API Business Models

Revolutionizing Banking – A Client-Centric Digital Transformation Journey

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Danny Goh is a Digital Market Management Manager with BNY Mellon in Singapore. In this article, he discusses opportunities that arise from digitization and the importance of placing the customer at the center of any development process.

Digital transformation is a must for banks. Changing customer demands coupled with pressure to reduce costs, increase efficiencies, and new technology developments are leaving banks with no option but to adapt to these new market requirements. Digital transformation is no longer a nice to have but is generally considered a critical enabler of a financial institution’s strategy. The ultimate success of digital transformation is achieving both business and organizational transformation. Customer experience will be driven by the emergence of technology that enables every touchpoint of the customer journey to be analyzed to reduce friction and improve satisfaction. Customer Experience is increasingly playing a major role in buying decisions. There is a direct connection between customer loyalty and business success. Financial service businesses will prioritize digital transformation because of these reasons. Automating manual and repetitive elements of back-office processes will continue to drive efficiency and transformation. Tasks such as onboarding new customers, processing routine transactions, document verification, KYC checks, and compliance will increasingly be managed by AI. From a cybersecurity and fraud mitigation perspective, as payments become increasingly digital, the need for robust cybersecurity measures for financial institutions and banks rises exponentially. While digital transformation offers firms countless opportunities and new market segments, cybercriminals are also developing complex new methods of defrauding and compromising data across the financial landscape. Countering these threats requires strategic and ongoing investment in tools, infrastructure, and skills. As an industry, it is our responsibility to do business where we prioritize sustainability and ESG factors in our decision-making. We need to factor integrating environmental, social, and governance considerations into business strategies and investigate opportunities in sustainable finance and ESG-related products and services.

Artificial intelligence is a game changer for the banking industry. With Intelligent Automation, banks can process and analyze vast amounts of data, automate processes, and provide personalized services to their customers; a cycle of cryptocurrencies and digital currencies, we are likely to see more use cases for blockchain around creating smart contracts, streamlining payments, and authenticating transactions. Within the region, we see the rise of mega apps where banking apps have been programmed into more than just traditional banking. Banks are looking to enhance mega apps towards being lifestyle apps. We have e-wallets where you can get shopping vouchers and promotion codes, manage your expenses, and access investment tools. Digital currencies and cryptocurrencies are firmly back on the radar of financial services. Over 130 countries are reported to be investigating the use or adoption. The Crypto space will likely expect further movement towards governance and regulation. Last but not least, bilateral connectivity for real-time payments as we see South and Southeast Asian countries starting and continuing to plan for bilateral conductivity of real-time payment systems, particularly for low-value cross-border payments.

Orchestrating impact, technology, and strategic transformation.

Financial institutions must reimagine the approach across the business lines, technology, landscape, and operating models. Driving digital transformation is not an easy journey. Banks that embarked on digital transformation have five pillars of support.

Digital customer journeys – Banks understand the various customer segments and use cases of their services. Look into manual touch points, currently manual processes, and how to digitize those to bring efficiencies and a smooth experience. Once these customer journeys have been identified and opportunities known to digitization, banks will then look at

Manage talent and build digital skills—Ensure the talent pool has the digital skills to execute the transformation.

Transform Ways of Working and The Operating Model – With the various teams in place, we are transforming how we work together, sharing knowledge and bringing together different expertise to achieve common objectives and key results. Reviewing the operating model in which we service our clients and support our customers is very important to ensure that the transformation works on all fronts.

Governance – Governance is important to ensure that changes from the transformation comply with the relevant regulatory requirements and bank policies.

Drive Technology Transformation – Working with our technology partners to ensure the transformation roadmap is supported and future-proofed.

Rationale behind going digital

  • Improving client experience and engagement
  • Increased efficiency
  • Increased business decision-making
  • Transform the business
  • Be more innovative

Top benefits of adopting a digital model

  • Decreased costs from poor-quality output
  • Increase operational efficiencies
  • Improved client experience

Different types of technology that drive digital transformation

Application Programming Interface or APIs go hand in hand with payment innovation. APIs are accelerating innovation. As a connectivity channel, APIs enable near real-time embedded and automated data flows between institutions and represent an easy plug-and-play solution.

Artificial intelligence has also become a popular topic of discussion for several reasons. Significant advancements in AI technology have occurred, including in areas such as natural language processing. The public availability of AI solutions is also making AI easier to understand by the general public. The use cases that banks explore around fraud detection prevention compliance, personalized customer experience, efficiencies in streamlining processes and predicting analytics, and predicting patterns for better planning.

Cloud computing is one of the most common technologies banks and the financial sector use. It enables banks to securely store and process large volumes of data, providing scalability and flexibility. Improved operations, increased productivity, and immediate product and service delivery are all benefits of cloud-driven services. Cloud computing also facilitates remote access to banking services, enhances collaboration, accelerates deploying new applications, reporting process automation or RPA, and automates repetitive and rule-based tasks, allowing employees to concentrate on higher-value activities. RPA improves operational efficiency, reduces errors, and enhances the speed and accuracy of back-office processes. It is used in customer support to address customer complaints and follow compliance regulations, allowing banks to lower error rates and save costs.

Blockchain—Global Accessibility is a hallmark of blockchain networks, which have various use cases, such as transactions that can be made instantly and around the clock.

Real-world applications

At BNY Mellon, we have a suite of API solutions offering an integrated experience with our bank customers. Our API services are broadly categorized under four core business functions, which enable our bank customers to initiate transactions with us across different payment rails, track the transaction status, get access to their bank statements, and then report over API and receive an API notification when there is a change in their payment status.

Our APIs are connected to our bank customers’ front-end and back-office systems, such as Online banking portals, mobile banking applications, and back-office applications or systems. Our bank customers’ operations and customer service teams use these to support any end-user inquiries they receive. The BNY Mellon has a single Unified Payments API, which allows our clients to initiate, track, and search for payment status. We provide the payment status via API to our banking customers, and they can reflect that on their mobile banking app for the end user to reference and see.

To summarise, there are many trending technologies and applications within a bank customer’s journey. Given the shifting landscape, we at BNY Mellon are keeping up with the latest trends to support our client’s digitization efforts and improve their customer experience.

 

Danny Goh
I have 16+ years of experience in the APAC banking sector, focused on streamlining operations and driving business growth. My current role at BNY Mellon blends product development with sales/marketing strategy for Treasury Services products.

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