The key to successful banking products in the future, says Balaji Ram, the ANZ Head of Financial Services for HCL Technologies, is to use open systems and be where the customers wants to be, rather than forcing them to use the bank’s proprietary platforms.
Most of today’s business is conducted on proprietary platforms owned by financial institutions, says Ram. “The technology world is fast embracing open source technologies, which gives greater control to its customers, but banks are still driven largely through proprietary platforms.
“Many companies are spending millions of dollars revamping corporate websites or net banking portals to make it easy for customers to access the right products and services and manage interactions through the customer life cycle.”
But these proprietary systems are forcing customers to transact on the bank or insurance company’s online portal, says Ram. He believes there is a better way.
“Use open source platforms, which allows customers to control the platform and be present at the point of truth for greater customer convenience. Such non-intrusive interactions will not only help develop a deep and strong insight into customers' behaviour but also prepare organisations for future product or service innovation.”
He gives PayPal as an example of the trend. “When you make an online payment, PayPal does not take you to its portal to complete the transaction. It effects the transaction at the ‘point of truth’ of the buying cycle.”
Ram defines the ‘point of truth’ as the moment in time when online buyers make their payment. That’s the very point companies want to keep their customers online.
“Consider a scenario where you have recently received your monthly salary and are buying something online. How impactful would it be if your credit card provider can trigger alerts to give you a real time estimate of your future net worth and the effect of your purchase at the point of sale on mortgage repayments or upcoming credit card payments?
“Businesses of the future will need to make themselves available where the customer wants them to be, instead of forcing them into their environment for effecting transactions. They will provide APIs for customers to build their own personalised or customer demographic based applications and business services instead of a typical enterprise apps store.
“Imagine a bank, by virtue of the deposit and credit card transactions, providing profiling, spend categorisation, cash inflow and outflow estimate APIs. Prospective customers and businesses can then use these APIs to create their own personalised dashboard with portfolio management or investment functions which integrates balances across accounts.”
Ram gives the example of French bank Credit Agricole, which has opened its apps store to third parties, with more than 40 apps across budgeting, savings and social functions. An insurance company AXA has also created an API platform exposing customer account and transaction structures for third party developers to build apps.
Cloud technology is important in this process, says Ram. “In order to differentiate its operations, almost every piece of technology will need to be integrated and abstracted as a service, on the software-as-a-service (SaaS) model. This will also demand new capabilities in terms of enterprise-wide dashboards, lifecycle management and monitoring of different application and infrastructure tiers.”
Ram believes that this will lead to reduced development times and the ability to trial multiple features simultaneously across various demographics and markets. “That means companies can significantly increase the number of product or function releases each year. These iterations executed in the cloud can be rolled out or rolled back almost instantaneously depending on the success of the releases.”
Innovation is critical, says Ram. “Only 12% of the companies that were featured in the 1955 Fortune 500 list made it to the same list in 2010. Traditional business models are becoming irrelevant with the radical evolution of technology, fresh thinking and innovation.
“In today’s environment of volatility and disruptions, playing safe will make you extinct. To stay alive, the focus on operational efficiencies will have to make way to true innovation. Organisations will need to experiment with and adopt new business models to survive.”