Welcome to our specialized banking category, an expertly curated space where we delve into the exciting world of digital transformation sweeping across the banking industry. Our insightful articles explore a multitude of facets that are actively shaping the future of banking, from the disruptive force of cutting-edge technologies to the shifting paradigms of customer expectations.
As the terrain of the sector undergoes continuous evolution, it becomes increasingly crucial for industry professionals, enthusiasts, and observers to keep abreast of the latest developments and trends. Our in-depth articles serve as a resource, providing valuable insights into how traditional banking institutions are navigating the transition to the digital age, and how emerging fintech companies are spearheading innovative solutions that are redefining the industry’s contours.
Our coverage encompasses a wide array of topics, from the convenience and the ubiquity of digital payments to the transformative impact of regulatory technology and the paramount importance of data security. This comprehensive exploration offers our readers a panoramic view of the digital banking ecosystem. Our overarching objective is to equip our readers with a nuanced understanding of the challenges that lie ahead, as well as the opportunities that digital transformation brings to the fore.
So, immerse yourself in our curated content, enrich your knowledge, spark meaningful conversations, and stay ahead of the curve in this digital banking era. Join us in exploring the captivating world of this sector where the only constant is change. Welcome to the future of banking, with us!
In 2021, total digital transactions conducted exceeded 40 billion with an accumulated estimate of over a quadrillion INR across the country. RBI had been brainstorming for a long time to optimize these transactions while creating a more efficient system for payments and keeping track. Account Aggregators(AA) are the latest initiative to resolve this.
What Is Account Aggregators Initiative?
Account Aggregators are RBI’s newest reformation in the payment processes. It allows the collection of user data that can be shared among multiple financial institutions with approval consent every step of the way. This permits institutions to create a better understanding of customers and provide their services, accordingly.
In addition, 8 major banks are joining RBI’s pep for reform. These include State Bank of India, HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, IDFC First Bank, IndusInd Bank, and Federal Bank. The new system with the aid of these many primary players helps the free flow of data between financial information providers(FIPs) and banks. It will especially help loans for MSMEs and other small scale businesses.
Account Aggregators relay user information between financial information providers and financial information users(FIU) during transactions. User consent is mandatory for each step in the process. This is mostly effective for loans and lending, but other payment processes can also utilize it.
What are the Benefits of Account Aggregators?
Account Aggregators create a systematic approach to financial data management among institutions. It is a precise solution for scattered data across financial entities and enables the transfer of consented data without view or processing by the aggregator itself. Users can search and find information
In terms of economic impact, observers are comparing Account Aggregators to UPI. Expectations are that Account Aggregators will bring unprecedented benefits in making payments and lending easier, just like how unexpectedly UPI transformed the economy.
With Account Aggregators, many SMEs can operate without physical branches transforming credit penetration. The ease of access Account Aggregators creates during loan applications, will encourage entrepreneurs and businesses to execute their ideas faster. Since the entire system is overseen by government bodies, chances of fraud and malpractices are nearly nullified.
Data Privacy
One of the major concerns surrounding Account Aggregators is how private the data is. Before the official release, speculations were in the air. RBI was diligent to emphasize how secure the user data will be. Data privacy and user consent are keystones for any transaction and formulate the fundamentals of the framework.
Presently, RBI allows only regulated entities to access the Account Aggregator ecosystem. On top of this, user consent is mandatory along every pitstop in the process. It is important to note that account aggregators themselves are unable to view or access data as they are designed only to relay information between FIPs and FIUs.
What It Means And How Can Signzy Help You
RBI acknowledges the pace at which the information era economy is transforming. Just like UPI, Account Aggregators are a step in the right direction. This will fasten and ease payment services and the lending industry. It is clear that what the nation aims for is a completely digitized economic infrastructure.
Digitizing your services is not simply about digitizing your services. In the cutthroat competition, it is simply not enough to meet the minimum standards. You need to craft a user-friendly, fast-paced, secure system. We at Signzy can help you create the perfect solutions for all your onboarding and KYC related needs.
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
Efficient and robust customer onboarding banking processes are a vital part of any bank’s compliance checks. Having an easy-to-use and seamless onboarding process allows financial institutions such as banks and NBFCs to keep up with the changing economic landscape. In addition, It leads to a solid ROI and creates a more enjoyable experience for the end customer.
Customers like to see digital experiences across critical services, especially in the finance industry. In the banking and financial services industry, customers now expect digital experiences across critical services. This is especially significant for client onboarding banking, which is the complete process through which an individual begin theirer journey as a customer or client of a bank or financial institution.
Learn about customer onboarding in the banking sector
Customer onboarding in banking refers to the steps taken by a bank to welcome a new business customer. To comply with KYC standards, this usually entails acquiring important information about the customer and conducting identity checks.
In banking and financial institutions, customer onboarding necessitates proactive communication and participation from several departments within the bank, including credit, operations, compliance, legal, front office, risk, and tax.
According to Forrester’s study, institutions with partial solutions with basic workflows require two to twelve weeks to enroll new clients. New technology has been introduced by many banks in the last few years to create greater efficiency and a better customer experience.
Key challenges in customer onboarding
An inefficient customer onboarding in the banking and financial services sector is resulting in hefty losses in terms of converting engaged customers. Between 2009 and mid-2016, banks were fined more than $200 billion for anti-money laundering violations, which had serious consequences for their onboarding operations. To combat this, banks have begun to tighten their Know-Your-Customer (KYC) and onboarding processes, resulting in a significant increase in onboarding costs. This has harmed the client acquisition process, generating unnecessary delays and long time-to-cash cycles, producing friction in a business customer’s day-to-day operations, and resulting in a significant loss of revenue.
In the rush to optimise their client onboarding banking journey to the point where it is an asset in the struggle to attract new customers and expand market share, banks and financial institutions are falling short. A recent report by HooYu found that:
86% of fintech intend to focus on the effectiveness of customer onboarding while only 43% would like to focus on driving further traffic to the top of the customer onboarding funnel with PPC advertising
Modern fintech companies are placing an increased emphasis on integrating onboarding technology providers and A/B testing compared to traditional financial services firms.
The single biggest customer onboarding drop-out comes when customers are asked to produce ID documentation. 50% of fintech believe this to be the area of significant customer abandonment.
Here are some of the primary difficulties that banks and their commercial customers experience as a result of the old onboarding process’ inefficiencies:
Customer Challenges
Complicated and time-consuming application process without adequate guidance and/or assistance.
Restricted communication and lack of transparency in the application process resulting in trust issues.
Wastage of time due to abrupt requests for documentation and duplicate/incomplete data entry in the paper-based process.
Excessive turn-around-time in customer onboarding impacting business transactions and cash flow.
Lack of personalization and proper assessment of the customer’s needs while guiding them through the products and services prompting them to switch banks.
Bank Challenges
Fast evolving regulatory requirements and stringent laws are resulting in complex customer onboarding in banking.
Inability to manage customer expectations across digital touchpoints during their various stages of the buying journey.
Longer onboarding time leads to lost cross-sell/up-sell opportunities with customers during their initial engagement period when their propensity to sign-up for additional services is high.
Missing single-view of the customer information impedes using existing customer data efficiently and any meaningful data analytics to give any conclusive customer insights.
Managing frustration due to delays, convoluted processes, and bureaucracy impacts the sales operations, which leads to up to 3/4th of customer onboarding requests not being able to reach fulfillment i.e. final stage of account opening.
Best practices for customer onboarding in banking
An Intuitive Mobile-First Solution
Customers are used to interacting with their phones and are disappointed when they don’t like the initial banking experiences. Almost half of the bank account applicants have abandoned the first few days of application for a bank account. The culprit is paperwork-laden processes that drive consumers to seek out digital-first alternatives.
Even though it is not as large a screen for a smartphone, the application experience should be enjoyable. Favorable mobile application experience limit the number of fields that are displayed on each page. Applications should be as easy to complete on mobile as on a desktop.
A customer can start and finish their banking experience with a simple text message on their mobile phone. Clicking on a link in the message will take the customer to a secured portal where they can do everything from interacting and completing steps to uploading supporting documents and identification.
When applying for a bank account, over half of clients claim they skipped the onboarding process. Cutting-edge banking technology allows customers to begin and finish their transactions with a simple text message from their mobile phone.
Eliminating Paperwork
Flexibility can be offered for how agreement details, legalese, and lengthy terms are presented and reviewed by consumers with the use of digital contract technologies. For example, It’s possible to present TILA disclosure tables in a variety of mobile-friendly formats, with the help of mobile-friendly document generation tools. If the only solution you can come up with is a static PDF that requires a microscope to read on mobile devices, then it should be done differently.
The new solutions enable banks to get legally binding customer consent from wherever they are. The customer can access and sign a secured document by clicking on the link in a text message. Banks can save money and time with the easy process because it eliminates cycle time and compliance exposure. The completion rates for customers are much higher when they use the smart eForms. It’s easy to complete eForms that are mobile-friendly, simplified in their presentation, and leverage autofill and CRM-prefill. Service reps can assist with the customer while also viewing the same form at the same time.
Without missing anything, the smart eForms ensure that the process is complete in a fast and accurate manner. Then eForms can be submitted from any device. In addition to this, terms and conditions can be presented in a format that is more user-friendly instead of having a service rep read them from a script.
Digital KYC
The benefits of digitising the ID collection process are several, the most important of which is that it lowers fraud. Financial associates aren’t always trained to recognise false or invalid identification cards. Financial organisations can confirm that IDs are authentic and relieve their workers of this strain by automating the ID validation process. Furthermore, digital ID collection eliminates the need to scan and file paper copies of identification. Instead, the information can be stored digitally in a more secure and accessible location. Digital ID collecting improves the experience for clients who sign up at a brick and mortar branch or in a remote scenario because it can be done without anyone leaving their seat.
A consumer can use a mobile phone to capture and send photos of their face and driver’s licence for approval with advanced ID verification and authentication systems that include completely automated KYC. Onboarding time is decreased, fraud risk is lowered, and even the most stringent ID and verification requirements are met promptly.
Automation and Real-Time Support
A digital customer onboarding banking process enables data to be pulled from Customer Relationship Management (CRM) systems like Salesforce or custom-built solutions to automatically populate contracts for additional services to expand the relationship. For customers, having contract fields already filled in is the ideal experience; it saves time and demonstrates the value of existing banking relationships. For banks, not only do completion rates improve, but re-keyed data errors are also reduced. This enables you to walk the customer through the process step by step, adapt to their needs and risk profiles, and skip questions based on past responses.
When the questioning is finished, the system can use the responses to build a signature-ready agreement for the customer. It’s a streamlined, mobile-friendly way for customers to navigate a difficult application procedure. For banks, it’s a method to boost completion rates, cut support expenses, and lower Not-In-Good-Order (NIGO) rates, all of which minimise the cost and time it takes for manual review and remediation.
Benefits of improving customer onboarding in banking
Consistency: Consistent design and a cohesive domain experience show customers that the application is being offered by someone that they know and can trust. While sharing personal and financial information during the customer onboarding banking process, they should feel secure and confident.
Ease of use: An intuitive application experience makes it easy for the customers to navigate or fill in their details. Seamless applications that allow customers to start and stop the process across platforms to further enhance the overall experience. (e.g. If they start filling out the application on a phone and finish it on a laptop, that’s how it will go.)
Clarity: The ability to connect with someone if the customer needs help is a hallmark of the best customer experiences. At the same time, the communication language used is clear and easy to understand, including error message explanations.
Efficiency: Customers can save time and avoid having to submit documents like account statements by connecting other accounts and pre-filling form blanks. These technologies improve efficiency and speed up the application process by removing needless manual labour.
Redefining customer experience & Future of customer onboarding
For the third year in a row, digital account opening (DAO) is the most popular banking technology. In 2020, almost 80% of all financial institutions will have introduced new DAO systems or modified current ones. – Forbes
Due to the COVID-19 pandemic, banks and financial institutions have started realizing the potential of digitization in the customer onboarding banking process. Digital identity solutions enable customers to safely access banking services and help banks offer customer-driven, mobile, and secured services. To provide a hassle-free UX while avoiding identity fraud, FIs need to focus on the following critical areas in their digital services.:
Provision of strong identity verification technologies and mechanisms
Provision of robust biometric verification
Provision of additional verification services for scoring, reputation, and risk management
Provision of a frictionless digital user experience for apps and services
Ensure that state-of-the-art security checks are performed in accordance with regulations.
When it comes to providing banking services, the better the customer service, the more customers will be willing to start a relationship with the financial institution. Emerging technologies being tested for client onboarding banking have a lot of promise in terms of speeding up the process, reducing duplicate data entry, and improving risk and compliance scoring accuracy.
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
Isn’t this the first question that comes to one’s mind when meeting a person for the first time? It is a natural question. In people’s conversations, a response is enough to close this question. But, it is different when dealing with institutions like Banks, Countries (immigration officers), and governments. Verifiable documentary evidence has to support the response. This is when an Identity Verification Service comes into play.
It doesn’t matter who you are. Documents must validate identity when dealing with institutions. A couple of years ago, a video went viral on the internet. It featured the tennis great Roger Federer. An usher at the Wimbledon center court did not allow Federer to pass without an ID document. For the record, Federer has won Wimbledon a record 8 times.
Businesses use identity verification services to ensure customers’ identity is true and accurate.
The identity verification service validates identity in the following ways
Using Government documents such as license, social security card, or passport.
Verify information from many sources – credit bureau or government databases.
Thus, identity verification service ensures successful KYC and Anti-Money Laundering (AML) compliance. It also reduces risks by fighting identity theft.
Your business may not have an identity verification service in place. It may already have one but is evaluating other options. Here are pointers to build a strong, successful, fintech, and sustainable identity verification process.
Compliance for an identity verification service
Law of the land still reigns supreme. Statutory and regulatory compliance is mandatory and no exceptions are advised for any identity verification service. On one end, there are KYC requirements that mandate access to identity, financial and personal information. On the other, there are privacy laws that regulate access to user-owned data. A paradox. It is this contradiction that identity verification service providers have to navigate.
KYC
In 2002, all financial institutions made KYC mandatory in the US. This was due to the USA Patriot Act of 2001, which came into being after the 9/11 tragedy. All KYC processes have to adhere to a customer identification program, called the CIP. The CIP also forms part of the institution’s anti-money laundering (AML) policy. Banks and Fintechs leverage KYC to assess customer profile and consequent risk.
Privacy Laws
On 25 May 2018, the European Union (EU) put a privacy law into effect – General Data Protection Regulation (GDPR). GDPR brought to the forefront the entire debate on data privacy. ‘User consent’ is the cornerstone of GDPR giving tremendous control to the user. The user now has the power to manage data – active and passive – that the user shares with other parties. The US too has many privacy laws, but none at a central federal level, unlike the EU’s GDPR. The Californian Consumer Privacy Act (CCPA) is often the most talked about and the most recent.
Be aware of legal requirements before zeroing in on an identity verification service. Adhere to all laws including KYC, Anti-Money Laundering (AML) regulations, and privacy. Violation of laws could invite major penalties or financial jeopardy.
Fraud Protection
The leading identity verification company Idology published the eighth “Annual Fraud Report 2021.” It says leaders call identity verification, the number one challenge in addressing fraud. It is not surprising. Covid-19 accelerated digital transformation initiatives across organizations. Identity verification was one of the top use cases. This at a time when incidents of fraud – financial, data breaches, identity thefts, and mobile fraud plays – are at historical highs.
Technology
Without technology, no identity verification service would be possible. The options are discussed below.
Optical Character Reader (OCR)
The world is still far away from complete digitalization. Most documents including those related to identity are still in paper form. OCR transmits the data from paper to electronic portals. OCR scans, recognizes, reads, and extracts written information from an identity document. It then verifies if the identity card submitted by the customer is legitimate or not. This allows customers to verify their identity through smartphones. OCR collects data from documents and encrypts it to follow regulations and reduce fraud.
Biometrics
Your smartphone asks for your fingerprint or your Face ID to unlock. Biological markers are impossible to replicate. These markers are best placed to customers into a password.
Biometrics goes beyond face id recognition. It could extend to DNA matching, iris scan, fingerprinting, voice, and even typing. Biometric identification captures and corresponds to people’s unique physical features/behaviors. Thus, it lends strong confidence to a business’s approach to identity verification.
Blockchain
Following the crypto-mania? The Bitcoin frenzy has overshadowed the technology that powers crypto – Blockchain. Blockchain is powering a broad range of applications from trade to music and even voting. Yes, voting in elections. Identity management is using blockchain too.
The beauty and strength of the blockchain are that it restores the right to privacy to the user. It is the user who decides what personal identity information to share. Thus, fintech balance the challenge of ensuring compliance while adhering to privacy laws.
Blockchain is a digital ledger of decentralized data. It lends itself well to solve the use case of identity verification. Consumers assign a digital identity or watermark for all transactions. They then decide which information to share. This makes the process speedy, convenient, and risk-free for both parties. Thus, leveraging blockchain technology can ensure that digital compliance is convenient yet secure. Digital identity verification solutions including Signzy are also utilizing blockchain to audit transactions.
Artificial intelligence (AI)
AI impacts identity verification in the following ways,
Replace the human in performing all mundane tasks e.g. physical verification of paper identity documents.
Quick real-time verification of captured information with a trusted database either public or private.
Fraud detection and prevention.
Artificial Intelligence (AI) fastens the identity verification process compared to humans. It also resolves the biometric issues related to aging, makeup, and facial hair. AI-driven platforms leverage artificial intelligence algorithms. They verify a selfie and a photo ID for a swift and accurate identity verification process. AI accepts many identity card formats and uses the selfie for more authentication. AI conducts real-time authentication with geolocation, IP address, and AML background check.
The technology stack supporting identity verification could start with one of the above. The stack could also be a combination. The decision would depend on the requirements and the business’ capability maturity. The choice of the technology stack should address compliance, fraud, and user experience.
Awesome User Experience (UX)
Identity verification is fraught with friction. In most cases, it is a frustrating experience for the users. Most users seem to have developed ‘acceptance’ to a poor user experience. Even the smallest convenience offered comes out as a great user experience. Balance awesome UX with the need for compliance and also preventing financial frauds.
Factors to consider
The approach to delivering a great UX could be guided by the following factors.
Avoid human intervention as much as possible
Ever imagined what would happen if the number of customers increased by 10 times? Wouldn’t it be tedious for your staff to keep up with the onboarding process? Thus, it would lead to bottlenecks causing the process to slow down. Higher the number of customers, slower the onboarding process. It’s an issue that can be exacerbated. Hiring more employees could solve this problem but wouldn’t be beneficial. Deploying automation will prevent this problem. It will avoid time-consuming processes, human errors, monotonous and repetitive tasks, improving productivity.
Need for speed and seamless experience
Customers hate waiting. The more you make them wait, the higher are the chances of you losing them. Sign-up abandonment is a reality, even if related to ‘mandatory’ services like banking. Unfamiliarity with the processes can be uncomfortable and frustrating for the customers. This causes poor user experience, resulting in abandonment and even churn.
Set user expectations
Identity verification is never a one-step process. It has to involve many steps. Setting user expectations at the outset can help manage user expectations better. Resetting user expectations at every step will help build a relationship. Thus, leading to eventual success.
Quick Wins
The single most important element in improving UX is simplicity. Achieve UX Simplicity by doing some of the following.
Autofill or automate the capture
One can’t imagine the joy one experiences on seeing a 15 field form partially auto-filled. A helpful dopamine shot. The availability of public and private databases of information can improve UX and cut errors of omission and commission.
Ask easy to remember information
Instead of asking the entire 9 number social security number (SSN) asking for the last 4 digits could catalyze action. Similarly, asking for information progressively (i.e. step by step) instead of all at once could reduce friction.
Fallback
Not every user who fails verification is a fraudster. Legitimate users may also be unable to verify ID because of genuine reasons (patchy internet, poor quality camera). So as not to impair UX, the system should provide for a fail-safe fallback including a manual process as the last option.
It is all coming together
Digitization will continue to grow. Institutions will juggle many factors in implementing identity verification solutions. Compliance will, without doubt, be the overriding factor in setting direction. E.g. The current COVID-19 pandemic is exerting another layer of verification for people’s movement. The continued growth in mobile users is making awesome user experience hygiene. UX should be as simple as ordering food on mobile, if not simpler. It is up to technology to do the tough balancing act between compliance and UX. It will be interesting to witness the future of digital identity verification. It will include compliance, mobile identities, cross-border imperatives, and artificial intelligence. Get ready for a machine soon asking you, “Who are you?”
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
AI-powered machines are tailoring recommendations of digital content to individual tastes and preferences, designing clothing lines for fashion retailers, and even beginning to surpass experienced doctors in detecting signs of cancer. For global banking, McKinsey estimates that AI technologies could potentially deliver up to $1 trillion of additional value each year.2
Many banks, however, have struggled to move from experimentation around select use cases to scaling AI technologies across the organization. Reasons include the lack of a clear strategy for AI, an inflexible and investment-starved technology core, fragmented data assets, and outmoded operating models that hamper collaboration between business and technology teams. What is more, several trends in digital engagement have accelerated during the COVID-19 pandemic, and big-tech companies are looking to enter financial services as the next adjacency. To compete successfully and thrive, incumbent banks must become “AI-first” institutions, adopting AI technologies as the foundation for new value propositions and distinctive customer experiences.
Over several decades, banks have continually adapted the latest technology innovations to redefine how customers interact with them. Banks introduced ATMs in the 1960s and electronic, card-based payments in the ’70s. The 2000s saw broad adoption of 24/7 online banking, followed by the spread of mobile-based “banking on the go” in the 2010s.
Few would disagree that we’re now in the AI-powered digital age, facilitated by falling costs for data storage and processing, increasing access and connectivity for all, and rapid advances in AI technologies. These technologies can lead to higher automation and, when deployed after controlling for risks, can often improve upon human decision-making in terms of both speed and accuracy. The potential for value creation is one of the largest across industries, as AI can potentially unlock $1 trillion of incremental value for banks, annually
No-code in a nutshell
For as long as there have been computers to program, there have been attempts to make programming easier, faster, less technical, and available to a much broader audience. Essentially, any end-user programming signals that even though most computer users lack coding skills, they would welcome the application potential of various tools — as long as the effort to obtain these skills is low.
No-code stands for a family of tools that allow people to build applications and systems without having to program them in a conventional way. Instead, the core functionality is accessible through visual interfaces and guided user actions, as well as pre-built integrations with other tools to exchange information as needed.
While these self-imposed restrictions can lead to issues for very large or complex applications, the whole family of no-code tools is handing a big chunk of power to their users. As Alex Nichols from Alphabet’s growth fund CapitalG said:
“No code is empowering business users to take over functionality previously owned by technical users by abstracting complexity and centering around a visual workflow. This profound generational shift has the power to touch every software market and every user across the enterprise.”
To give you a few examples, here are some common things that can be built entirely with said no-code tools (check out Nocodelist for more examples):
Websites and landing pages with Webflow (ours is built with it!)
Web or mobile applications with Bubble, Adalo, Mendix or Thunkable
Chatbots or virtual assistants through Octane AI, Kore.ai, Landbot or Mindsay
Databases through Airtable
Connecting your tool stack with Zapier, tray.io, Integromat, Parabola, or Paragon
E-commerce through Shopify or Weebly
Manage memberships with Memberstack
It is fair to believe that the no-code space is here to stay. AI tools built on these principles are showing that the field not only grows in width but also depth when it comes to the job to be done and technology in place.
Before we move to no-code AI, we will quickly touch on one fundamental question first: When does it even make sense to use AI?
When to use — Why No Code AI Can Help Succeed?
Note that AI can be used for a variety of applications but we intentionally limit our discussion to business applications.
Broadly speaking, AI is particularly helpful when there is some sort of intelligent judgment to be made by humans and when there are many of these on an ongoing basis. We often use the phrase “AI starts where rule-based automation ends” — which makes sense from our viewpoint but should not be generalized (there are tools that go beyond pure automation, e.g. Obviously AI for analyzing tabular data at scale).
Quantity
Due to ever-changing regulations at both the federal and state levels, insurers and banks are finding themselves having to produce, reproduce, and edit a massive amount of required client forms. Whether it’s a policy proposal, an insurance application, a policy amendment, or a prospectus, it’s something that must be reviewed by an employee and scanned for future retrieval. When you use a digital solution like EasySend, your company can significantly reduce the number of forms and make it easy to fill them out and store them. If there is an update to be made, an existing form can be changed and saved in the cloud-based database. The catch is that your client database must meet current federal and state security standards to protect consumer information from data breaches.
Quality
Let’s face it. Many insurers and banks in the U.S. have slowly developed into large and complex enterprises. They are slow to complete their digital transformation because they are often crippled by legacy systems and inefficient processes. The result is that customers don’t enjoy their experiences. With EasySend’s no-code, plug-and-play solution, any insurer can become more adept at processing multiple client forms, which improves the customer experience and elevates overalls satisfaction to a new level. Your insurance company must invest in a solution that brings legacy systems into the digital age (even if it means replacing them).
Cost
We live in a world where the potential ways you could invest in digital transformation would exceed your IT budget if you purchased them all. Every time you adopt a digital solution, ten more options emerge on the market promising to perform the same processes and more with greater efficiency. Although many large insurers and banks have deep pockets, their spending is under constant scrutiny from regulators, distributors, and customers. Generally, the priority of the insurer is always ensuring that you have healthy cap reserves, general account surplus, product embedded value, policyholder or contract owner dividend, etc. EasySend can help enterprises improve their top-line value (earnings) by reducing the substantial direct and indirect costs associated with manual form production and form management. We’ve also planned for how to manage the many risks associated with manual document processing including errors, non-compliance, and client attrition.
Time to Market
It used to be feasible to wait 8 to 12 months for the release cycle of a new digital product. Now, if you were to wait that long, your customers would abandon your brand. Today’s insurers should consider solutions that deliver new digital experiences to their clientele with greater speed. EasySend uses advanced AI (artificial intelligence) and no-code application development capabilities to reduce development time from months to days. Our solution also reduces maintenance costs and simplifies operations. You won’t need any programmers to update business processes with EasySend, but your CTO will find it easy to implement this platform across your organization. Choosing EasySend would be a crucial and impactful step in your digital transformation.
Benefits In Banking — What No-Code AI Helps You Achieve
Shadow IT solutions being built by businesses to resolve immediate needs are increasing the operational risk considerably. According to Gartner, at large enterprises, citizen developers are likely to be four times the number of IT professionals by 2023.
Customer experience transformation is held back by digital skill shortfalls in the workforce. Almost 80% of banking CEOs in a PwC survey saw this as a key challenge to digital transformation.
Dynamic market and regulation landscapes need adaptability at speed, but technology investment is slow in traditional banks. According to a recent Oliver Wyman study, traditional banks take three to six months to launch a new feature, while challenger digital banks do it in just about a couple of weeks.
Legacy systems that don’t integrate well with modern applications, hinder digital transformation efforts, consuming 60–80% of technology budgets for operations and maintenance.
AI and Credit Decisions
Artificial Intelligence provides a faster, more accurate assessment of a potential borrower, at less cost, and accounts for a wider variety of factors, which leads to a better-informed, data-backed decision. Credit scoring provided by AI is based on more complex and sophisticated rules compared to those used in traditional credit scoring systems. It helps lenders distinguish between high default risk applicants and those who are credit-worthy but lack an extensive credit history.
Objectivity is another benefit of the AI-powered mechanism. Unlike a human being, a machine is not likely to be biased.
Digital banks and loan-issuing apps use machine learning algorithms to use alternative data (e.g., smartphone data) to evaluate loan eligibility and provide personalized options.
Automobile lending companies in the U.S. have reported success with AI for their needs as well. For example, this report shows that bringing AI onboard cut losses by 23% annually.
AI and Risk Management
It’s difficult to overestimate the impact of AI in financial services when it comes to risk management. Enormous processing power allows vast amounts of data to be handled in a short time, and cognitive computing helps to manage both structured and unstructured data, a task that would take far too much time for a human to do. Algorithms analyze the history of risk cases and identify early signs of potential future issues.
Artificial intelligence in finance is a powerful ally when it comes to analyzing real-time activities in any given market or environment; the accurate predictions and detailed forecasts it provides are based on multiple variables and vital to business planning.
A US leasing company, Crest Financial, employed artificial intelligence on the Amazon Web Services platform and immediately saw a significant improvement in risk analysis, without the deployment delays associated with traditional data science methods.
At the same time, explicit programming often leads to problems when there are simply too many rules or exceptions to be considered. In that case, AI often works better. For example, it is certainly possible to set up rule-based automation for processing text by using a long chain of words and phrases but in many situations, this wouldn’t be efficient due to high costs or poor performance.
How small banks can make the most of AI?
In several of our conversations with executives of smaller banks like Community banks in the US, it became very apparent that they were seeking a differentiator in their intense competition with the larger banks. Big banks are using cutting-edge artificial intelligence techniques by using in-house teams of Data Scientists and Quants for risk assessment, financial analysis, portfolio management, credit approval process, KYC & anti-money laundering systems. On the other hand, small banks can use AI for achieving operational efficiency and better customer interactions.
Some of the several applications of AI that smaller banks can benefit from are:
Better Customer interaction using chatbots
Accurate recommendations using Recommendation engines
Fraud detection using machine learning algorithms
Conclusion
Digital transformation has erupted at a rapid pace especially with the pandemic crisis making it difficult to execute daily operations on a physical basis. Rapid transformation of banking operations in AI is no joke, and hence with no-code AI one could say that the process can certainly move along faster. While in its infancy no-code AI still leaves a lot of room for skepticism, one can certainly agree to it that this is the way to banking — now and in the future!
About Signzy
Signzy is an AI-powered RPA platform for financial services. No matter how complex your workflow or operational complexity, Signzy is able to completely automate your back-operations decision-making process into a real-time API. This is possible due to a combination of Nebula — Our no-code AI model builder and our Fintech API Marketplace of over 200+ APIs. Today we work with over 90+ FIs globally including the 4 largest banks in India and a Top 3 acquiring Bank in the US. Globally we have a strong partnership with MasterCard and offices in New York and Dubai to serve our customers in the 2 geographies. Our Product team of 120+ people is building a global AI product out of Bangalore.
The world fintech market share across 48 unicorn fintech companies is north of $187 billion. This amounts to more than 1% of the global financial industry. A sensible question that comes to mind is, how are they doing this?
Fintech startups are considered underdogs in the financial ecosystem especially when compared to financial behemoths that are already present. Nonetheless, they are growing at a tremendous pace posing a challenge to these traditional giants. This is evident from the pace at which they acquire new customers. Some take less than 4 minutes to complete the entire end-to-end customer acquisition flow and in most cases right from the customer’s smartphone with almost no human interaction.
The reason for their excellent presence is due to multiple factors. The fact that they have defined a specific customer base to explore helps them identify their market. Their diligent proximity with advancing technology helps them create innovative and cheaper solutions. But mere statements for how they are doing it isn’t enough. We need a thorough understanding of the mechanics and strategy. Let’s have a closer look at how fintech startups approach digitization
How the Fintechs Have Fared in the Past Decade
The era before the dot-com bubble was the time of startup boom with over $30 billion in venture capitalist investments in the US. But once the bubble burst, investments for startups, especially fintech startups declined. By the early 2000s, the total investments were barely meeting the $5 billion mark.
The situation has been on a drastic change since the beginning of the past decade. Investments have grown tremendously, coming back on top to over $22 billion in the US alone. A good example is Venmo (launched in 2009) whose valuation rose from $150 million in 2013 to $38 billion in 2020. The company had proven that they had fresh ideas and excellent execution strategies for investors. The fact that they had grown from 10 million users to 40 million users was one of the primary reasons for this. This attracted the backing they required, boosting the venture.
Braintree, a division of PayPal acquired the company for $26.2 million in 2012. This was no epiphany for the fintech giant, but the result of years of close observation. Not only was the startup gaining customers, most of them remained active. Currently, with more than 26 million active users, Venmo is set to grow faster and better.
Venmo is merely one example of this potential opportunity. 2018 was particularly a crucial year as 18,000 startups received more than $254 billion globally. The majority of these were from the US. The global fintech market was worth $127.66 billion in the same year with an expected growth rate of 25% to $309.98 billion by 2022. All this was due to how sedulous catering of their customers.
What Are The Fintech Startups Doing Right To Grow?
Fintech startups are not bound by traditional methods. They have the freedom to think outside the box for they know not where the boundaries of convention confine them. They can understand the most fundamental concept in running a business. Gaining a customer is harder than retaining one.
Retaining your customers will help you forage all the low-hanging fruits. One of the vital aspects of any financial venture is to create retainable, loyal customers while improving the ease of onboarding new ones. Thus, it is easy to conclude that onboarding customers are the key to a company’s growth. But, whether fintech startups have done so is a question to be pondered upon. They have amalgamated technology into their onboarding process by making it completely digital. In an industry where 71% of consumers end their relationship with a company because of poor customer service, it is essential to provide the best service you can from the get-go.
Most Fintech Startups focus on certain areas of improvement when it comes to customer onboarding and service. Some of these areas are:
Selective Niche
The Startups define their customers. Mostly focusing on Gen X and Millennials, they cater to a younger customer base. This is beneficial in the long term as most of the current younger generations can be converted into long-term loyal customers with considerable financial assets in the future. For example, Most of Venmo’s customer base is aged lower than 34 years. 7.4 million P2P payment service users are between the ages of 18 and 34. 4.1 million of them are between 25 and 34 years. Since they are focusing on the younger generations, only 1.4 million consumers are above the age of 35 and below 44.
Digitization and Consumer Experience
The traditional methods of onboarding are tedious for newer customers. Fintech Startups acknowledge this by making the process easier. The first step is to provide digital onboarding options. Not only does this reduce the time required for the process, but it also enhances the overall user experience. Expenses too are reduced for the companies due to reduced exploitation of resources for storage and manpower.
The best technology usable will meet contemporary expectations in customer service. Banks with no websites or no online presence are yet to come out of the dark ages. By 2020 more than 67% of consumers have used a fintech platform. This was 33% more than in 2017. This number will soon reach absolute saturation. Giants in the insurance sector are wise in predicting this. More than 63% of CEOs in the sector believe technology like IoT(Internet of Things) will impact the whole financial sector.
60% of the consumers opt for transactions with financial institutions with a single online platform. This number is set to increase as a 2020 survey pointed out that 96% of the global population is aware of one or more fintech companies
Mobile Onboarding
The human palms are more powerful than ever with the advancements in mobile technology. Any financial task is performed on a smartphone with a mobile app by customers. This is made possible by the institutions welcoming and adopting this technology. Payment services companies promote this to a greater extent increasing mobility for the customers. Tipalti.com predicts mobile transactions to grow 121% by 2022. This will constitute 88% of all bank transactions. Fintechs are targeting this latent market.
The Road Not Taken- What the Fintech Startups can do going forward
The financial landscape is expected to change in the coming decades. 2021 has more than 90% of users making at least one payment using a smartphone. By 2022 78% of Millennials in the US will become digital banking users with credit cards, debit cards, and e-wallets surpassing cash at all points of sales. Fintech Startups see all this as an unavoidable opportunity.
Fintech startups’ methods of digitization and mobile onboarding have become inevitable for customer experience enhancement. They save time, energy, and in most cases, even money. Unfortunately, the traditional banks are struggling to adopt what the fintech startups have already embraced. Meanwhile, the startups are looking ahead in decades. They are understanding new technology that can be used for better customer service.
Some of these are:
Blockchain Technology Neo-Banks are considering better methods for data storage and security. Blockchain technology is an excellent option for this. Blockchain is a DLT(Distributed Ledger Technology) that permits data to be stored globally on multiple servers. A form of cryptocurrency is used by two entities(people or companies) as payment. The agreement forms the ‘block’ in the chain. This type of financial technology revolutionizes central banks and financial markets.
More than 24% of the world population is familiar with this technology. This is because Blockchain and Regtech(Regulatory Technology) are leading in terms of growth in the fintech industry. Blockchain technology is set to reach $20 billion by 2024. This includes P2P digital lending which was at $43.16 billion in 2018. It is expected to reach more than $567 billion in 2026 with a CAGR greater than 26%
Artificial Intelligence AI is already prevalent in the current fintech ecosystem. It is used for automation and related processes. It can vary from simple automation to complex Machine Learning(ML). AI and ML in the financial sector are used to perform tasks that are traditionally done by a human worker. Such repetitive tasks being automated will aid the company both financially and in aspects of time.
But fintech startups are looking at the next stage of AI implementation. Banking-related chatbot interactions are expected to go to 3150% by the year 2023 from 2019. This will enhance the experience the customer has while onboarding and interacting with the institution. Along with this $2 trillion will be managed by ‘Robo-Advisors’ by the same year.
AI will also enhance labor productivity by a maximum of 40%. The projected expectations of 2035 estimate profitability of 39% for all industries, let alone banking. Even customers are expected to prefer Machine interaction over human interactions in the coming future. Startups analyze these data and evolve their modes to suit the future customer base.
Conclusion
The financial niche has been altered by the booming fintech startups. Among traditional banks and organizations, nearly 82% intend to collaborate with fintech companies in the next decade. If they do not, they might lose the total customer base by the end. With nearly 90% of banks fearing their consumers to be lost to up-and-coming startups, they are willing to adapt.
Consumers demand a seamless digital experience while onboarding and transacting. Smart traditional banks see the solution and upgrade their methods. If that is not possible they collaborate in partnerships or contracts with fintech startups and other technology companies. Most of this helps in onboarding younger customers. This converts many B2C models to a more B2B model. They then gain access to a bigger client pool.
Established financial institutions need to focus on onboarding more customers, for their existing consumer base will soon be exhausted. Thus, while retaining their customers they must focus on expanding their presence in the future. For this Help of fintech startups can be used. This will be the swiftest and smartest step traditional financial institutions can take for the better.
About Signzy
Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.
Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.
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