Will Kiosks be shaping the retail banking soon?

Banks have been investing in alternate channels strategy for a while with focus now on omni-channel to bring stickiness and relevance to the customers.  Kiosks which were used initially for queue management at the branches then evolved with touch screen functions and video capabilities but these were not killer applications.

Although queue management streamlined the branch traffic it still was solving problems for customers coming to branch.. how about customers who dont want to go to branch or dont have a branch near where they work/live/play?

I  have been advocating banks, that for the Kiosk strategy to be successful, banks will have to bring transactions which are critical to the retail banking customers to the self-service channels like Kiosk (not ATM) as there is a bigger chunk of people across all segments who would use kiosk or any other self-service channel as a matter of fact as compared to stepping into a branch (myself included). These segments will only grow with customers in Gen-Y moving to next stage of their life.

The new kiosk strategy involves transactions and interactions together on the kiosk allowing customers to do transactions on the Kiosks like Opening CASA Account, Getting ATM/Debit card dispensed on-the-spot, Loan applications (with instant approvals for selected loans), Credit card on the spot (including credit checks which can be done online now), KYC (Know your customer) using video conferencing, Personalization of cards, Print Demand Drafts/Cheque etc. Basically all the branch banking services at low cost on the Kiosk.

With my interactions with bankers as well as end consumers (across Asia-Pac and Japan), I have found that putting cash on such a machine would result into long queues for customers who need cash, extra security for cash management needs, bulkier machine etc. For Cash we already have an ATM, why make a super-duper ATM with everything inside it, especially when we all know that if (Q-length @ ATM) > 5, most the people would not use the ATM… also typical cash withdrawal transactions take only few seconds as compared to the transactions like account opening, applying for loan etc which will result into longer wait time even if there is only one person in the Queue.

Citibank just launched such a Kiosk (although not a totally new concept, but of-course Citi being global bank gets its own share of attention) under Citibank Express in Singapore.

Currently Citi Kiosk allows customers to open bank accounts and apply for loans. Very soon customers will be able to instantly print and get ATM, debit and credit cards.

This does create a big opportunity for banks in several ways and customers do have a choice not to step in branch. These kiosks can also be used to offload the branch traffic, especially in scenarios where during peak hour, customers can have option to either wait for personal banking/teller etc or to use the the Kiosk. I do see a lot of benefits in this model as it provides the low cost/transaction for pretty much all the transactions as compared to the branch.

Branch wont be obsolete, but would be more focused on sales and advisory functions especially on big-ticket items like buying mortgage, review portfolio, wealth management. etc.

rgds

mPayments to hit mainstream with ease of dev, use & scale

Recent announcement from Visa that mobile payments would hit mainstream caught attention of pretty much all in market.  While  connecting the dots, found some interest facts for mCommerce here and I am not posting on NFC this round.

Mobile payments are already catching up in the developing world and from philippines to africa there are several example. However the core and crux of getting this is to bring this to life in mainstream. The key here is the ease of use for consumer, availability of these payments just anywhere on any channel from merchant terminals, commute(train,bus etc), platform payments (on device), web. The other aspect to the winning formula is to create the transactions and this to the cloud services too and it should be easy enough for a developer to take less than 20mins. I had designed these systems before but was quite impressed the way braintree has approached to with its API and “yes” this was with the application developer in the mind and keep it simple that it only takes less than half an hour to get the system and service up, no information storage at your end and all security aspects taken care of.

Other recent interesting startup on mCommerce was onebip and their key value from user experience is a single click without a need for password or pin and user doesnt need a credit card as the payment can be done on the mobile phone bill. I have some of my doubts of this not from the interesting technology but the point that the consumers apart from techies may not be comfortable with this. Mobile banking has come far on this with 2FA and now if we take this basic security it may be a concern to the users. The other aspect of the this payment mechanism which was more of my interest that they were able identify the application access based on device as well as the networ (3G/WiFi etc) perhaps using user agent string_ and changing the application UI based on these parameters.

Payvia the new kid on the block had similar direct carrier billing model which didnt impress me much as there are several options already available in market and this was just one more. Perhaps they are still not sharing more as of now and may have something under the hood.

The number of startups focusing in the area of mCommerce have increased significantly in anticipation of the market to pick up and Apple is no different here with the recent acquisition of AuthenTec and I dont have doubts about the adoption to pick up in next few years especially with Gen-Y segment getting more comfortable with the alternate channels. As what Visa predicts for it to go mainstream, it still needs some very simple use cases, simplicity and security/trust from consumer to keep this simple.

Defining Customer Experience For a Bank

Have you ever tried thinking of what your bank stands for … what the tag line for your bank is? Put couple of big names aside who spend huge amount of marketing dollars to put their brands in customers mind. Most of us won’t know what our bank stands for and perhaps may not have even a clue of it. Would you agree? Recent study showed that customers could associate and connect better with the soap’s brand and the tag lines.. why is it that banks do fair poorly here. This kind of sets the stage for customer experience and the theme for this post.
Before I begin I wanted to share my perspectives on what customer experience is and how I believe it should be defined.
Customer experience (of course from banking perspective here) is about having consistent experience across channels where I could consume any service offered by branch across any other channel (as far as regulatory framework allows) and it should probably take same amount of effort, time steps no matter which channel customer is using for his interaction/transaction.
Lets take an example… if I step into a branch and get 10 services which I could consume including opening of an account, txn, advisory services, transfers etc, I should be able to get all these services (within regulatory framework) except cash withdrawal across any channel. The look and feel number of steps to perform transaction should be consistent. If I login to my mobile banking and am instantly recognized for who I am and addressed by name, I expect the same level of experience if I step into the branch (which I generally don’t). Its all about I want banking on my terms and my way rather than bank telling me how they operate, what time which services is available at which channel.
Most of the bankers when I interact with them, they highlight how CRM is helping them achieve the customer experience. Infact I disagree… “totally” if I may. CRM has been there for ages banks have implemented it and havent got what they wanted to achieve nor the customer experience has gone anywhere.
Although CRM plays a key role but its more about overall multi-channel strategy for the banks.
I would perhaps write more on how banks could achieve customer experience and what has worked and what has not in my next post.

Core Banking on Cloud

I had a post sometime back on what is Cloud, types of cloud and different ways to view it, this post is more targeted towards Banking Systems moving into cloud. Hold on … I did’nt classify it yet and there are reasons.

With virtualization going mainstream into critical banking applications now with automation, provisioning and service catalogs getting more acceptable within banking IT environments several vendors have started pushing “Core Banking on Cloud”.  Naturally most of the vendors are inclined towards private cloud there are some heading to road less traveled of public cloud.

Lets touch on CBS (Core banking System) is the most critical part of the bank before we discuss about CBS on cloud.  CBS is a collective pack of Trade finance, Treasure, Credit Card, Stocks, Mutual Funds, Bonds, savings/checking accounts, term deposits and lending products, Payment gateways, SWIFT, Shared ATM network, credit card and ATM networks . CBSs are the back bone of product and services for any bank or financial institutions. To achieve the entire banking enterprises CBS should be highly robust, automated, secure, flexible, regulatory compliant (Basel II/III norms), scalable, highly secured.

CBS on cloud has been making waves in news in past few months … T24 on Azure cloud, Polaris Core Banking Cloud, Finacle Lite Cloud.  There are also several banking customers who have already started using CBS on Cloud and I see this trend picking up first heavily on Private and for smaller sized cooperative bank or unions perhaps considering public cloud model too as some banks are already good case studies in the space.
Polaris re: CBS on Cloud (‘satchet banking’) said “One rupee per customer per week is what we promise as the cost that our customer would incur by opting for our new offering”.

CBC on cloud should be integrated and pre-configured solution automating all core banking processes across business product lines  supporting trade finance, savings/checking accounts, term deposits and lending products, acquisition, multi-currency transactions across retail, corporate & trade finance modules, real-time transactional/settlement services and regulatory reporting.

There are several thousand articles about how public cloud is dangerous and security risks, loss of control, SLA’s etc…. perhaps I could try to highlight few benefits of putting CBS on private cloud which I believe would be easier for banks to adopt as compared to small handful of co-operative banks adopting/considering public cloud.

Possible benefits of CBS on Cloud would include : The pace at which banks could launch new products would be fast with the agility of the cloud,  cross company reporting, inter-company accounting, inter-branch transactions without logging in/out of each entity to record the entry resulting in easier branch reconciliation. Of course standard cloud benefits like higher asset utilization of the computing power and lower consumption of resources from idling due to virtualization, increased business automation would be always there.

The future road for core banking is decoupling away faster from mainframes than most of us would have anticipated just a few years ago with X-86 being viewed more favourably by banks and with most of these cloud offerings going on X-86 it would be interesting to observe how the traditional core banking systems would be in next 5 yrs with other vendors jumping in to provide their CBS on cloud and at the same time banks (large and small) implement their private cloud infrastructure.

80% of major 150 banks having NFC initiatives

Recent KPMG survey revealed that mPayments would be mainstream in next few years.  The KPMG Monetising Mobile survey shows that more than 80% of the 150 major banks and corporate companies questioned are examining how they can introduce mobile payments, which includes the use of NFC.

NFC wave is picking up in the region and in next 3-5yrs it should be very popular based on the insights from several research agencies.

CBA NFC initiative seems to have decided to jump straight into market by skipping the trial and wait-and-see approach of ANZ. Although I am not a big advocate of MicroSD card based payments but for the time being to scale with limited handsets in market it might work out well. With smartphone adoption reaching to almost 60-80% in some banks, perhaps in 2 yrs time it would be a market banks cant ignore. And of-course there is always a first mover advantage and risks behind doing anything new ….

ANZ has decided to stay away from NFC for the time being after doing some initial study.  However key to note here is that ANZ CIO  Anne Weatherston does believes that Google and Paypal are their next competitors as they are new fronts of the competition pushing margins south and challenging the role of cash. Innovation at tech vendors also happens faster as this is their core business as compared to banks which are historically very pragmatic to technology risks.

Google recently released its Wallet feature, which will allow users to make payments on NFC-enabled phones at retailers using the MasterCard contactless technology. Google has also teamed up with Citibank and Mastercard creating payment system that would allow Google to offer retailers more data about their customers and help them target ads and discount offers to mobile-device users near their stores. Not just that Google has partnered with Ingenico for NFC based coupons. Apple has announced similar NFC initiatives for iPhone. Microsoft Is Said to Plan Mobile Payments in Phone Software

Visa is now delivering real-time promotions and discounts to mobile consumers when and where they shop. This combined with power of augmented reality would really kick things off especially when this is context sensitive with several parameters already embedded in.

Its not just banks, Singapore comfort taxi is also heading towards NFC based payments using veriphone terminals. South Korea’s communications commission also said that it would require mobile phone vendors to equip all smartphones with near field communication (NFC) technology.  They plan to install or upgrade 300,000 mobile payment checkouts at major retailers and transport services this year in its latest push in the potentially lucrative market as the likes of Google Inc and Apple Inc competitively introduce their own pay-by-phone services

NFC would probably change the way we make payments, queues at retail stores might disappear (look at apple stores now), making payments on table with tap, receipt sent via email, flexibility of carrying credit cards in mobile phone and a lot more.  Would banks be left behind or be part of it is the question.

ATM now with Lie Detectors

Something really interesting in Innovation came up from one of the biggest Russian banks just recently which I think was really game changer for self-service as it had voice analysis and in-built features for lie detection developed by Speech Technology Center which has customers like Federal Security (aka KGB). But what a pity such an innovation is tied with with the ATM. Details here

Also recently it was announced that ATM could also allow customers to talk to tellers.  View from ATM Vendors lens here

One of the stories I have heard from vendors about pushing video interactions over ATM is to drive the transaction banking business out of the branch. Not sure how this is going to help because today people who queue up in branch for deposit/withdraw stuff they can do it at ATM’s but they are not doing it (call it silver hair population or whatever) but end of the day if these guys are not using simple features of ATM not sure how and what part of these video interactions would make this transition to these customers in the branch.

While all these initiatives are great there is one piece which I always find difficult to digest. “Why must we invent mother of all ATM’s that can do everything” it only adds to frustration of customers in the queue while someone in front is doing all these cool interactions. While these are all great capabilities why not tie these with Kiosk model, so ATM do what they do best handling Cash and limited self-service. Move most of the self-service functions to Kiosk.  Its extra investment on kiosks but after going all around talking to banks when they agree that “customer experience” is key then why take a step back.

My suggestions would include:

• Keep ATM focused on what they do best and prime focus on CASH & DASH
• Classify these video-teller machines and try out at selected areas (lets not totally kill the idea unless we try it out)
• Drive these video interactions on Kiosk
• create an overall multi-channel strategy including migration of these customers in branch to self-service area and video interaction kiosks.
• these video interactions should be across all the channels including web, mobile etc for consistent experience not just at Kiosk or branch.

Next time I walk at the self-service lobby I would rather apply loan using voice recognition and video at Kiosk rather than at ATM.

Mobile transactions to almost hit $1 trillion by 2014

This recent Lafferty report came up highlighting the subject of this post. $1 trillion, yes it was not a typo. I was not really surprised as the momentum has been there for a while on the next big thing on payments.

So obviously market dynamics and players had to get ready to capture this new HUGE addressable market.

Microsoft: Microsoft Is Said to Plan Mobile Payments in Phone Software

Microsoft is likely to get support in its mobile payments effort from Nokia Oyj, the handset maker that recently said it will use Windows Phone software on its devices. Nokia said it will make NFC a standard feature of its 2011 smartphones based on the Symbian operating system.

Apple: Apple Plans Service That Lets IPhone Users Pay With Handsets

Using the service, customers could walk into a store or restaurant and make payments straight from an iPad or iPhone. They could also receive loyalty rewards and credits for purchases, such as when referring a friend

Google: Google Sets Role in Mobile Payment

“Google’s planned payment system would allow Google to offer retailers more data about their customers and help them target ads and discount offers to mobile-device users near their stores. The project, which is in its early stages, would allow holders of Citigroup-issued debit and credit cards to pay for purchases by activating a mobile-payment application developed for one current model and many coming models of Android phones. ” Google infact has released a new API for Android developers to create NFC Apps. Details here

So while all the key players are gearing up, one thing which I am yet to see perfected is the business model viability for NFC.  There have been several trials that had been done with one bank, one Telco and selected merchants and we all know what happened.

Perhaps its about time the TSM infrastructure and direction becomes more universal allowing multi-bank, multi-telco, multi-merchant and multi-* to be in place being a neutral provider.

There are several opportunities coming up in Asia for TSM setup allowing NFC transactions which would round up the equation and satisfy business interests of key stakeholders in the value chain from handset manufacturers, SIM buys, issuers, acquirers and SP’s.

Whats there for a customer for NFC? Basically the power of this would only be there with attractive promotions and payment options. Scenario where user walks through a digital media and watches attractive context sensitive promo (using location as example here), uses NFC phone (iPhone, Google Android device …) to download promo coupon with context of location gives user better discount and reasons to shop with NFC devices.

Its really got to be integrated and simple user experience like using mBanking services. I personally find it hard to login to internet banking for simple transactions when with mobile banking its faster and easier too…  (especially when the laptop is hibernating or powered off … those few seconds to get browser up and connect are painful.)

Would love to see easy to use interface allowing users to select different credit cards (just like flipping pictures … it could be visa, mastercard etc) and one click for payment.  Although apple could perhaps bypass this whole scenario and charge users on their iTunes account tied to specific card although they may need to address the fact that iTunes today is for smaller micro payments and for bigger purchases customers look into loyalty points tied with card where this gets complex.

We are just few months away from the launch of these devices in market and business models to be announced while infrastructure setups are being already looked into.

Demystifying types of clouds and services

Dont get me wrong, this post is not about defining what is cloud or cloud computing as there are several hundreds if not thousands of definitions out there on web.
This post is about differentiating cloud vs cloud services and how we classify types of clouds in easy to understand way and also to look beyond public and private cloud.
To begin with lets first address whats the difference between cloud and cloud services. I would rather start with example to make things simpler (I just prefer it this way). Google would be example of cloud and Gmail would be cloud service. Lets attach few properties to classify them:

• Hardware and its management is abstracted from the buyer(user)
• Infra capacity is elastic (means can be turned up or down)

If you have above properties then you are using cloud services (gmail again as example). Now lets add another feature/property and it would turn into cloud like azure or AWS.

• buyers(users) pay infra costs as OPEX

So cloud would have all the three bullet points while cloud services would have the first two. Hopefully this was simple enough.

Now lets address the issue which generally adds to the confusion on classification of cloud. Here let me address types of cloud (bear with me).

Clouds: Private, internal, Public, External

Very simple way to classify these types of clouds would be by putting classification levers (Ownership, Control)

So whenever we refer to Internal or external clouds the classification lever is where OWNERSHIP of these resources reside on the cloud.  When we refer to public or private clouds the classification lever is where CONTROL of these resources residing in the cloud.

So yes there is something called external and internal cloud but most of the users would just classify it as public or private.  There are many other types of cloud like virtual private, hybrid etc too.

Umqua, Citi & RBC creating the “New Normal” in retail banking

Since Umpqua changed the way retail banking was done fundamentally, it has kind of become a “new normal” in the branch design.  One of the key feature they have used to scale resources is “Ask the Expert” to leverage video conferencing to scale resources. Details here

Umpqua has now opened up a new store at Seattle’s Capitol Hill district and introduced few new cool stuff like interactive touch screen wall (touch screen interface for customers to find more information) which they call Discover wall. More detail on the video here

Whats interest is the fact that customers at the branch can call bank’s president directly using hotline. Capital hill branch provides Umpqua’s signature service delivery model, which includes Ritz Carlton-trained associates, and regional touches such as a gourmet chocolate coin with each transaction and videos by Pacific Northwest artists. More Details here

This has become the new normal as now Citi, RBC and other banks are trying to re-define their branches. RBC recently unveiled their new stores with microsoft surface technology at branches along with other cool stuff on digital media. This new store can be compared to the Apple Store, especially when you look at the fact at what the Apple store has done with its cash registers. Details here

Success of Citi’s new smart branch initiative which started in Asia from singapore and Japan is paving the way for launching it in other countries too (hopefully soon). Citi’s innovation lab has 4 prototypes and all of them are up and running in Asia as Citi believes this is where customers love Innovation. Details here

Interesting point to note about Citi’s future roadmap on branch roll out was that the typical branches would get smaller except the flagship or citigold branches and would use technology to make employees more effective in their work. Transaction and services might be provided with single resource which could leverage other virtual resources to scale at branches.

The question now is what’s next for retail banking as more and more banks are adopting Umpqua or Citi model or are planning to take this direction as this becomes the “new normal”.

Citi and Chase keen on Google’s NFC based mobile wallet

Recently just in past few weeks the mCommerce arena has heated up with the flavour of NFC especially with Eric Schmidt’s announcement of mobile money as on of the top 3 initiatives for google in 2011. It was published in HBR(Harvard Business Review). Details here

Since I last posted about Google and Apple jumping on NFC and mPayments here; the update from Eric really makes it big as mobile money is now in top 3 initiatives for Google. What was of interest to me was the fact that Google is looking at addressing this ground up from LTE as well as providing smart phones at low cost hence calling it “big mobile revolution”

Google’s NFC based mobile wallet is nicknamed “Cream” and Citibank and perhaps some other US banks have already shown great interest in it. Details here

Google itself may not be providing mobile payment service itself but would act as enabler for those payments by banks and PSP’s. The idea is to create and tap on new mobile adv revenue big time.

Cream wallet would be default feature on android phones and would be using NFC. Currently Gingerbread only supports NFC tag reading a feature they used in the recent trials in portland.

Apart to Google, Visa is also also gone into quite a few trials and recently started subsidising the placement of NFC terminals at new merchants in Poland to drive up the volume of NFC trade.

Visa Europe and Wireless Dynamics, also announced mobile contactless payment solution that will bring Visa contactless payments to iPhone users across Europe.

This all is good news for the banks and acquirers as this all is new traffic which is going to replace cash for low value and convenience transactions, and really driving a new segment into the market.