Month: April 2019

Fintech is the acronym for “financial technology” and it refers to the innovative use of technology in the design and delivery of financial services. Fintech companies include technology providers which are into financial services and financial/non-financial companies using technology to offer financial services.

Customers today spend a good amount of time online checking mails and messengers on their smartphones. They expect extreme convenience of doing financial transactions like bill payments, fund transfer, buying/selling financial products, making investments, and paying taxes through these applications. Technology companies like Facebook seem to have gained customer trust and confidence. Customers who feel safe in uploading pictures on Facebook feel delighted to perform financial transactions on messenger. Future generations will prefer opening a bank account using these applications as part of their regular use and interaction. This creates a worrying situation for traditional banks.

Fintechs are also able to pick and choose which business within banking they want to get into. They champion user experience, convenience and lower transaction costs by reducing friction in the current banking processes, in the area they choose to foray in. Banks can collaborate with these Fintechs to generate more business to reach out to unbanked population (and others who are able to transact with banks directly) round the clock and provide products customers want to buy based on their profile and lifestyle.

In order to offer better services and new products to their customers, banks have already started collaborating with technology providers to meet their digital objectives by combining a few or more of following different approaches:

Banks are building partnership ecosystems and making banking more accessible by extending its touchpoints to areas that intersect with consumer’s lifestyles. In November 2018, United Overseas Bank (UOB) got into a strategic alliance with Grab (ride hailing giant which is also into financial services) and kick-started many digital initiatives and customer benefits thereafter with Grab offering UOB cards privileges directly on its mobile app and UOB card members enjoying certain privileges when they utilize Grab services. This industry cross-over creates greater value for customers who commute a lot.

End consumers will benefit by this Bank-Fintech collaboration not only in terms of lower costs but also by being able to transact conveniently, control their finances better and experience personalized services.

Reference: https://www.businesstimes.com.sg/companies-markets/uob-grab-kick-start-partnership-with-digital-initiatives-customer-benefits

With the advent of technologies such as blockchain, bank regulations such as Europe’s second Payment Services Directive (PSD2) and the FinTech revolution, it is imperative to have an open mind and collaborate with the ecosystem players including competitors, third parties, FinTech players, and developers with the end objective of offering value to customers in the form of financial and non-financial offerings. As the definition of banking expands to include non-financial services, it may not be possible for banks to develop all products and services in-house and also deliver the products which the customer needs through the channel they prefer. So to remain in business, it is critical to leave behind the traditional mindset and follow new approaches to solve customer problems by enabling interactions between consumers and third party product or service providers. Unified Payments Interface (UPI) by NPCI in India is a clear example of banks participating in an ecosystem effectively. UPI-enabled banks can provide other qualified payment service providers (PSPs) connectivity to access customer account data to initiate payments. They can also allow instant transfer of funds between two bank accounts.

Similar to a cloud service provider’s offering of PaaS (Platform as a Service) banks can offer a platform that provides an infrastructure for interactions between its existing customer base and other players to offer a full suite of products and services which the customer wants thereby enabling value creation for all participants. Infosys Finacle’s 2019 Banking Trends report states that banks will arrive at different approach based on their unique vision and circumstances.

Different participants in the ecosystem will be able to access banks’ capabilities using APIs, an easy means of exchange of information in a scalable manner, enabling integration of its internal consumer data with external products and services. The platform will set control mechanisms and usage guidelines for the participants to engage and arrive at new digital offerings. As per the report, a lot more banks are expected to launch their API stores in the coming year to expose APIs to the ecosystem players including partners and developers to build real-world applications with production data.

Banks need to identify different areas of the customer journey which they want to address, and arrive at a comprehensive list of APIs. For example, in secured and unsecured lending, we can plan and arrive at a comprehensive list of APIs for different scenarios and products and not create APIs in an ad hoc manner.

Customers will also benefit in this collaborative environment. They can expect relevant financial and non-financial products and services in a single interface. They will have control over their data by providing consent and securely sharing it with the participants in the ecosystem.

Banks must think about their revenue sharing models as they embark on this customer-led business opportunity so that the ecosystem is a profitable one. Innovation with ecosystem players will be a key differentiating factor that will set one ecosystem apart from the other.

Parry logs in to his digital banking app where he is authenticated using his front facing smartphone camera for adequate security to transact safely. The app suggests different preapproved financial products which he is eligible for based on his profile, and at attractive pricing. He voices out his queries and gets immediate and accurate response from the app thereby empowering him to make informed decisions. Further, the app can even perform non-financial and financial transactions in certain cases where the customer has given authorization to do so. The machine learning (subset of AI) algorithm finds patterns from the data and determines if a transaction is permitted or not, and instantly process or rejects the transaction. In certain cases, the algorithm processes the transaction under assessment and flags any inconsistencies or anomalies. Basis feedback from humans on the anomalies identified, the program readjusts its logic dynamically.

In the use case above the app or a smart virtual assistant (SVA) uses visual recognition (VR) technology to recognize the customer. Similarly, it uses speech recognition technology to capture and interpret information thereby emulating the sensing aspect of human behavior. It uses advanced analytics powered by big data, cloud computing and machine learning to offer personalized products to the customer thereby emulating the thinking aspect of human behavior. It responds to the customer using natural language generation (NLG) technology providing insights and advice thereby emulating the action aspect of human behavior.

Smart virtual assistants are AI solutions that can interact, receive and deliver information and act on human commands. They are created using a combination of technology building blocks for AI powered solutions like machine learning, visual recognition, natural language processing (NLP)/speech recognition technology and natural language generation. Visual recognition technology transforms identity management. Speech recognition technology captures and interprets information and converts spoken language into machine readable format. Data, analytics, cloud computing and open source AI algorithms are the foundational building blocks for AI. Prescriptive analytics makes use of structured and unstructured data based on customer’s activities and interactions from various sources to make a personalized offering. Banks can collaborate with other participants in the ecosystem with automated business-to-business interactions to exchange data in a scaled manner using APIs and offer a full suite of products to customers through the open banking model. These technologies enable anytime, anywhere banking, offer 24/7 customer service and increased transparency of transactions thereby providing revenue generation and cost saving opportunities for the bank.

Banks can choose between platforms, applications and cloud services for deploying AI. It is generally accepted that a combination of all three is both practical and desirable. AI adoption accelerates banks’ digital transformation agenda of becoming more agile and customer centric. It frees bank staff for creative thinking, complex problem-solving and helps them focus on business strategy. Interaction with smart virtual assistant empowers the relationship manager as well by providing the details of the interaction and helping her / him find new business opportunities. Basis feedback from the relationship manager, the program adjusts its logic dynamically and acts on its own thereafter, recollecting previous interactions that have a bearing on the current decision to make relevant offers to customers in real-time.

Thus AI improves the overall experience for both employees and customers of the bank and any business in general by way of fewer errors, higher efficiency and better decision making.

When we journey to a new place we are attracted by the surroundings and we like to take selfies and pictures that we can post on social media. If it’s a short trip, we want to make the most of the available time and visit more places. But if it’s a longer stay or a medium to long-term on-site assignment, travelling in that city or country, an exciting experience before, becomes a routine and mundane one now. The initial enthusiasm fades away naturally!

Similarly, in business, enterprises need to constantly look for new ways to delight their customers. Businesses must design customer journeys to weave a coherent and contextual experience at every stage. Keeping the customer at the center of any business decision rewards the business in the long run in terms of revenue generation and profitability. The customer is attracted to the initial offers like cash back on fund transfer, zero convenience fee and added benefits on digital wallets or debit/credit cards to book travel tickets/hotels/movie tickets/pay bills. Such positive experiences that intersect with customer’s profile encourage them to use more and more of the varied offerings of a business and enhance loyalty. For a retail customer it could be offering personal loan or student loan to young customers to offering an insurance product, mortgage loan, loan against securities during a later stage of life. Banks can also offer working capital loan, term loan for a manufacturing entity as per the different requirements as a customer’s business evolves and grows.

Digital objectives of any business also need to consider offering new products and services to its customers based on changing customer behavior and demands to enhance the overall experience with the engagement. This may call for the following:

All these steps will in turn offer a full suite of products, services and experiences which the customer wants today and in the future, thereby enabling value creation for all participants. Thus digital technologies ensure ease of doing business, offer instant gratification to customers and empower them for better decision making. Use of these technologies also offers faster, secure transactions end-to-end with lower transaction costs. But the choice and convenience which the businesses offer the customer should not come at the cost of their data and privacy breach.

Mr. A is a very busy working professional. Multiple client calls and meetings fill up most of his day.

On a mundane Monday, at around 11.10 in the morning he receives a call from an unknown number, the caller claims to be an employee of a reputed bank. The call is to confirm the services offered by the bank and also about a debit card update they are doing online with the consent of the customer.
The caller on the other side is very persuasive and insists on gaining information. The caller also threatens Mr. A that his debit card is likely to be blocked and it will take 30 days to replace the card as the new card needs to be shipped from their central warehouse. Worried Mr. A, urges the caller not to block the card as he uses the card for multiple purposes and completely depends on it for his everyday payment transactions.

Since the caller has established confidence with Mr. A by talking about an application in progress i.e. his debit card the next step about how to keep the card active is discussed. The caller suggests Mr. A to keep the card handy so that they can initiate an activation request and need some card-related details like CVV, expiry date etc.

Mr. A is not hesitant in sharing the details and also borrows some time to get the card which is there in the office cubicle. Caller asks Mr. A to share the 16- digit card number. Mr. A shares the card number and is asked to share the remaining details like expiry date and CVV. Mr. A shares all the details patiently and now the caller asks him to share the OTP details in order to complete the card activation request.

Mr. A informs the caller that he has not received any OTP till now and requests the caller to wait for 2 min as his network delays OTP sometimes. After some time, Mr. A asks the caller to verify the card details again as he still has not received any OTP. After the caller confirms the submitted details, Mr. A politely confirms that the card number entered by the user is not correct and the caller has erroneously entered some other card number. Since everything is done in a hurry, the caller re-confirms the card details and initiates the action for generating OTP. Mr. A is yet to receive the OTP and asks the caller to re-check the card details as he still doesn’t have the OTP.

Another 5 minutes pass, and now Mr. A has spent almost 15 minutes on the call and still has not received any OTP.

Now Mr. A asks the caller if there is any other way to unblock the card or if he should visit a branch to activate the card. The caller suggests and instructs him not to visit a branch just yet as it might take a little longer to process the request.

After spending more than 15 minutes on the call, Mr. A politely informs the caller that he knew the caller’s intention and plan right from the beginning. Mr. A confidently confronts the fraudster (Caller) that he is aware of the OTP frauds taking place and the card details shared are not correct and he intentionally gave wrong data multiple times.

He also informs the caller that he faked ignorance and gave the details since his main intention was to waste the fraudster’s time.

Mr. A wasted the fraudster’s time and tried cheating him with the wrong details by making him believe that he indeed had not received the OTP. After all this, the fraudster doesn’t have any other option but to disconnect and perhaps curse Mr. A for his smarts.

Yes Mr. A wasted 15 minutes of his personal time during busy hours, but he prevented the fraudster from gaining access to any confidential information and succeeding in his attempt of social engineering. He may not have succeeded in eliminating these kind of cyber-crimes, but he certainly stymied the fraudster’s confidence. The caller would not believe the next person he tries to fool if they tell them their card details.

Cheating a cheater may not be the best solution to combat fraud, but if we a great number of potential targets give wrong details to fraudsters and cheat the cheater, then eventually fraudsters will think more than twice before attempting fraud. An awareness of these kind of pranks can greatly help reduce the chances of such a crime and the number of people from being cheated.

Almost every individual uses smart phones today. It is a part of life. However, users need to know their phone w.r.t. its security and accessibility controls, to avoid compromising their privacy inadvertently.
With the advent of digital revolution and IoT, most customers perform most of their transactions using their smart phones and almost all services are maintained through android or iOS applications. Be it a movie ticket booking or food order or grocery purchase or cab booking, everything can be managed through an application. Even payments have been revolutionized such that funds can be transferred with a single click.

Most of these apps don’t require the user to enter card details for each transaction. They give users the flexibility to save card details in the app data and just ask for a CVV to initiate the transaction and an OTP to complete the transaction. Users don’t need to go to the messages app and manually enter OTP. App by default accesses message inbox and reads the latest OTP message received by the user.

Yes, this provides flexibility to the user and also enriches the experience, however at the same time it also allows fraudsters to steal personal data. With the increasing number of services online, every day we get to hear about a new startup with new and exciting offers in order to penetrate into the market quickly. At the same time there are many fake apps available online and their main aim is to capture the important or confidential data of the user.

So users must be more attentive while installing any new application and while transacting through any new application. Though authenticity of an app. can be explored and evaluated through user reviews or other options, it is better to restrict the app’s permissions to read messages or media files directly. Android users can review the different apps installed on their mobile regularly and can check whether any unauthorized app is installed. Also, users have the flexibility to check the various permissions they have granted to the different apps. For example, users can check what permissions apps have and revoke permissions when they want. For example, if a user does not want an app to access the message inbox for OTP, the user can simply use the toggle button to revoke access.

Similarly, users can control any application installation if not verified by the google play store. Android users have an option to control the installation of applications from unknown sources. This feature allows the user to check the authenticity of the application before installing it and then either install or reject the installation based on personal checks.
Also, it is not advisable to save any passwords or PINs for cards or apps on their phone or online as these can be accessed through some malware or through any unauthorized apps.

Though these things might scare users and create apprehensions about using digital banking, the comfort, convenience and flexibility of using digital banking and other digital applications makes it very difficult for anyone today to not use digital banking services. However, users must be aware of the impacts and usability guidelines. Also, users should be aware of the possible implications and preventive measures.

Just like every bank expects users to comply with KYC norms by collecting identity and address proof documents, every user should know what is happening in their mobile and what all is installed in order to keep themselves safe and prevent data breach at their level.