Instant payments as a response to instant society

24 Apr 2017

Banking on the go. Image: Georgejmclittle/Shutterstock

What does this increasingly impatient world mean for the future of banking? Oliver Lynch, director of business development at Comtrade Digital Services, has some insights.

Fintech Week

Welcome to the instant society, where everything is only a tap away, including something as complex as banking. In this brave new world, new species have arisen and among them are banking bots: clever, helpful and sometimes incredibly witty creatures that help thousands of people around the globe manage their money.

Digital-native humans have higher expectations, more information, more choices and louder voices than any other customer in history.

The changed perception of social media

Millennials are fundamentally changing the way we use social media. Research shows that most online social interaction is no longer happening out in the open. Instead, it is taking place in private groups and messaging apps. Instant messaging platforms can therefore no longer be considered places where people simply connect and communicate in real time.

Platforms such as Facebook Messenger, WhatsApp and Viber are increasingly providing a broad range of services to their users, either directly or through partners, making them central to people’s lives. This trend represents a significant change in what social media is. As one-to-one messaging begins to dominate the social media world, it creates a whole set of opportunities for companies.

In this new world, where change is the only constant, another innovation has reached its tipping point: chatbots. Chatbots – computer programs that can simulate human response – are providing companies with a new channel to communicate with customers, driving conversational commerce.

Conversational robots based on predefined logic or artificial intelligence have confirmed a risky hypothesis: people want to interact with businesses as if they are people. Alongside the new conversational model for interacting with online services – and by overcoming the app challenge – bots have made their way into every industry, including banking.

‘A tap away’ banking

As fintech continues to shake up the banking sector, instant messaging provides banks with new and exciting ways to attract digitally savvy customers. The messaging platforms allow banks to give their users on-the-go access to most banking services. By simply adding another public account to their conversation list, users can now instantly transfer money (P2P payments, asking for money, internal transfers), check their balance, exchange currencies and even ask for a loan. Banking chatbots have become people’s financial assistants and saving advisers.

Oliver Lynch, business development director, Comtrade Digital Services. Image: Comtrade

What does this all mean for the banks?

Incumbent banks have struggled to compete with challenger banks and fintech companies when it comes to providing an innovative and engaging digital banking experience. By embracing this new digital channel, banking players have an opportunity to compete with challenger banks and fintech companies when targeting the much talked-about millennials.

The banks that will be among the first to adopt new channels will gain competitiveness by re-establishing their position as digital leaders and becoming more attractive to customers.

Financial institutions can:

  • Evaluate the opportunity for cross-selling and upselling, and therefore better leverage the ROI for further sales.
  • Decrease internal resources consumption in the process of customer acquisition and customer support services.
  • Explore the opportunity to integrate e-banking applications with a customer relationship management program – and integrate popular internet services and apps with the bank’s digital channel – to attract new customers and improve customer satisfaction overall.
  • Simplify user journey from installation. Banking chatbots don’t require an additional download and are very simple to use.

On the road to digital transformation

The bot revolution is still in the early phase, but the interest is growing among consumers and businesses alike. For the banking industry, chatbots will represent another channel through which they can attract millennials. It will probably not completely replace other banking channels, but it will certainly help the industry to compete with tech giants that are spreading their offering to banking.

While undergoing digital transformation, financial institutions should consider banking bots as a crucial part of omni-banking strategy. They should also:

1. Think beyond PSD2 compliance

Recent regulatory changes in Europe – namely the Payment Services Directive (PSD2) – force European banks to open up their data and infrastructure. The financial industry and third-party providers will be able to use APIs more strategically, but shouldn’t wait until PSD2 will be enforced. To gain the most out of competitive solutions based on open APIs, banks must act quickly.

2. Take a strategic approach to chatbots

Each day, the number of bots is  growing, which makes differentiation a key factor of success. Detailed research of your customer’s behaviour should offer clues and guidelines prior to building a bot. Do they seek a payment assistant, saving adviser or just someone to answer their questions?

3. Check resources

Building a successful banking bot requires a collaboration of highly skilled professionals with deep understanding of the banking industry and its regulations. Before initiating the project, assess the effort and form a diverse team of experts.

The modern business offers several opportunities for organisations that don’t stand still and want to create something new or better. In a world where market trends are rapidly changing and new players are disrupting even the most established business models, every organisation has to adapt to constant changes, quickly.

By Oliver Lynch

Oliver Lynch is a business development director at Comtrade Digital Services, with experience in international markets, specifically in the finance, gaming, telco and ICT sectors. Previously managing a call centre, Lynch’s skills in sales, communication, product management and planning have helped to develop the Comtrade fintech offering. He is in charge of growing the customer base and mobilising the team to achieve growth plans through advanced technologies.