In a mood for some #fintech inspiration? Take a walk down the #startup #alley. At the TechCrunch Disrupt 2017 event, currently taking place in New York, Bank Innovation came across a gauntlet of bright, shiny new #fintechs. Here are five of our favorites: Spendwallet While major #banks are busy building NFC-enabled digital wallets, this fintech […]
Bank Innovation
It is no surprise that with ever more stringent legislation, especially in the realm of anti-money laundering and beyond, all-too-often one-size-fits-all policies and regulations are stifling growth and exponentially increasing the onus on business across sectors and industries, but ever more so in the financial services provision industry.
Regulatory burden is regularly cited as the main problem area for #banks and financial services providers across both sides of the Atlantic, and beyond, with 3 of the top 5 reasons all being directly interlinked with the shifting up of gears by regulatory bodies, namely #KYC, transaction monitoring and the ensuing reporting requirements.
Equally unsurprisingly, this situation has two direct and immediate effects in the banking world: a) the gradual and relentless disappearance of community banks and smaller banking operations, with over 25% of all outfits with capitalisation of less 100 million USD disappearing over the course of the past 20 years as reported by the American Banking Association, and b) regardless of size, the increased aversion to risk by financial services provider across the board.
While the former can be partially explained away through mitigating factors such as conglomerate mergers and turbulent market conditions over the past two decades, the latter is a consequence of the continued inability to effectively adapt and comply efficiently with legislative requirements, the demands posed by which are hardly going to be alleviated and will only see thresholds lower and the net widening.
As clearly shown by the findings of the 2016 Thomson Reuters survey, the average cost for KYC and CDD compliance by financial firms is approx. 60 million USD, shooting up to 9 times that in a number of cases. The industry’s response to the increased demands posed is an almost disingenuously simple one: throw more resources and money at the problem and pray it sorts itself out.
In reality, the opposite has been found to be true: onboarding times are on a steady increase, estimated to take 50% longer in 2017 than they did in 2015, with customers’ responses directly contradicting the banks’ belief that correct, timely and full ongoing information was being provided (hence putting into question the veracity and therefore validity of the exercise itself).
Struggling to keep up with requirements at onboarding stage, it is even more worrying to note that financial services providers of all sizes and types are further unable to keep abreast, efficiently or otherwise, with the ongoing vetting and risk assessment due on past approved applicants.
As a consequence, the industry’s inability to keep up and to manage the additional impositions has seen the appetite for exposure being directly impacted, with all the snowball effects that this has on bottom lines, the economy and the future.
Effectively financial service operators are increasingly becoming more akin to information warehouses, and no amount of increased human resource spend will ever be sufficient to manage the volumes of data requiring processing. The increased reliance (if not total dependence) on ever growing specialised risk and fraud teams has created an inevitable bottleneck and a false sense of security that an acceptable minimum is slipping through the cracks, when the facts and figures spell otherwise.
While financial providers are having to allocate a growing percentage of their non-interest expenses (estimated by the Federal Reserve to be around 9% in most cases, down to around 3% for outfits with asset valuations between 1-10 billion USD) to cover specialist resource costs, make up for losses incurred through miscalculated risk and fines levied for regulatory non-compliance, facts and figures squarely point that the situation is entirely untenable.
The latest developments in the #FinTech and RegTech universe however offer a clear and cost-effective solution that allows for specialised efforts to be refocused, automating a huge portion of both the new customer onboarding process as well as the maintenance and ongoing assessment of client portfolios, enabling risk and fraud efforts to be redirected where it really matters – the upper percentage of customer accounts that are to be considered of medium-high risk.
In a world full of customer onboarding tools, data analysis software and customer screening services, the Aqubix KYC Portal stands out squarely by uniquely providing a fully tailored and customised platform through which true automation can be achieved. KYC Portal simplifies and delivers efficiency gains across the entire prices, from the initial acquisition of customers through to the automatic determination of the exposure posed according to the currently prevailing risk appetite internal to the organisation or department, the full KYC and AML compliance, irrespective of the operation’s jurisdictional requirements and the fully automated ongoing assessment of all clients.
Connecting independently and seamlessly to any third-party service providers of choice (be they screening services, document verification providers, external data warehouses etc) and internal data sources alike, KYC Portal opens up a previously untapped realm of data management and analysis opportunities that directly impacts operational efficiencies (with improvements of over 60%, by the most conservative of estimates) through the significantly reduced time frames required to onboard new clients, the drastic reduction of touch points during the process and the delegation of the initial data collection away from the specialised risk and fraud core.
Through a trigger and alert notification system, KYC Portal effectively sifts through new customers and automatically (based on predefined parameters reflecting the organisational procedures and practices) segment applicants based on their risk value, removing the need for intervention on the low risk or the ones beyond acceptable risk thresholds. In this manner specialist attention is refocused exclusively where it is needed – the high value but equally higher risk accounts.
Even at extended due diligence stages, KYC Portal offers a plethora of unique tools easing, speeding up and further securing the process, not least amongst which are the in-built, plug-in free face-to-face video interview recording and storage #technology, facial recognition and customer overview dashboard tools ensuring that human bias and limitations are totally done away with at all points in the process.
Following onboarding, KYC Portal automatically queries all existing customer records on a continuous basis, against any number and type of external and internal data sources, to ensure that any changes in status and background of all accounts is immediately flagged and notified to the correct personnel, as are any changes in documentary validity and requirements.
Operating on a highly notification logic, KYC Portal’s infinite customisability not only ensures that no single trigger goes unalerted, but equally that no resources are wasted on unnecessary investigations and account queries.
Building on an infinitely scalable and modular architecture, and married to a pure risk-based logic set, KYC Portal offers a plethora of additional modules which include transaction monitoring and assessment, with automatic notifications occurring in real-time whenever preset rules and ranges are triggered on an individual basis.
KYC Portal will be presented this June, 7th and 8th at the Harnessing FinTech Innovation in Retail Banking conference in London, where Aqubix are the event’s Lead Partner and main exhibitors. Aqubix CEO Kristoff Zammit Ciantar’s keynote speech “Automating compliance – the problem, the solution, the innovation” will open the 2-day event, where Aqubix will also be hosting 2 round tables on the operational impact of the innovation and potential offered by KYC Portal.
[linkedinbadge URL=”https://www.linkedin.com/in/kristoff-zammit-ciantar-7668681a/” connections=”off” mode=”icon” liname=”Kristoff Zammit Ciantar”] is CEO of Aqubix and the author of this article
For further information ahead of the event, or to discover how KYC Portal can help solve your organisation’s Compliance, AML and Risk problems, contact Adrian Darmanin, Chief Commercial Officer on [email protected].
From investing, to new payment services, to money transfer acquisition love triangles, #Chinese #fintech is having a bigger and bigger crossover with the U.S. fintech scene. With that in mind, here are five Chinese #fintechs #making their way into the U.S. market to keep an eye on. AliPay Yes, AliPay is sort of a given–if there’s going […]
Bank Innovation
Innovation is risky, so when it comes to funding new fintechs, #banks should hold with a more traditional view of risk than the one proposed by Silicon Valley. In other words, banks can apply the famous “#move #fast and #break things” mantra of Silicon Valley’s #technology entrepreneurs to quite a few facets of the industry—but […]
Bank Innovation
Momentum is building around real-time #payments in the US as #banks, corporations and #fintech companies begin thinking of how this could change the way they do business or the services banks could offer.
Tom Groenfeldt – Financial Technology
#Innovation is a young company’s game, right? Well, not according to the #incumbents. Established financial players are aware of the need for a “digital rebirth,” according to Kathleen Murphy, president for personal investing at Fidelity Investments. “We invest a lot in #fintech, in startups of varying sizes, to help spur innovation,” said Murphy, during a fireside chat […]
Bank Innovation
#Green Dot has had its share of trouble in recent years — MoneyPak fraud, the attempted ouster of CEO Steve Streit, and strong entrants taking it on its core competency of prepaid cards. But none of that has stopped the company from launching new products at a regular clip &8212; GoBank for Business, GoBank for […]
Bank Innovation
SAN JOSE, Calif. — Getting a mortgage is a terrible experience. It is expensive and time-consuming, and a lot of work to gather documents and data. It makes sense that #fintech startups are taking on mortgages, but the uptake has been slow &8212; until today. Yesterday, a few mortgage services took the #stage here at […]
Bank Innovation
Leading Accenture’s #FinTech programme is one of the most exciting jobs in the business. It gives me a great ringside seat on the latest innovations in this space and the #digital trends that will transform every area of banking in the next few years. In this, the second blog in my ongoing series, I want to focus on the new #channels that are opening up, and what they mean for how #banks engage with their customers.
Channels are critical. They’re nearly always the first point of contact between customers and financial services providers and, as such, they set expectations around the type of service that’s likely to be provided from then on. Over the years, we’ve seen many startups in the labs looking at this area. No surprise. Digital affords unprecedented opportunities for completely reinventing the quality of experience that customers receive.
Banks are adopting various different strategies for evolving their traditional channels. Some have focused on the branch as a primary point of contact, and branch network optimisation has been a theme for many of our clients, maintaining branches where they identify value and pulling back where they’re either unused or not economically viable.
Some new challengers are going mobile-only. But many in the middle are looking at a whole range of approaches. With #customer #engagement of such high importance, a key priority is enhancing channels to make them easier to use: making use of voice as an authentication tool, for example.
Whatever the course of action, all the initiatives we see have one primary objective: providing an easier and more convenient customer experience. The latest leap forward in this regard is the use of chatbots. These are like ‘live chat’ services that let people interact in real time with online services. The big difference? There’s a robot not a person at the other end of the proverbial line.
Chatbots have been around for years in many different forms. Old-school messengers like ICQ, for example, had a simple version of this #technology that exercised call and response based on hard-coded logic and/or guesswork.
It might seem counter-intuitive that a command line-based interface would be the next big thing. But it’s a trend that’s been prompted by platforms. Facebook’s chatbot platform, for instance, has proved particularly popular with some sectors of the population. So have the platforms offered by WeChat, Snapchat and WhatsApp. The ease of interacting with all of these via mobile has been a major factor in their uptake.
The chatbot model has evolved from answering relatively simple questions to leveraging machine learning, artificial intelligence (AI) and textual analysis APIs to answer more complex ones. These models learn over time, getting better at interpreting our intentions and executing them quicker.
Some chatbots are standalone apps. London-based startups in this space include Plum, Chip and Cleo . Plum’s been promoted as the first AI-powered Facebook chatbot that lets customers ‘micro-save’ small sums without having to think about it. It does this by connecting to users’ current accounts, learning their spending habits, predicting how much they can afford to save and automatically depositing small amounts into their Plum savings account on a regular basis.
Chip’s another micro-saving chatbot. The startup’s USP is that it opted to develop its own iOS and Android chatbot, rather than depending on an existing messaging app. Cleo, meanwhile, is an AI-powered chatbot that lets users check all their bank account and credit card data in one place. By allowing them to keep tabs on their spending, it helps users improve budgeting and get smarter with their money. The chatbot also suggests ways to improve saving, whether that’s rationalising subscriptions or identifying better value financial products.
The next big trend could see people engaging with a bank’s/partner’s third-party proprietary chatbot as a servicing platform (“tell me my balance”, “send money to X”, “tell me when my repayment is due”…etc). A number of players have been looking at how services might be provided through other people’s channels.
But will incumbent banks be willing to provide APIs so they can form part of other people’s bots/platforms (like Monzo’s done by enabling its service to be used on Amazon’s Alexa)? It’s an interesting question. Will they be comfortable with sensitive customer data being relayed through other peoples ‘walled gardens’? In some respects, PSD2 may answer this question for them.
With 2017 being touted as the ‘year of voice’, expect to see more vendors seeking to launch similar propositions to Amazon’s Alexa. As that happened, perhaps we’ll leap from text to voice even quicker than we think. For banks, this will add momentum to their push to reduce the number of calls real people need to answer.
There’s a lot of opportunity right now. But banks should exercise caution in how they expand the channels through which they engage—and as they move forward, do so consciously and strategically. Otherwise costs will continue to go up, with customers fragmented across both low- and high-cost channels. Leaders in this area will have a clear point of view on their channel strategy, and they’ll apply this thinking to their response to PSD2/open banking.
That said, people still like to talk to people. And that’ll never change. We’ll be watching closely to see how this space evolves.
Thanks for reading.
The post New channels, new voices: Customer engagement goes digital appeared first on Accenture Banking Blog.
#Fintech has another cousin. The rise of insurtech is running parallel to the rise of regtech, as financial firms and #startups apply artificial intelligence, #blockchain, and other technologies to the dizzying world of financial #regulation. Changing the face of regulation for a fresher, more transparent take isn’t exactly easy–as the OCC is finding out&8211;but we […]
Bank Innovation
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