via internet. What is Mobile Banking Accessing banking services via Mobile phone Using of online banking from smartphone or cellphone What is Neo Banking Digital Only Digital Offers on the go Banking beyond walls “Financial Institutions must be able to deliver and easy to navigate, a seamless digital platform that goes beyond a miniaturized online banking platform.” -Jim Marous, Publisher –  Digital Banking Report How many of you have actually visited a bank in recent times? Do you remember the last time you visited a bank to transact money? Not sure, right? The reason for this can be understood better if you acknowledge the fact that you live in an era of digital banking. Your buying behavior and modes of payment have changed drastically over the last decade. Cheque and cash are old schools now, and it is more about online banking, mobile banking, and Internet banking. This cashless economy has not only made things easier for you but has also made it all instant and quick. You no longer have to carry wads of cash or wait for banking hours to receive and transact money.  While you do have quite an options when it comes to virtual banking, here, we would focus majorly on digital banking, mobile banking, open banking, and online banking. So here is the primer on different ways to bank. What is ONLINE BANKING | Define Online Banking You are using online banking service every time you log in to your online bank account. In other words, transactions conducted electronically using the internet as a gateway are called online banking.  “Online banking refers to banking services where depositors can manage more aspects of their accounts over the Internet, rather than visiting a branch or using the telephone. Online banking typically is comprised of a secure connection to banking information through the depositor’s home computer or another device.” – Techopedia. So Online Banking is – Accessing Banking services via internet Also Called Internet Banking or Web Banking Conducting financial and non-financial transactions via web interface or a smartphone Ability to access all financial information of your bank on your computer or mobile What are the Pros of Online Banking | Advantages of Online Banking HASSLE FREE BANKINGAlmost every financial institution nowadays gives this facility to its customer to reduce the hassle of visiting their physical branch. EASY AND CONVENIENT FEATURESSome banks even allow you to deposit cheque by simply taking a picture of it. BANKING ANYWHERENo more tedious process of banking with the long queue with restricted working hours and unpredictable weather conditions with equally unpredictable mood swings in hot, sweaty and humid conditions. BANKING ANYTIMEWith the advent of online banking, a person can virtually monitor and transact money 24/7 without having to wait for the banking hours. REAL-TIME ALERTS/NOTIFICATIONSAlso, the alert messages and emails allow you tomonitor your account anytime and detect any fraudulence well in advance. What are the Cons of Online Banking| Disadvantages of Online Banking COMPUTER/MOBILE CANNOT DISPENSE/DEPOSIT MONEYThe biggest drawback of this mode of banking is that it can’t be used to deposit and withdraw money. NO OFFLINE MODEAlso, your online banking experience is dependent on your internet connectivity. What is DIGITAL BANKING? | Define Digital Banking While there is a tendency among people to confuse this term with online banking, digital banking is definitely not the same as the former. While online banking literally limits you to the services provided by your banks like NEFT transfers, automatic payment reminders, and the likes, digital banking goes beyond this. Online banking focuses on digitizing the “core” aspects of banking, but digital banking encompasses digitizing every program and activity undertaken by financial institutions and their customers. Digital Banking is – Banking services delivered over internet Digitization of traditional banking activities and programs In technical terms, full digital transformation of front-end, back-end , data collection and everything What are the Pros of Digital Banking? | Advantages of Digital Banking ACCESS HIGH-END FEATURES VIA INTEGRATION WITH THIRD PARTY API’SWhen you talk about digital transactions, you think of mobility, feature-laden transactions, predictive and profile-oriented banking with functions like booking tickets online and purchasing a product/service online. SHOP FROM OFFICE, HOME, BUS OR ANYWHEREIt is also about using e-commerce businesses for doing your day-to-day transactions and your regular online banking without any hassle on-the-go. AVAIL INSTANT DISCOUNTS AND CASHBACKSDigital banking also means attractive cash-backs, discounts, and vouchers while transacting digitally. What are the Cons of Digital Banking? | Disadvantages of Digital Banking While the advantages outweigh the disadvantages, there are a few drawbacks involved in digital banking as well. RELUCTANCE TO CHANGEYou may not be very comfortable making large payments digitally. EXCESS SPENDING’SAlso, you may tend to get lured into unnecessary online shopping just to use the cash back and vouchers that you get whiletransacting digitally.  But who considers shopping a drawback ever, right? What is INTERNET BANKING? Define Internet Banking | What is e-banking? You may say that online banking and internet banking are the same.  Yes, agreed!  However, there is a new facet of online banking that goes over and beyond the understanding and scope of online banking.  Open Banking!  Ever wonder what that means to you?  Through this concept, people can share their transaction data with third parties to boost competition in the financial market. Sounds interesting, right? So, Internet Banking or e-banking is – Facility to a customer to transact/access financial data via a net banking account Internet banking is same as Online banking Manage

Digital Banking
Digital Banking, FinTech

What is Digital Banking and How Digital Banking Works?

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I wonder if “Right to go digital” should be included as the seventh fundamental right in India. What do you say? Be it a shop, a salon,or cobbler everyone is aspiring to register its digital presence. And why not when “money” can move digitally,even individuals, organizations,and most importantly banks need to sail via a digital ship. While newer trends suggest Neo Banking making a mark, we discuss a bit about the basics of Digital Banking – what and How. Let’s get started – Define Digital Banking Digital Banking is availing of banking services like balance inquiry, funds transfer,etc. via smart devices over the internet like smartphones, laptop, desktop,etc. The services could be expanded via Open API’s,and individuals could even manage their financial portfolio, check credit score, get a preapproved loan,etc. What is Digital Banking? Digital Banking is – AVAILING OF BANKING SERVICES VIA SMART DEVICES OVER THE INTERNETNow your customer need not queue up in front of the bank branch to deposit a cheque or discuss aboutloan facility. With Digital banking, you are offering all these services via phone or computers.  Even the facility of video call/voice call when integrated can help your customer in enjoying customer support at their convenience. OFFERING BANKING SERVICES ANYTIME ANYWHEREBanking needs expansion, as a need for money could arise anytime, it cannot be turned off when there is a bank holiday or at night. You might not want your customer visiting Paris to wait for funds transfer, he/she can do it from there. That’s the power of digital banking -anytime and anywhere banking. ENABLING DIY BANKING SERVICES FOR THE CUSTOMERAre your employees bored to stating the same procedure of opening a bank account to every probable customer that lands onto your branch? Automating and enabling DIY services helps is engaging your customer quickly and conveniently. MORE PERSONALIZED SERVICES AT CUSTOMER’S CONVENIENCETime is crucial for your customers, and so are the services, the digitally savvy customer looks for organizations that offer seamless digital services at their “time.” Lay down the offerings that attract thedigital nomads and propagate via digital channels when they wish. POWERING SERVICES WITH OPEN BANKING – OPEN API, OPEN DATAHarness the power of Open Banking, integrate, expand, and let your customer experience the power of banking. Open your API’s for other third parties to hook up with you and offer best in class banking experience ANY MEDIUM EXCEPT THE “PHYSICAL BRANCH.”Digital Banking is all except a physical branch, move beyond four walls, and explore the potential of the bank with virtual walls. ALL ABOUT INNOVATION AND AGILITYGet feedback, conduct surveys, and market research, understand your customer, adopt newer technologies and innovate to offer banking as an experience. SECURED BANKINGDigital Banking is absolutely secured if you and your bank keep their software updated, fix loopholes install security measures, and as a customer you own your password and OTP’s, never sharing with anyone or writing it down. How Digital Banking Works? The working of the digital bank is simple enough – Imagine a cloud [ yes the blue colour one], now on that cloud draw a bank with your account details and money, secured with a big lock. How do you access that? For that, you would be provided secured credentials from your bank to login via mobile banking or internet banking. As soon as you punch your valid credentials that big lock on bank opens up and what next? It also opens up a bouquet of banking services for you to avail. However, technically it’s bit complicated, but let’s make it simple – So you as a customer have requested “Digital Banking services” what happens – BANKS/SMB’S /PAYMENT BANK’S INITIATE’S A REQUEST OR CUSTOMER SIGNS UPA request is initiated to enable digital banking facility in the banking software via a mobile app or through the bank’s website THE REQUEST ONCE ACKNOWLEDGED IN THE BANKING SYSTEM PRODUCES VALID CREDENTIALSOnce the KYC [if needed] are validated the request is acknowledged and processed to provide successful user signup or valid credentials are sent to him via email/post/SMS. The credentials need to be memorized and never be shared with anyone ENJOY A BOUQUET OF BANKING SERVICESOnce signup or credentials are received, the user could avail banking services via a mobile app or through the bank’s website. If you are willing to craft “banking as an experience” for your customer, we would be glad to assist you with our banking solutions of Digital Banking, Mobile Banking, Data Analytics, Reconciliation and Neo Banking. Give us a shout; we are just a call away!

Digital Banking, FinTech, Online Banking

KPIs to measure ROI of a digital bank

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The post first appeared on FINTECH FUTURES. To get more such insights, please connect with me here. An Avaya survey in India a couple of years ago found that 51% of Indians use online banking whereas another report by the Office for National Statistics says 69% of UK population bank online. Digital banking that knocked on the customers doors in the 1990s with the advent of the internet has the potential of reducing cost, save the environment (with paperless mode), offer convenience and raise profitability for the banks. Has that happened? Are digital banks able to generate a positive return on investment (ROI) while keeping the customers engaged? Let’s dig in to find out. Key performance indicators (KPIs) to measure the success of a digital bank Once a bank has finalised a digital strategy, and the most suitable bidder amongst the solution providers is onboard, what are the KPIs that could help the bank to measure the ROI? Digital traction metrics Digital traction metrics is a way to audit your digital strategy and whether it is helping in attaining a positive ROI. It applies to any digital platform that offers digital services and products. For the banking industry, the metrics would indicate number of users (existing or new) who signed up for internet and/or mobile banking. What was the growth rate in a month and channels via which customer was acquired? How much time was spent on each transaction? How many transactions got dropped in between? What was the number of active users? What was the conversion rate and which channel helped majorly in converting? A quick reference of the key metrics below would be helpful: Cost to acquire a typical customer (CAC) The expenses put in by sales and marketing teams divided by the number of new customers added on to the repository would define CAC, and as part of this, you could also include infrastructure cost, production cost, wages etc to get a more accurate figure. Source: quicksprout Lifetime value of a typical customer (LTV) LTV, also known as customer lifetime value (CLV) or lifetime customer value (LCV) is a forecasting method to estimate the projected revenue from a customer over the lifetime of their relationship with your business. Knowing the number helps banks in determining how much one should invest in customer acquisition and retention. As a matter of fact, banks hold their customer for a longer period when compared to other verticals. So picking a simple example if a customer purchases: the worth of products/services from your bank over the lifetime of your relationship $1,000 the total cost of sales and service to the customer $600 LTV $400 ($1,000 – $600) Based on the data above, if banks are investing more than $400 on product purchase, sales and marketing it would generate a negative ROI for the bank. Other KPIs set by industry leaders While the above KPIs mention the metrics of any digital platform, experts from the industry, such as Deloitte and DBS Bank, for example, present different criteria. In its Digital Banking Benchmark Report, Deloitte evaluated ten retail banks in Luxembourg on eight dimensions representing 235 criteria. The milestone covers the daily banking services that a bank could/should offer on its web platform or mobile application. Source: Deloitte For DBS Bank, which wanted to transform a bank in India to scale with few branches, a solution of a mobile-only bank seems feasible, but how to execute and generate an ROI? DBS explains: “You have to balance it. And the way we balance it is through group scorecards, which really drive everything we do and clearly indicate to people the amount of time we expect them to spend on certain areas. The top part of the scorecard is all financial metrics, customer metrics, shareholder value-add, and revenue generation. The middle part is where the core of the digital transformation comes in, and we ascribe 20% of the value of the scorecard to this, which is then used to drive compensation for the company. Below that we have the strategic initiatives we need to get done, and that’s another 40%. So big transformations like automated lending into India or how to transform future-ready employees, go in that box.” Strategies to be adopted by banks to attain a positive ROI A digital banking product cannot only save cost for you but could make a place for new revenue models.   DIY Service With digital banking, research suggests that you can save up to $5 on a branch visit, $2.50 for a customer call to a call centre. With online banking, the customer is using their device and broadband connection. All you need is keep the website up and running.   Low-cost funds transfer Issuing a demand draft in India means an additional amount to be paid by the customer. If it is an inter-bank transfer customers not only need to pay extra charges, but spend a lot of time on conducting the transaction. With a digital banking solution the customer can make money transfers seamlessly at no additional cost. Digital banking also helps to make global transfers faster.   Environment friendly Lessen your paperwork by releasing e-statements, offers on email and electronic know your customer (e-KYC) submission. Support digital transformation, be environment-friendly and save on paper costs.   Support and maintenance Deploying chatbots or voice assistants as customer support can help banks in slashing the cost of employing full-time customer support. And now with the serverless mode, you can reduce the infrastructure cost by only paying when in use and not for idle time.   Customised products While booking an air ticket from my net banking, a pop-up appears to include travel insurance at just XYZ price. Or when you use your card at a fuel station, you get a message of a cashback or X% discount on next purchase. These personalised product offerings can help to keep the customer engaged and also drive revenues.Digital banking with the use of open application programming interfaces (API) could

Digital Banking in US
Digital Banking, Financial Inclusion, FinTech, FinTech Europe, Industry Observation, Open Banking

Digital Banking – Initiatives, Use Cases, Examples, Opportunities in the US

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The year 2012 was a bit frustrating for Olympic tourist in London as VISA was the only card to be accepted. Banks in the US who have offered Mastercard to their customer were under pressure to issue new VISA cards to engage their loyal customer and earn revenue from international payments. For a developed nation like the USA that excels in technology adoption issuing new card may not be a significant task and that reflects in their growth and economy with flexible products, services, underbanked population dropping to 6.5%[ in 2017]. Indeed, U.S. is far ahead in innovation in the banking sector when compared to other countries. Our post of today would talk about these initiatives, opportunities, and examples of Digital Banking in the U.S. Examples of Fintech-Bank Collaboration to enable Digital Banking in the US   Legence Bank integrating their CBS Legence Bank in Eldorado, Illinois was looking for a tool that guides their customer on solid banking practices. They needed a tool that could integrate all customers’ accounts at one place and help them analyze their spending decisions. Collaborating with CSI, a fintech offering banking solutions that got integrated with their legacy banking system helped in educating young customers about making smart budgeting plans.   Live Oak Bank integrating with Plaid Another interesting collaboration happened when Live Oak Bank in the US collaborated with Plaid to serve the small businesses and personal customers with security and speed. Live Oak Bank was looking for speedy on boarding process so that the customer could use the online banking platform within hours if possible and should be secured validating and following all legal processes. Plaid offered their secured solutions that helped Live Oak Bank in expanding their services to different verticals, and they also started offering personal banking platform to other regions. Implementations / Examples of Digital Banking in the US Banks need to draft a “Digital Strategy” to move and align with the digital wave. Each Banking services be it in Corporate Banking or Cards and Payments now has a Digital Solution available. What Banks need to work on is analyzing all aspects of Digitization and evolving truly as Digital Institution. Let’s take a closer look at some of the banks in the US who followed banking trends and emerged victorious in serving tech-savvy millennials.   American Express AmEx or American Express is a brand that doesn’t need an introduction in the US. Popularly known as “premium brand” it has been one of the banks that understand “How customer and relationship need to be nurtured while offering comfort and convenience.” An article covered by The Financial Brand dictates some of the “good things” that make AmEx a top choice in customers, sample these –   Onboarding Simple and QuickAmEx bid goodbye to long paper forms, quick and easy onboarding process helps in saving customer’s valuable time. In fact the application for an American Express card is so simple that it takes ~30 seconds. Digitization Rocks! Compatible With All DevicesIs your Banking form only compatible with Desktop? How about opening it on Tab? AmEx made sure that all the screen sizes and device compatibility is applicable for the application form to avoid any inconvenience to the customer Integration of Third Party PluginsAmEx always shows its value to its customers by displaying the comparison chart and dictating the actual value customer would derive. Does your banking software allow the customer to integrate with other third-party plugins to compare and make informed decisions? Using Data effectivelyAmEx uses data points not only to mitigate risks but also to detect fraud. Are you using your data effectively? Above features may not be “newer innovations” but are making customer life more straightforward and that’s what distinguish you from your competitor. Wells Fargo Wells Fargo another leading bank in the US who led the Digital Banking initiative implemented Balance Scorecard [BSC] to track and measure the online financial services [OFS]. The case study that studies the implementation in the year 1997 and 1998 came up with the following conclusions – It’s worth to highlight the fact that even in those days when digitization was not end to end Wells Fargo was able to reduce its cost by 22%, imagine with modern technologies and innovation how much operational cost could be reduced for a bank leading to an increase in profit margins. History of Banking and adoption of Digital Channel in the US October 8 that is celebrated as National Online Bank Day triggers nostalgic feelings of banking to be a brick-and-mortar business. The simplefund’s transfer used to take 2-3 days and depositing a cheque on bank holiday was utterly forbidden. We have indeed come a long way of Banking …. Initiatives in the U.S to adapt to Digital Banking Stanford Federal Credit Union (or Stanford FCU) was one of the first to offer banking by telephone and conducting its first four internet transactions, introducing Online Banking to US residents. Wells Fargo was the first bank to provide secure credit card transactions on the internet. As they celebrated 20 years of internet banking on their website in 2015, they mentioned – people being reluctant to avail banking services online. An exciting story shared by early adopter is worth sharing – One of the major hurdles faced by Banks in the past while adopting digital channels is “assuring security” to the customers. With lack of regulation, Banks themselves managed compliance to assure best services to the customers. But with innovation in technology speeding up, there was a rise in adopting the Digital banking initiatives by the US residents. We now see tech-savvy millennials demanding IoT based banking services, easy acceptance to contactless payments and use of VR/AR in banking institutions. Opportunities for Digital Banking in the U.S Different modules of Banking have been digitized with Fintech and Bank collaboration, but as Banking is like the veins of any country’s economy, it has the potential to evolve further. Some of the innovative use cases being explored by enterprises in

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