While the COVID-19 pandemic forced financial institutions to undergo rapid digital transformation, they must not be lulled into a false sense of security, thinking that the rate of change is going to slow down. In fact, it is just the opposite – the era of digital transformation is only just beginning to gain momentum.
To remain relevant, banks and financial institutions will need to shift their focus from product to servicing customer needs and delivering a seamless customer journey.
McKinsey and Company highlights this in its Global Annual Banking Review, titled The Great Divergence, which focuses on the changes brought about by the pandemic and how banks urgently need to deploy a future-proof business model to enjoy growth and prosperity.
Keeping up with change
“Companies like Amazon, Apple, Google, Netflix and Spotify have taken existing services and transformed them into digital experiences that are now embedded in customers’ daily lives. Leading fintechs, specialists and banks are replicating this model in financial services, turning products into features to meet customer needs and keep them engaged,” says the report. “The existing, underlying elements are still there – the checking account, the personal loan or the POS terminal – but they are less visible, a seamless part of a digital experience that goes beyond banking. In a future-proof business model, the customer, not the product, is the focus.”
So, what steps do financial institutions need to take to obtain and retain customers? First, they need to solve customers’ specific needs. That can be by making shopping and cash management simpler and more convenient, or offering quick and easy self-service onboarding, buy-now-pay-later checkout solutions or new Point of Sale terminal features. Secondly, they need to bring customers into an ecosystem and connect them with other services by building a dynamic, intuitive and distinct experience.
And finally, they need to provide customers with personalised insights. The rewards are twofold. First this increases customer engagement and in turn makes them ambassadors for your brand as they spread the word about your offering, and secondly, it provides the bank or financial institution with valuable data related to customers’ needs and behaviour.
To achieve all of this, agility is key. Otherwise, by the time financial institutions have adapted their service offerings, the customers’ needs and wants will likely have shifted.
The value of rebundling
In their recently conducted impact study, Rebundling: The Next Stage of the Fintech Evolution, Finextra outlines the importance of rebundling and how it can help financial institutions keep pace with more digitally advanced competitors. “There is a great opportunity to be found in rebundling and recognising the value of delivering multiple solutions from one platform. Rebundling helps customers fix not just one problem but the complete life cycle of challenges they encounter when engaging with financial services that make their lives and business tick,” the report explains.
But what is rebundling? Simply put, it means services that are provided today are updated, repackaged or removed to provide customers with more relevant services as their needs shift. This means customers are receiving an excellent and relevant customer service and experience, without any disruption to their customer journey. In the payments space, mediating between a financial institute and its external providers is a common and ongoing occurrence. To ensure future growth, it is imperative for financial institutions to take control of managing the interaction between their systems and external systems and to do so on a digital platform where enterprise architects can build out specific service offerings with confidence.
The Verto solution
Tech-enabled innovation and speed to market are key enablers of digital transformation. While some banks and financial institutions can develop their digital capabilities themselves, Finextra points out that 63% of fintechs and 56% of banks have skills gaps in their organisations and are not able to manage the complexity of orchestrating multiple intricate systems elements at high speed to deliver new services. This means accessing payments mediation quickly and securely can be more readily achieved through partnerships with an external provider, such as Stanchion’s Verto Payments Mediation.
This innovative platform has been specifically designed to meet the growing market need for financial institutions to deliver new payments features, experiences and products in a rapid, efficient and cost-effective manner. Verto Payments Mediation orchestrates the fulfilment of service requests from multiple systems, in turn reducing risk, speeding up time to market and simplifying architectural complexity in use cases such as instant card issuance and personalised printing; cardholder authentication with OTP messages validated at an ATM; acquisition of QR code wallet transactions through POS terminals; and TLCM for digital wallets like Apple Pay and Google Pay.
It does this by providing a managed pathway that enables disparate payment architectural elements to communicate with each other in an efficient, structured and transparent manner.
The platform enables financial institutions to accelerate time to market with new services and reduced operating costs with an efficient solution for orchestrating services across disparate systems and elements in complex IT environments. The platform has been built by payments professionals and has payments best practices embedded into its core.
It is this expertise, coupled with the platform’s flexible integration, that delivers the innovative solution financial institutions need to underpin their readiness for a rapidly changing world.