Future proofing banking through the power of data, APIs and automation

The global pandemic has ushered in a new paradigm for the Retail Banking sector, one which demands quicker transformation to a customer-centric service that is digitised, personal and convenient.

A recent Financial Industries panel discussion held by Kearney, a global consultancy, shed light on how the power of data, Application Programming Interfaces (APIs) and automation could be leveraged to satisfy these expectations and invigorate the sector.

Hentus Honiball, Partner at Kearney, maintains that large, traditional banks with complex, cumbersome operating models and legacy technology architecture are now being threatened by agile new fintech entrants. In contrast with the siloed, product-centric approach of traditional players, responsive new players are looking to build customer-centric value propositions that are easy to access simple to understand and that offer a full suite of products and services from a diverse ecosystem of players.

These ecosystems can be coordinated with novel technology architecture based on secure APIs. These models allow other banks and third-party service providers to integrate into ecosystems at much lower costs and faster speeds.

“Agile financial institutions also digitise and embed their decision-making, governance and risk management controls, as well as compliance protocols in their processes. This results in efficient real-time risk-management as well as far swifter launches of new product offerings,” Honiball explains.

The greater frequency of interactions with more touchpoints allows the collection of richer data and more reliable customer profiles. This leads to more meaningful personalisation and the advent of highly tailored targeted solutions to give each customer a unique experience. Financial institutions are increasingly leveraging the power of rich customer data to look after the customer’s health and influence customer behaviour, promoting financial literacy and enabling healthy financial choices.

This more progressive approach aims to empower the customer and reward positive financial behaviour to the benefit of both the customer and the bank, as financially healthier clients invest and transact more. “Analysis of rich customer data will also be used to guide or ‘nudge’ customers towards healthy financial choices through customised financial education and a better understanding of savings, investment and insurance. Such a strategy is aligned with global shifts towards more ethical financial governance that support equality and financial stability,” Honiball notes.

While such strategic shifts may at first herald slower revenues by reducing the rate of profit that banks initially capture from each customer, they ultimately stand to increase overall profitability through the encouragement of wealth-creation, financial health, and lengthened customer lifetimes.

Honiball believes that the time is right for banks and consumer-facing businesses to harness the potential that these new operating models have to offer.

He adds that Kearney, through its experience and expertise in international banking and deep understanding of emerging trends in numerous sectors and industries, is well poised to guide a strategic shift towards innovative customer-centric business models.

  • Kearney is committed to providing the insights and guidance required for local and international businesses as well as government to achieve an immediate impact and growing advantage as Africa continues to rise. Since 1995, we have been supporting clients in Africa, starting with our Johannesburg office which opened in 1998. More information at https://www.africa.kearney.com/