Unisys and RFi Group brought together bank executives in Malaysia to explore how banks today are meeting the needs of their customers while keeping an eye on emerging security threats. Mobasher Zein Kazmi and AB+F reported on the day.
Banking customers today expect speed and convenience across a range of touch points from branch to online to mobile banking, all with an institution they can trust with their money and their personal and financial data.
Building and maintaining that trust, however, is becoming increasingly hard for an industry which continues to be impacted by sophisticated and persistent cyber security threats.
Financial crime headlines feature daily, ranging from malware, ransomware, data theft to fraud and money laundering schemes. For banks, there is more at stake from the impact of financial crime than the loss of financial assets. Reputational loss and disruption to the customer experience can be equally, if not more, damaging to banks especially when malfeasance is uncovered.
With all the complicated systems and processes in financial services, how can banks balance the trade-off between robust security and system-wide compliance, with seamless omnichannel customer engagement, where security doesn’t take away from an expected frictionless and real time 24*7 customer experience?
It was a theme that was tackled in a far-ranging discussion among the roundtable participants. Ten years ago, Unisys’ Selbie worked on financial crime prevention systems where he was involved in developing solutions that address fraud and money laundering. His focus was eventually broadened to look at banking solutions in general from digital banking to back office and front office solutions, which led him to be become, as he puts it, “obsessive about the customer experience”.
It was the first topic that opened up the discussions among the roundtable participants. As banks look to enhance their systems both at the front and back ends to address customer pain points, the bankers in the room acknowledged that the approach must be done through the lens of the customer experience.
“The entire process that sits behind a bank’s transaction processing, the functionality, CRM systems, security systems, they all have an impact on what that frontend customer experience actually ends up looking like,” RFi Group’s Page said.
The bankers around the table all acknowledged that indeed it was about striking a balance between customer delivery in terms of a seamless experience with security that ensured regulatory compliance as well as fraud mitigation.
“Customer experience is not just about the user experience in digital banking. The way the bank deals with fraudulent activity on a customer’s account or card is also part of the experience. Everything that involves a customer outcome, even if it’s something that happens in the back office, is part of the customer experience,” Selbie said.
The group were also unanimous – maintaining trust is essential for driving a positive customer experience with your bank. Using data from RFi Group’s Global Digital Banking Council, RFi’s Page revealed an interesting insight based on a survey of 1,000 consumers across 10 markets including Hong Kong, Singapore, India and China. In summary, 42 per cent of people around the world trust their banks on a scale from eight to 10. “The great news is they trust banks more than any other business. So banks are in a great position when it comes to consumer trust,” Page said.
The omnichannel experience
With high levels of trust on their side, banks are well-positioned to deliver on the omnichannel experience including digital banking. However, if banks are to maintain consumer trust ongoing, they need to address a number of concerns that customers have in using the various banking channels. Nicholle Lindner of Unisys added to this point regarding the importance of cross channel harmonization: “A customer expects the same level of service and data sharing across all links in the value chain - and a chain is only as strong as its weakest link.”
As RFi Group’s Khan noted, while the simplest and more transactional tasks are skewed towards digital, customers still want to use different channels to suit different purposes. Again, trust plays a role and interestingly Khan highlighted that younger generations still turn to family and friends for advice when it comes to making decisions around banking products such as loans. Unisys’ Lindner agreed, calling out social media as a growing driver for consumers to research into who you could bank with, and what products to buy before even engaging with a bank. Social is also an important new channel for banks to reach out and engage with their customers across many different generations, not just Millenials.
Knowing the customer
Once more Eleanor Page from RFi Group highlighted RFi’s research based on a survey of consumers in Malaysia, which looked at how consumers are using digital banking channels. Those using digital banking on a daily basis are considered digitally engaged consumers, holding more products with their bank, and being stronger advocates while those who use digital banking channels less frequently are less engaged consumers overall.
“What you can see is if the consumer is digitally engaged all their metrics are just so much better. This is the positive uplift around digital engagement. They’re likely to have an NPS of 30 and not an NPS of 15. They are going to be more satisfied than less digitally engaged customers. They are going to be less likely to switch banks as well,” Page said.
As banks seek to offer the omnichannel experience, the roundtable participants assessed the customer onboarding process across the various channels including through digital and face-to-face channels.
In particular, customers demand human interaction when they need an issue to be resolved. “Most of our clients who start their journey on the phone want to finish the process on the phone. They don’t want to switch between channels.”
Khan also highlighted interesting research around the customer onboarding experience when it comes to using digital channels for mortgage applications.
It’s one of those things that all banks have struggled to crack. How do you get the customer applications online, Amit Khan, RFi Group
“It’s one of those things that all banks have struggled to crack. How do you get the customer applications online,” he said. “Key concerns and issues customers will cite is they are just used to dealing with a person. But among the top two factors for consumers is that they want to be able to negotiate the rates that they receive for example,” Khan said.
From RFi Group research, the discussion element that occurs on a face-to-face basis can be replicated via a digital experience, using AI and automation such as chat bots. “When you look at what are the things that would help you push a customer towards an online application, chat bots, telephone support, flexibility in terms of the application, being able to say stop and start again, those sorts of factors are all combined,” Khan said.
Here, Unisys’ Lindner says it is all about user experience (UX) design ensuring a seamless experience. It is about “thinking about how the customer progresses through this application, the different points. No one of course completes a mortgage application in one sitting, they need to be able to dip back in and out throughout the process, accessing documentation, researching rates and asking for advice.”
Notably, Chat bot as technology has already been adopted in CIMB and applied to different parts of the banking process including balance transfers, spending analysis on credit cards and bill payments. Chat bots have been used by the bank for a year now and according to Singh have been successful, even garnering a few awards for the bank. Interestingly, she notes that it is Generation X among the bank’s clients who have embraced this technology.
“I believe that the chat bot is really a great solution for a segment which is otherwise ignored when we do our planning and strategy,” Singh said. “People are talking a lot more around let’s appeal to the Gen Y and the younger generations, but the wealth is actually currently with Gen X, because this is the segment who will be the high net worth of tomorrow, if not already. Chat bots have really worked for us.”
I believe that the chat bot is really a great solution for a segment which is otherwise ignored when we do our planning and strategy, Manpreet Singh, CIMB
Banking innovation today also includes initiatives such as biometrics with the application of analytics playing a key role in knowing your customer. CIMB’s Vivienne Chin oversees the sole proprietor and partnership division for CIMB Business Bank. The unit includes providing loans to different segments as diverse as farmers to consultants. Acknowledging that the business she leads is a “niche market” the risks the bank sees are framed in terms of the writing of loans to criminals who are using very small businesses as a front for illegal activities such as for money laundering. Here, analytics will be important to assess potential fraud and Chin acknowledges that the bank’s customers in this segment are not large companies but still have the capabilities to conduct money-laundering activities. “This means a person could open a legitimate business within a bank to siphon out $1 million to fund a terrorist activity. Therefore we need to ensure that the loans we make to customers are not being used to fund terrorism,” she said.
Acknowledging that it is a very cash-driven business, Chin adds that the move towards digital banking will also have its challenges. “While we are described as a small part of the bank, our customers issue around four million cheques a year. That’s a lot for a business like ours. While we want to move away from that type of payment to digital and real time payments, at the same time, we have to ensure that these new processes will be able to identify legitimate businesses and prevent fraudulent businesses from coming on board with us.” Analytics will be important in supporting this objective and Chin says here the focus on customer experience will be key. “It requires a lot of analysis of large amount for data which is why we need to closely look at the customer experience. We have a lot of data we can use which is captured all across the bank – often in the Consumer Bank where many of these proprietors are captured separately as individuals with personal banking accounts. Therefore, we need
to work together across the silos in order to find the right solution,” Chin said.
The application of biometrics as a way to authenticate customer identities is now being increasingly seen in the financial services sector. As a former “career banker” – with twenty years of experience being chalked up with Australia’s major banks – Lindner sees a shift in the sector towards new ways to authenticate customers. “As banks move towards delivering the omnichannel model, allowing customers to pay bills, purchase products and apply for mortgages, new methods of authentication are being used to ensure people’s data is protected.” She adds: “Obviously biometrics is a big topic for the sector as it contributes to a seamless experience. We’ve done a lot of research in this area. I think it’s one of the things that is really going to revolutionise the customer experience and drive it forward.”
We’ve done a lot of research in the area of biometrics. I think it’s one of the things that is really going to revolutionise the customer experience and drive it forward.” Nicholle Lindner, Unisys
In fact the institutions represented at the roundtable were all embracing biometrics to identify their customers. Their approach to biometrics includes using fingerprint recognition as well as voice recognition. Selbie believes that the application of iris, face and voice recognition is superior to the use of fingerprints but all are far superior to the traditional use of the signature or PIN number.
A benign big brother
He also points to the growing application of “behavioural authentication”. Here bank systems analyse smartphone or tablet usage to form uniquely identifiable behavioural profiles across several areas including, location, how much force users use on the screen the angles they swipe and even their typing speed. When combined with the traditional approaches to biometrics – voice recognition and finger printing – behavioural biometric profiles can ensure transactions are in fact legitimate.
While banks have begun adopting this technology, for CIMB’s Chin the one sector that is even more advanced than the banks are the mobile phone makers - much to her frustration. “I finally got used to the thumbprint and now Apple have released the iPhone X and you can’t use your thumbprint. So now we’ve got to do facial recognition. We just got the thumbprint rolled out here at the bank! I can’t buy the new iPhone now.” However, Chin’s frustration revealed the myriad of biometric initiatives underway including but not limited to facial recognition but also the need to seek industry collaboration and the importance of testing such initiatives in a secure regulatory environment. “My view around this is that I think at this stage banks are kind of jumping onto this purely to get a point across that I’m being digital. It’s a bandwagon. I think not enough has gone in to make it something collaborative across the board. Although having said that regulators here in Malaysia have already started talking about using a
sandbox to try these new technologies.” Singh said. Selbie echoed Singh’s views adding that it is better not to take a hardware-dependent approach and it will help to get governments involved to set up standardized databases - using the passport system as a case in point. “If you look at the way immigration border control works with the use of chip-based passports, there is a set of standards that have been adopted.”
The approach calls for a balance between informing the customer and being nonintrusive, according to Lindner. When she arrived in Kuala Lumpur from Sydney on the morning of the roundtable, the Unisys executive received an immediate notification from her Australian bank (Westpac) as soon as she withdrew from a CIMB ATM. “I simply got a text message from the bank asking if I was overseas pop up on my phone. It was very unobtrusive. The card hadn’t been blocked. My bank was just checking on my location. It was an intelligent approach to safeguarding the consumer.”
Like other countries, Malaysia also has had its fair share of transactional fraud based on social engineering where fraudsters offering attractive ‘deals’ claim to be working on behalf of bank. Singh identified a number a number of cases early last year in 2017 where there was a syndicate operating a fraudulent business using customers’ identity cards. Other cases include the use of social engineering where fraudsters can call the bank’s customer and get them to provide their personal details. It’s a challenge that the banks remain aware of and continue to be vigilant.
Just as technology can help tackle fraud, equally fraudsters are taking advantage of innovation to undertake their activities. Despite all these challenges, the roundtable participants were positive on the ability of Malaysian banks to deliver on the customer services while complying with security and regulatory needs. As highlighted earlier, key to achieving this balance will be in knowing the customer through a smarter use of Big Data and advanced analytics, working proactively with regulators, taking a “test and learn” and “sandbox” approach to innovation and the ability to tap into emerging technologies such as biometrics.
“The more information that you already have about the customer (not just the transaction data but everything else you know about them), the better banks will be positioned to deliver on a frictionless customer experience while ensuring their customers safety when it comes to combatting fraud,” Selbie said.
“In a way it’s a bit like big brother but it’s a benign big brother. It’s about really understanding as much as you can about the customer in order to serve them better.”
For more interesting insights in banking and other industries, go to www.unisys.com/research