What might the future of banking look like?
The consensus today is that this question must be answered starting with a laser focus on the consumer’s need. And rightly so. In this post, I’ll be giving you my answer - a vision of what banking experiences could look like presented in the form of a product concept. I call this product the “Banking Experience Canvas”.
My intention with the Banking Experience Canvas is to give you a tangible example of what is already possible as the next step towards the future of banking and is derived from my experience in working with banks to enable their journeys in the API economy. I hope this proves to be a catalyst for more interesting conversations and innovation around how we can meet the needs and expectations of today’s consumers drawing on existing trends and technologies that have taken root in the financial services domain.
Starting With the Consumer
There is no doubt today’s consumers are increasingly digital. “Millennials” and “digital nomads” are terms that are used often to profile what we can freely observe - consumers making use of products and services on multiple channels and devices, sourcing instant, personal and seamless ways to meet their needs.
Today’s consumers expect better experiences
Picking up from the finely tuned user experiences delivered on modern smartphone apps, social networks, and e-commerce services, we have been conditioned for internet-driven convenience synced instantly across our multiple digital identities and physical life. The hold outs, generally from older demographics, have now been pushed over the digital edge by COVID-19, and have most likely bought into these experiences for the long run. More and more, these behaviors which emerged from among “millennials” and “digital nomads” have become common to us all, placing more pressure on traditional businesses to respond with matching experiences or risk becoming irrelevant.
From Branch to Mobile to Platform
As with any industry, the financial services industry has (even if slowly) responded. First, we saw existing products and services being made available on digital channels. Now, banks have bought into “doing digital” more completely, seeing the benefits of collaboration with service providers from both the financial services domain itself, and from related verticals, to help deliver more relevant consumer experiences.
We can already see this playing out at scale, arising from regulatory and market-driven movements like open banking, with banks collaborating proactively with fintechs to respond more quickly and effectively to changing consumer behaviors. Consumers, both individual and corporate, are already deriving value. Time-to-cash on loan applications have been slashed from months to minutes, millions more have been able to prove creditworthiness based on utility and rent payments, and personal finance management services have mushroomed giving us a new in-depth insight into our spending and investment patterns.
Where Are Banks Falling Short?
Even with progress, financial services experiences are disjointed and driven by the provider, not the consumer. The financial steps on my journey towards fulfilling my needs - buying a house, or saving for that dream summer vacation - are designed not by me, but by the service provider. These financial steps don’t arise as a natural step on my unique journey as a buyer and involve detours and moving between different vendors and service providers.
Take, for example, the process of buying a house. The journey involves several unique steps including figuring out how much we can afford, putting the funding together, analyzing properties, negotiating on price, contracting, and committing funds. What each of us feels is a natural ordering of these steps and how we feel comfortable progressing through these steps is unique to each of us. Some would first identify their dream house, while others would first figure out their funding plan. This journey is not necessarily linear, and generally involves a fair amount of back and forth between steps, reevaluating decisions made previously based on new information and unresolved concerns. However, the process we must follow is often driven by different service providers, including financial services providers, and their disjointed independent processes. Collaboration is attempted, for example, with redirects to banks on online real estate portals. But these attempts are still clunky, prescriptive, and ultimately a digital rehash of old-world pillar-to-post processes. Often, we feel nervous, frustrated, overwhelmed, and not in control. In today’s world especially, this is not a natural or comfortable journey for most.
Banks can do more
Can banks do more? Of course. Both to create a better and more authentic experience for the consumer, but also, importantly as a business, to derive the most value possible for the bank from the position of trust held by the bank, and the value and capabilities offered by the bank to partners and end consumers.
Introducing the Banking Experience Canvas
The Banking Experience Canvas, or the Canvas, is a new digital model built on three principles. I believe, in order to provide the fulfilling and natural experience to consumers, in a way that brings in return the most value for banks, banking services must be:
- Omni channel
The Canvas is designed to provide a personal and complete experience to fulfill the need of the banking customer. It also looks at bringing in value-added services outside of the traditional banking domain. This enables banks to improve brand loyalty and customer retention, delivering on the promise of platform banking for banks, partners, and consumers. It may also be consumed on the bank’s own channels across mobile, web and kiosk, or on channels operated by partners, picking up from the point of the buyer journey that is the next logical step for each individual consumer.
An illustration of the Banking Experience Canvas
In its essence, it is designed as a digital canvas where customers will build a workflow arranging multiple individual functions provided by the bank or sourced from partners. These functions range from standard banking functions to value-added services outside of banking. Each banking function can be customized based on the customer’s needs.
One of the important building blocks is the value store. This is based on the fundamental concept that banks, in all their avatars, manage value.
The bank as a value store
The value store represents the “Bank Account”. It has multiple representations to facilitate interaction with different sources of income. It may be partitioned with static or dynamic rules. Each partition is attached to a specific banking experience that extracts value from the store. Instead of what you see in traditional banking, you don’t find multiple types of accounts. Each banking experience has its own intelligence. It is also able to dynamically adjust itself and advise the user based on learning taken from similar and related experiences.
This model provides the customer with the freedom to design their own experiences. With the Canvas, the bank is able to provide a rendezvous point for multiple partners which can provide value-added services beyond traditional banking and inturn customer benefits from a holistic experience. This rendezvous point can be made accessible either on the bank’s channels or on other portals and channels which represent natural places for the consumer to create the experience relevant to fulfilling their need. Taking the example of buying a house, now each user may access design a completely personal and complete buyer experience, where they feel most comfortable doing so and at their own pace.
A consumer’s buyer journey
Building the Canvas
How can we make this happen? APIs, microservices, eventing architectures, and open banking initiatives across the world provide the necessary technical foundation for this new interaction model.
An architectural overview of the Canvas
An important step in the process is to secure access to a strong and complementary set of partners. The bank could look to build a partner ecosystem by providing a collaboration space in the form of an API Marketplace. An effective marketplace setup organizes APIs into groups based on their attributes with categories, labels, and tags and provides intuitive and self-care workflows to enable fast onboarding. A feature-rich monetization capability will allow APIs to be monetized in multiple models and would be available on any strong API Management platform. These APIs may be used to build API products which could be added as services on the service palette of the Canvas. The Canvas is presented as an intuitive single page application that is paired with an eventing architecture. Each individual banking experience is built as a workflow. Support for eventing architecture, full support for different EI patterns, and agility in building these integrations will provide the ability for experiences to be built quickly. The bank would also need to have a strong identity framework that would support many types of identity protocols and identity federation mechanisms. Additionally, to deliver an intuitive and helpful user experience the bank would need to augment real time analytics capabilities. Providing this integration, API management, identity, and analytics capabilities in cloud native manner on a single platform would further make it easier to build the Canvas.
The conditions for broad collaborative products like the Canvas are now very much in place with the concepts like open banking taking hold globally. It’s time for banks to grab the opportunity with the right technology and mindset.
Taking the Experience Forward
As I mentioned in the introduction to this post, my intention in proposing the Banking Experience Canvas is to provide a starting point for more discussion and consumer-centric design thinking in the banking space. Is the Canvas a valid vision for the future of banking? I feel so, and I also feel this is a future that may be realized today building on existing technology and ecosystems. I hope you would share your thoughts or alternative ideas and together discover a better model of financial services that delivers truly authentic financial experiences delighting consumers.
I will be discussing the Banking Experience Canvas, its use cases, and underlying technology at was first introduced by me at WSO2 Summit Americas later this month. I invite you to join us.