Doing Digital Banking Right

Doing Digital Banking Right

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  Digital Banking
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  In retail banking,new competition has accelerated in recent years from the digital challengers—those so-called Neobanks or digital only banks. While some banks may have poured money into technology and digitization, the others focus on streamlining the back office and automating repetitive operations. The results vary. While traditional banks contend with inflexible legacy IT systems, the transformational ones deploy Agile methods to significantly reduce their time to value and make the organization more flexible as a whole. Transformation is difficult and digital transformation is even harder. The following are the top 3 priorities for banks to shape their competitive advantage in digital banking race: 1. Redesign the jobs to be done for its customers, make them more convenient across all channels 2. Modernize mobile banking authentication, protect customers from fraud and cybercrime 3. Embrace Team and Technical Agility Foreword Doing Digital Banking Right | Introduction TAI LE VP of Vietnam Business KMS Solutions
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  Digitization clearly linksto higher customer satisfaction, by giving customers access to bank services anywhere and any time. This has become critical as customers demand the convenient, technology giant-like experience such as that of Amazon, Apple products during their daily life, and expectations for personalized experience keep rising. Customer centricity puts the customer at the center of every decision and uses design thinking to ensure the final solution has 3 characteristics: it’s desirable, it’s viable, and it’s feasible. In retail banking, more often than not, the development value streams jump right into brainstorming for the problems at hand. Design thinking is not a new concept. It’s been around for sometime and in fact today it will be difficult to find any team that is not aware of design thinking concepts. Applying Design Thinking practices is a problem to most of the team when it lacks an empathize step. Understanding their journey, observing what they are doing while interacting with Bank’s Mobile app will discover more of their motivations or discouragements in any stage of the process. The true goal is to gather observations, emphasize with them while not jump into any solution or conclusion early. In the SME space, the traditional banks completely missed the opportunity because of the changing work environment. The freelancers, the Gig workers, young start-ups are now making up a growing part of the working population. Their banking and lending needs are not being addressed by the traditional banks. For example, secured loan applications geared toward full-time employees who have a full time contract with track record in salary payments via bank accounts. 1 - Redesign the Jobs to be Done Cards /Payments Accounting The Neobanks such as Tide.co tap into this market segment of independent workers, small business owners the tools they need to manage and grow their businesses. The jobs-to-be-done in these cases are invoicing, expense management, pay to staff, pay to vendor, shipment tracking, etc. There is a trend that Neobanks integrating 3rd-party providers in Accounting and Finance space as part of their value propositions to these. Redesign the Jobs to be Done | Page 01 Integrations for SME Neobanks (Europe) – Source: Arrival Bank
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  The rise ofcybercrime in 2021 was widely reported in the Financial industry. It’s increased by 118% from 2021 according to Modern Bank Heists 4.0 Report. One obvious thing is that financial institutions need to take this as a wake-up call, protect their customers against fraud and cybercrime in order to embrace digital banking practices. SMS One-time-password (OTP) is the popular authentication method in Vietnam banks today. However, SMS OTP is not as secure and personal as you think it is. The banks send SMS to customer’s mobile phones with an OTP when users login or perform a financial transaction. The OTP is subsequently keyed into the digital banking interface, either via mobile channel or web channel to confirm the transaction. SMS protocol was designed in the 1970s and modern security exploits its potential loopholes. For example, a Signaling system attack 7 (SS7) can be done with special equipment to read the text messages without being detected. Digital OTP is a cheaper alternative. Smartphone manufacturers such as Apple and Google offer push notification features for application developers. The push channel can be used to push such OTPs. With separated Digital OTP, the trade off is user experience, where users have to switch context while they login into mobile apps or perform the transaction. To further enhance digital user experience, banks are moving digital OTP features back into their Mobile applications with Solutions such as PayConfirm from Airome. It’s a software platform that performs mobile transaction authentication to authenticate or confirm any type of operations. No more hardware tokens, no more OTP-Generators and no dependency on mobile operator network and SMS. This solution offers protection from most common security threats in digital banking such as SIM swap fraud, phishing, bank account details replacement and other security threats. 2 - Modernize Mobile Banking Authentication Payconfirm • Secure • User-centric • Cost-saving Modernize Mobile Banking Authentication | Page 02
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  The core foundationwhen it comes to digital banks should be the mindset shift. Banks have a long history in investing in technologies such as using ATM machines to shift bank tellers to outside of the branches and work 24x7, or deploy online banking systems for customers to access their bank accounts remotely. With many consumers willing to go fully digital in banking services, a set of digital propositions is emerging to cater to these digitally savvy customers. The mindset shift is enabled by a blend between banking operations and digital thinking. To do this, the banks need Team and Technical Agility competency. It outlines the principles and practices that high-performance Agile teams use to create high-quality solutions for their customers. Agile teams create and support the business solutions that deliver value to the bank’s customers. This is the real cornerstone of Business Agility. While traditional organizations commonly align for functional expertise, value delivery spans functional silos. It’s not uncommon to find these silos in the business these days. The true Agile teams have all the skills necessary to define, build, test and deploy value in short iterations. To deliver the value to customers, they can be business teams, operations teams, support team, software team or hardware teams. They are empowered and focused on a shared goal. To help illustrate how to organize the Agile teams to deliver values to its customers, let’s take a look at the following example from financial services. This example consists of consumer banking loan operational value stream and 2 development value streams that support it. Loan Application Development Value Stream In this example, there are 340 people involved, so they are split into multiple teams. One option is to split into different channels to market such as online, mobile, branch, etc. Another option is to group by customer groups such as existing customer, students, homeowners and so on. Another option is to organize around products such as mortgages, personal loans, auto loans, 3 - Team and Technical Agility DEFINE BUILD TEST DEPLOY Team 1 Team N Team and Technical Agility | Page 03 Agile teams are cross-functional
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  and loan structuring.Together, these teams share the responsibility to maintaining and developing the loan application system. Without this system, the banks can’t process loan applications. There is one note in the picture. Credit Scoring System is complicated and requires specialist skills that are in short supply, the decision is to split Credit Scoring System into one team that support all other teams under Loan Application Development value stream Core Banking Development Value Stream This is the 2nd stream that support the servicing of the loans. One of its team is the consumer loans. Its charter is to develop specific consumers loans functionality that needed to support the operational value stream. Another team in this stream is Core Banking Platform team, who will provide the services not only for current stream but also access the wider scope of the bank. This platform team normally organize by steps in customer journey such as: New Account Creation, Account Closure, Payment Processing. Team and Technical Agility | Page 04 Financial services example showing 2 development value stream support one operational value stream. Attract Customers Channels LOAN NEEDS Quick Rate Quote Loan Origination System Credit Scoring System Core Banking System Complete Loan Application Eligibility Decision and Uncerwriting Extend Loan Terms Setup Payment Terms Repay Money Close Loan Award Loan “Loan application” development value stream “Core banking” development value stream $ Consumer banking loans operational value stream Repayment plus interest 30 Estonia 80 US (Atlanta and Redmond) 230 India (Bangalore and Delhi 150 US (Chicago) Original source: Scaled Agile
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  KMS Solutions worksclosely with leading software companies across the globe to bring the most advanced and innovative technologies to Asia Pacific. The focus is to help organizations achieve their business goals through world-class fit-for-purpose solutions and proven industry best practices. KMS Solutions’ success is ultimately mea- sured by the positive impact that it makes to the client’s business. Learn more about KMS Solutions: https://kms-solutions.asia/