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Wednesday, August 20, 2014

Heading to the new banking applications

Innovation, and more "Innovation". This looks to be the constant when speaking about the bank of the future, but unfortunately for those that haven´t started to innovate, the future is now, something like "No Country for Old Men". I will now put some examples for applications that can make the difference in the vertical.

1. Use of Artificial Intelligence (AI) for banks.
The common problem to interact with systems it is the easy of use, friendliness, etc, whatever you call it. Natural Language to interact with decision making systems can allow a number of tasks and features. Combining the power of Big Data Analysis or no so big data but common data found in Core Banking glued with powerful artificial intelligence systems that allow the use of natural language for querying the system can make a real difference. For the interface the chances are: written text, voice commands or implicit alerts triggered to existing interfaces.

Customers can ask things like "How much I have been spending in clothing this year?" "What is my best investing option for home insurance?" "Please project my savings for the next 12 months".  Let´s think about the customer who can be alerted by an app in her mobile when trying to buy something that threatens her savings plan.

On the other hand banks can use this system with its task force, allow new staff to ask for advice when dealing with complex transactions or specific customers. Risk Management or Compliance can be greatly improved, safer and quicker decisions can arise from AI in this context.  The number of solutions derived from AI in banking is huge.

2. Social Networks Support
Banks can check a number of things in social, who say what about the bank or competition, what people like or dislike, and eventually answers with supporting advisory or guidelines to customers complaints or launches social campaigns. But people are gregarious, they like to met partners and doing business with each other. Sometimes are expenses shared within a group of people, so they need something to help them to split expenses, borrowing, paying and collecting money for special occasions. Families who can join forces for specific needs in a form of money savings or somebody who can prepay services and obtain discounts. Private social messaging can be useful to send alerts of invoices to overcome. Some banking services can use the security log-in from external user certification authorities like Google, Microsoft or Facebook and forget about complicated and tricky proprietary applications. Using a mobile application that complements the social support, customers can access financial advisory for savings, investments, money management.

3. Democratizing Credit Card Brands
Is it wise to use a high limit card for a low amount internet transaction? Maybe is just a matter of feeling safe.  If you have a low amount prepaid card you can use it to execute low amount internet transactions, to let your sons to use on weekends for going to amusement parks, etc. Such card is perfect for gifts. But here comes something different, a re-loadable gift card. Why you should throw away the gift card after consuming its money. In one way sounds ecological and on the other is a way to empower people that does not have banks accounts to have its own "credit card". Of course it is not a pure Credit Card but can use recognized brands such MasterCard, Visa or American Express. The business turn to complement the service  with discounts networks, and promotions.
Customers can easily load the basic card information to its mobile, card number and user id. Then customers can use its mobile instead the plastic and secure its use through a personal password and one time code when they are ready to pay for services or goods. In such application the customer can also load discount coupons instead of paper cut ones.

4. Social Inclusion
There are some initiatives to insert un-banked and under-banked in the banking system like the one partnered by FIS: :This solutions uses the same principles exposed with Remote Check Deposit, clients simply take a photo of checks and instantly receive the check amount less a low fee directly right in the mobile where the electronic wallet application resides. Really an easy piece of cake.
Other example is Kiwa they are a sort of micro credit facilitators. They manage the lending process having in one side organizations or institutions that put money available to lenders and on the other side they work with micro credit lenders, people who ask for small amounts of money to initiate or implement improvements in its business. Kiwa offers a set of analysts who are in charge of lender qualification and approval. Something like Kiwa is MrPresta, they use the same business model. but they are focused on people who sell stuff in "Mercado Libre", the auctions Latin American portal like eBay.

5. Breaking the egg

As the new born bird who needs to break its egg to be free in the nest, banks need to rethink some traditional behavior. When customers visit an on-line retail store such Amazon or eBay, they experience a comfortable environment, with a history of its recently viewed items and purchases, they receive news on new products that can be of its interest. They have offers and specialized verticals for music or videos. User can explore its shipping address or credit card information. Banks have information that can be used in the same way,  user should have chances to personalize its experience in the Bank´s portal, receive coupons or discounts from local providers, or special interest rates, be advised on investments. Banks need to think from its customers point of view and let away the baker spirit for a while. For instance one customer could make a list of projected expenditures and as soon as the month begins the internet bank system can present the available balance vs the monthly payments, as soon as the customer salary enters the account it can be divided and the customer can visualize the real status of its accounts.

I will come with other ideas in other posts, stay tuned.

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