Close the Bank! — How the “Banking Experience Canvas” Helps You Move Beyond “Open Banking”
No one wakes up in the morning and says “I want to get a student loan!” They would instead dream of becoming an architect or an artist or a programmer, professional and consciously explore ways of making their dreams come true. Once you select your passion, it is at a later, equally important stage of the journey that you may engage with a bank or a financial institution to fund your studies by way of a student loan.
Visionary Banks look at the end “need” of the customer, not the individual steps they take to get there. Financial institutions are attempting to thrive in this intensely competitive market by providing the help and guidance by fulfilling the “need” the dream. Customers then make the decision to discuss their desires with a banking professional. The trust, privacy and security built by the banking industry over the years helps in this engagement.
The Swiss Banking Law of 1934 made it criminal for Swiss banks to disclose the name of an account holder. Similar to the confidentiality protections between doctors and patients or lawyers and their clients, these protections are the primary differentiator that make Swiss bank accounts so popular with banking customers around the world.
Challenger banks and financial disruptors increasingly recognise this fundamental principal. They are trying to provide an authentic banking experience by fulfilling the “need”. In order to fulfil the need, banks need to evolve, move outside of the traditional banking boundaries and establish collaboration models across multiple industry domains (Travel, Logistics, Education, Retail etc.,). Collaboration is already being increasingly facilitated by standardisation initiatives like “Open Banking” : PSD2 in Europe, OBUK, “Finance as a Service” in Singapore, Open API Framework in Hong Kong, Consumer Data Right (Australia), Open Banking in Mexico, Brazil and the standards like Banking Industry Architecture Network (BIAN).
“Open Banking” initiatives are fast gaining momentum, either driven by regulation (e.g. PSD/2 in Europe, CDR in Australia and Mexico) or by markets and competition from fintechs (e.g. US and China). However, to benefit from the opportunities created by standardised APIs to amplify value delivery and reach, stopping at publishing mandated regulatory APIs alone won’t help you secure a competitive edge. While preserving trust and security — the core promises of traditional banking — the focus should be on transforming traditional banking functions to agile banking utility services that may be consumed by both internal and external entrepreneurial teams to deliver more personalised value for individual and corporate customers.
In this context, and through my experience in facilitating multiple API-led transformation projects at leading financial institutions, I have found that a framework for delivering long term business value is generated when traditional internal capabilities (i.e. storing value, transferring value, providing credit and financial advisory) are unbundled, composed into API products and made available on a service mesh. This enables each capability to be scaled and developed independently. Importantly, it also allows consumers to pick and choose and even repackage these capabilities into new products in a way that is more relevant to their individual financial needs, thereby organically building their own banking experiences based on real-time needs and associated value delivery.
The Banking Experience Canvas
In this context, and through my experience in facilitating multiple API-led transformation projects for leading financial institutions, I have found that a framework for delivering long term business value is generated when traditional internal capabilities of banks (i.e. storing value, transferring value, providing credit and financial advisory) are unbundled, composed into API products and made available on a service mesh. This enables each capability to be scaled and developed independently. Importantly, it also allows consumers to pick and choose services, and even repackage these capabilities into new products, in a way that is more relevant to their individual financial needs. This process allows consumers to organically build their own banking experiences with value delivery by the service providers that is authentically linked to the each consumer’s immediate personal need .
The concept of a “Banking Experience Canvas” provides consumers a digital canvas to build their own banking experience by giving them the freedom to choose individual capabilities of the bank and it’s partner network across domains. Diagrammatic representation of the digital canvas is shown below.
Canvas is the digital space where you assemble your banking experience. Bank provides a pellet on the side which provides collection of individual banking functions (e.g : payments). These banking functions may originate from services and application portfolios of the bank(e.g : direct debit) or through its partners. (e.g : Consumer behaviour insight from a 3rd party Fintech.). Customers can drag and drop these services on to the canvas and build relevant experience. Each function dropped to the canvas has its own property configuration which allows the function to be customized based on the need. Individual functions are stitched together to create an experience. Canvas provides standard edit functions and maintains a history of activities.
The Canvas comes with pre-built experience (programmable experiences) templates.
The Consumer Experience
Consumption experience is your day to day general financial interactions. A template is available and the user can modify the template based on his/her individual needs. Template that is shown below is for your day to day general expenses.
Consumption experience template comes with standard payment configuration which supports on demand and scheduled payments through transfers, direct debit etc., Consumer experience binds different channels like credit/debit card, electronic payment channels like “Apple Pay” and e-wallets. It will provide integration to different rewards schemes (e.g : Qantas Frequent Flyer) which you are part of.Templates come with spending pattern analytics which provide advice/suggestions on your spending habits. Banks can extend the capabilities by incorporating tax advice services that analyse each transaction.
The saving experience is one of the simple consumer banking experience templates which could be included by default as shown below.
Your “saving behaviour” is your understanding of the amount you can save monthly. It can be either a fixed amount or in most cases a variable amount. An example of a variable amount is where you may decide to save a higher amount if your monthly earnings goes beyond $10,000. In the above template a simple rule set defines your saving behaviour. You save $250 every month without withdrawing. This is your standard “saving” account without boundaries and dynamic behaviour. The bank will look at individual needs of the consumer and come up with the saving behaviour where the consumer gets an interest rate of 1.15% p.a with a variable bonus rate of 0.05%. Based on account activity the consumer may get a monthly account keeping fee waived. The Banking Experience Canvas goes the extra mile by monitoring the transactions and may identify that the account can keep a higher balance. The Canvas may automatically advise keeping it maintained to earn an increase in the interest rate.
Let’s augment your banking experience by building an investment behaviour. Your investment may be simple like term deposits or complex like property, stock, bonds etc.,. Let’s assume that your need is to start investing in an asset class which is least risky and looking at the long term. You can assemble your investment behaviour on the same banking experience canvas alongside the saving experience. Investment tool kit on the canvas will help in building that.
Bank can bring in its experience in wealth management and investment banking providing advice to the customer. Lets assume the customer chose to invest on a property. Bank can help the customer by providing property advice, valuation, legal and tax services within the canvas as shown below.
Bank itself may provide these individual services or the bank will introduce partners who provide services on the canvas which you could drag and drop into the canvas.
The notion of a “Banking Product” dissolves and an authentic “Banking Experience” emerges. Consumers choose individual templated experiences and modify their colours and hue (behaviour). They will be able to superimpose experiences. The banking experience is further refined (maturity) and personalized by Artificial Intelligence. Canvas is integrated with advice and financial management capabilities delivering insight and detecting anomalies. The following table provides a comparison between the a “Banking Product” and “Banking Experience”.
“Banking Experience Canvas” is a digital canvas and dashboard which provides consumers the capability of building their unique banking experience. Banking capabilities and services are provided as individual building blocks and can be dragged and dropped to the canvas. The following diagram shows the building blocks on the canvas.
The Value Store
The value store is the logical representation of your storage of value similar to the account in traditional banking nomenclature. Value store is identified by an immutable id within the bank and is mapped to a value store identifier in the format of International Bank Account Number (IBAN) to support cross border payments. The value store will support multiple value types : currency, cryptocurrencies, bonds, precious metal and valuables. In a single value type, variations can be supported e.g : multi-currency. Multiple sources of value can be configured with a value store. The value store can be partitioned based on static and dynamic criteria, which allow you to have multiple buckets within a single value store. Value store is governed by privacy and security rules of the bank.
According to the Cambridge cash-balance theory, which is represented by the Cambridge equation, money’s ability to store value is more important than its function as a medium of exchange.
The Business Banking Experience
The small to medium sized (SME) business sector is vast and diverse. They employ half of the workforce and account for one fifth of Australia’s gross domestic product. The sector is often touted as the “engine room of the economy” and while its significant contribution to the economy is recognized by both government and the banking sector, it is a market that remains underserved.
“SMEs are traditionally time-poor, having to balance daily administration and accounting tasks with the day-to-day running of a business” : Ian Pollari, global co-leader of KPMG’s fintech practice.
SMEs want solutions that can help them address these challenges. They want their invoices to be paid on time. They want to spend less time on day-to-day administrative tasks to focus on running their business and they want the ability to access capital to help them with not only their daily cash flow but also to grow their business.
In order to cater the diverse needs of SMEs, banks need to go beyond the traditional business lending and build an ecosystem of service providers that converge banks, fintechs, market lenders, aggregators, cloud CRM, HR services, spatial analytics etc.,. Banks are expected to provide additional business services packaged with the business loan.
“You have to ensure that you are always adding value to your customers and you can’t just do that by providing them with only a loan. An effective customer retention strategy is done by providing additional products and services,”
The concept of “Banking Experience Canvas” extends to business by enabling the ecosystem of providers. Business will choose individual capabilities from bank as well as from the eco system of partners. Following diagram shows how these capabilities are built on the “Banking Experience Canvas”.
The Technology Layer that Enables the Banking Experience Canvas
The “Banking Experience Canvas” is essentially an application delivered online which provides an immersive environment. It provides an omni-channel experience across web, mobile and on devices (e.g : kiosk, teller pod). The application is designed and built on the following architectural building blocks.
- Single page rich internet application using HTTP/2
- Event driven architecture with async communication
- API based integration : REST, GraphQL, gRPC, Websockets, Async API
- Microservices architecture
- Big Data and Streaming Analytics
- Artificial intelligence
- Elastic scaling
- Multi-factor and adaptive authentication
“Banking Experience Canvas” consumes APIs and messages from the underlying services framework. The services framework provides standard endpoints of interaction through the integration layer to internal banking capabilities and ecosystem capabilities.
The following diagram shows how “Banking Experience Canvas” sits on top of the technology fabric.
