The road towards a better bank

Paul Briault is senior director, solution sales at CA Technologies UK

The financial sector is a slow mover in innovation, however no single industry is leading the way in the Digital Identities economy. Banking is one sector that can take advantage of Digital Identities to better develop customer experience given the nature of the engagement and relationship between Banks and their customers. Banks fulfil a very important role in our economy, but are inherently fragile due to the nature of the information they are dealing with.

Digital Identity Management relates to the understanding and management of data that uniquely describes a person online. As customers access information online, sign up to new applications and tie themselves to more services, the more complex their digital identity management becomes as they leave a digital footprint.

A major factor for this increasing digital identity complexity is the volume of security details required to access personal information, prominent in the finance industry. Banks need to move away from the often painful world of customers using, and having to remember, several passwords, usernames, PINs and tokens for each account and service. Leaders in the finance sector are beginning to recognise that customers are more likely to interact and stay with their brand if they limit pain of both the enrolment and the log-in process and a robust Digital Identity Management strategy can do just that.

We now live in an application economy, which has increased the amount of online data users access, often frequently throughout the day, requiring multiple log in details and this usage will only continue to rise. A  robust Digital Identity strategy including risk-based authentication removes the pain point of requiring multiple log-in details and will help drive a better customer experience by creating a more seamless and efficient experience for the user.

Reducing Complexity

In this application-driven economy, users expect to access applications anytime, anywhere – and they expect them to be secure. Every time a user goes online, they leave a trail of digital breadcrumbs, be it a credit card transaction that pays for the groceries or an email address they use to register a product. Combining all of this data together creates a detailed and complete picture of who the user is, what they do and what they like, which banks need to begin utilising to create a better customer experience.

When access to applications becomes time consuming or complex, brand loyalty suffers. A study by Vanson Bourne, sponsored by CA Technologies, showed that 47% of consumers in Europe have dumped a brand’s application for another due to a better feature or service, highlighting the importance of a seamless and easy digital interaction to help build customer loyalty. If banks understand their customer base digitally, they can service them better and create an experience that is designed to suit their needs more efficiently.

Governments are also becoming increasingly aware of digital fraud, privacy and security. Regulations have been put in place to ensure that customer information is being kept secure by companies and the consumer demand is growing for new processes to be put into place to make sure that their information is protected. For example, the SecuRe Pay Forum published recommendations with the keystone to the argument being that all internet transactions have to have a “strong authentication”. In April 2014, the European Parliament voted in favour of the Fourth AML Directive, which had a focus on Customer Due Dilligence (CDD) being required when the customer is not there to physically represent themselves at a transaction. Both show the need for online financial services to increase their CDD solutions and Digital Identities can be used to do this.

Creating a More Efficient Banking Experience

An increasingly leading role in keeping consumers safe in the exploding application economy is played by API (application programming interfaces) management solutions, which help enable APIs in a secure and scalable environment. API management and use of Digital Identities is a vital step to enhancing the finance industry, creating an innovative ecosystem for the banking community, as well as ensuring appropriate security controls that would be more fulfilling and more ‘market-appropriate’ for today’s banking.

API Management helps banks open up their data in a secure and easy-to-consume way, moving from a reliance on monolithic systems to an open enterprise based on agile apps. This enables customers and third-parties to interact quickly, easy and securely with the bank-functions that are going to become increasingly important in light of the UK government’s recent commitment to deliver an open standard for APIs in the UK banking industry. If taken forward, this initiative would require all UK financial institutions to create public APIs, which could be consumed by price comparison tools, thereby delivering value to consumers and increasing competition in the banking sector. The API security and identity considerations are going to be an absolute priority, as there will be no room for errors.

However, banks should not view a move towards open APIs as just an inconvenient and additional security problem – but instead as an opportunity to leverage their data in new ways to create an innovative ecosystem to serve their customers better and generate revenue from APIs. Banks have a wealth of data that if shared, dynamically, with insurance, credit agencies or even social networks to name just a few examples, could breed entirely new business models and ways of serving customers. A good example being the ability to pay back a friend directly on Facebook, when he/she reminds you via a message, without the need to actually go into your online bank account.

At the heart of all of this is of course the importance of protecting the users. Users expect their information to be fully secured when placing their trust in the company handling their data. If they don’t, this could have a disastrous effect on the brands reputation. Combined with the fact that there is a high demand for Digital Identities to be introduced as an authentication method, the financial sector needs to grow on the existing trust they have with their customers and begin introducing simpler but effective methods of authentication that still allow for information to be stored securely, but provide a more seamless customer experience.

Banks today need to recognise that using Digital Identities as a method is an enabler for their business and can help build better, longer-term relationships with customers. Today’s consumers are constantly online, so it makes sense to communicate with them online. Banks are responding by transforming the way they do business; La Caixa, for example, has created its own social networks and developed a service that allows clients to link their Facebook account to their bank account.

Smart companies are leveraging digital Identities to increase customer loyalty and engagement by delivering tailor-made services and improving the overall user experience. Social identity is becoming an important component of the digital economy — not just for security, but also for turning customer enquiries into sales. The concept of Digital Identities is changing the global economy, allowing faster, more convenient interactions between organisations and individuals, and the development of innovative new services. If banking services can take advantage of consumers high demands for a more secure and efficient way of completing their tasks, the financial sector could begin to lead the way towards a more customer friendly banking environment.