The use of connected banking can help banks and financial institutions remain competitive in the contemporary digital age.. Banks are adding digital apps for mobile banking, online payments, and client self-service.
Still, they must add features to current systems and successfully exploit new digital technology to stay up with the rapid growth. By 2030, banking will be invisible, insights-driven, linked, and purposeful, according to Forrester, a market research company.
Let’s examine how linked banking streamlines the end-to-end client journey, makes operations more adaptable and achieves sustainable innovation.
What is Connected Banking?
Connected Banking is an enabled or utility-based method of maintaining financial products and services that enables banks to provide clients with the finest banking practices regardless of channel.
Financial organisations and banks are beginning to recognise the capacity of technology and innovation to transform the conventional ‘product’ impression of account management into something more engaging.
Connected banking includes digital front-office apps for mobile repayments and self-benefit; nevertheless, for banks to gain agility, they require similarly adaptable mid- and back-office frameworks equipped for rapid expansion.
Customers are beginning to embrace innovations such as purchasing from searches, voice-activated devices, and the use of mobile phones in all parts of the shopping process as firms find new ways to attract customers beyond traditional trade collaborations.
With the help of internet of things, connected banking has become one of the most significant technological developments of recent years and continues to grow.
Driving Factors for Connected Banking
A networked bank must operate cohesively to address four primary drivers:
Customer experience
A smooth, omnichannel customer experience may assure customer loyalty, cost reduction, and higher profitability, setting you apart from competitors.
Product innovation
A rapid implementation rate is essential for banks like yours. As is providing products and services tailored to your client’s requirements
Operational efficiency
A holistic, customer-centric strategy allows you to add speed and agility to your processes, establishing a future-ready, efficient bank.
Risk and compliance
The standardisation of processes and standards and the deployment of secure technologies go a long way toward assisting your bank in maintaining compliance without sacrificing efficiency.
The Key Components of Connected Banking
There are four essential components of a genuinely connected banking:
1. A concentration on customer-centricity
Customer focus is the foundation of connected banking. To provide clients in a unified, coordinated manner, your financial institution needs an “outside-in” strategy.
Banking driven by customer journeys:
- Omnichannel: Enable your customers and employees to engage and transact via any channel and to seamlessly switch channels without interrupting their journey.
- Personalised: Enable each client journey in a customised fashion by understanding consumer needs and offering personalised products and services accordingly.
- Contextual: Serve your consumers without losing context over their interactions by granting your authenticated workforce full, authorised access.
2. You can access it anytime, anywhere
Your customers and employees should be able to engage and transact whenever, wherever, and even while moving.
3. Integrated banking operations
You must transcend organisational silos by concentrating on your processes, content, and communications – the three pillars of the connected banking paradigm.
4. A boundaryless and extended banking ecosystem
Banks such as yours must provide a boundaryless experience in which all stakeholders can function efficiently and without time, location, or medium constraints, all through self-service facilities.
To boost the lifetime value of your consumers, you must also develop an extended banking ecosystem, bringing together merchants, fintech, aggregators, and others.
Features of Connected Banking
The prospects for banking
Connected banking is about developing a wider ecosystem of banking goods and financial services that enables banks and fintech to give clients a consistent and unified banking experience regardless of channel.
With new digital technology and advances, connected banking allows banks and fintech to service nearly all of their customers’ banking and financial demands centrally. With related banking, banks and financial institutions can transform the consumer experience using a modern digital platform.
A boon for companies
Small and large enterprises increasingly manage their finances online using fintech banking applications. Connected banking enables banks to cooperate with fintech to give SMBs a digitally enhanced experience supported by personalised offers tailored to their needs. In addition, it can provide consumers with the bank or non-bank products tailored to their spending patterns and needs.
Connected banking provides a platform for businesses to make payments using their preferred source while automating statement reconciliation, saving time and money and boosting corporate productivity. In addition to fostering a connected and smooth banking experience, it promotes increased financial services security.
Customer orientation is the heart
All procedures, technologies, and staff in linked banking aim to provide coordinated and unified service to customers.
Connected banking enhances the consumer experience by recognising customer needs and offering customised products and services in addition to around-the-clock customer service.
Modern banking platforms minimise expensive infrastructure and connect banking with the best solutions in the industry for payments, cards, analytics, security, fraud control, and omnichannel customer experience.
At any time, everywhere banking, customers and workers can transact and interact at any time and place.
An ecosystem of banking without boundaries
In collaboration with fintech, banks offer a borderless experience for all stakeholders, allowing them to operate quickly and without any limits on time, space, or media while utilising self-service facilities. Connected Banking contributes to the expansion of the banking ecosystem by bringing together fintech, aggregators, merchants, and others for the customer’s advantage.
Benefits of Connected Banking
Enhanced security
As hacking and other sophisticated security threats become more ubiquitous, businesses need to maintain security to maintain customer trust.
Connected banking considers increased security through encryption and authentication that permits access to authorised users, including perceived customers and staff.
This invention can provide banks with a complete view of the client and representative conduct and character, thereby enhancing the protection of sensitive data.
A thorough understanding of customers
Customers want greater convenience in traditional banking, so the sector can leverage connected banking to improve the customer experience.
While consumers can benefit from easy-to-use, useful mobile apps for saving money, banks can benefit from increased customer cooperation via social media channels and a better understanding of customer needs through more information regarding credit and money management.
Competitively superior
With the assistance of connected banking, banks can increasingly assist business customers and achieve better results due to the increased amount of available information.
Relevant technological improvements can enhance understanding of certain tasks, such as biometrics for monitoring physical execution and location tracking devices.
Data collected from these executions can enable banks to develop new procedures and make decisions for further improvement.
The rebellion of open banking systems
It is necessary to recognise the trend toward open banking. The open bank project, for instance, is the primary initiative that provides a convenient format for sharing banking data.
The United Kingdom has already embraced the concept, with intentions to implement a mandatory open banking API standard.
In addition, Barclays has implemented an update to its core banking service that enables customers to view accounts from competing banks in one location.
Common Obstacles
Operational efficiency has been a major differentiator for years, allowing financial institutions to remain competitive. Despite their ongoing efforts to increase efficiency, banks encounter numerous obstacles, including:
Prevalence of legacy systems: Monolithic and stiff architectures of prevalent legacy systems are significant barriers to modernization.
Automation in isolation: Frequently, automation efforts, including artificial intelligence (AI) and robotic process automation (RPA), result in siloed technological initiatives.
Broken processes, content, and communications: Process gaps, technology that cannot accommodate content, and a lack of consistent communication can result in disconnected and delayed operations.
Conclusion
Connected banking provides your financial institution with a solid foundation for meeting the demands of a continuously expanding banking sector. You may provide your personnel with pertinent knowledge and provide omnichannel, anytime, everywhere client assistance. In an increasingly digital environment, the linked banking paradigm enables your financial institution to prepare for the unexpected and continue delivering business results.
FAQs
1. What is Connected Banking?
Ans: With connected banking, banks can provide clients with the finest banking practices regardless of the channel through which they conduct business.
2. What are the benefits of Connected Banking?
Ans: The benefits of connected banking are:
Enhanced security
A thorough understanding of customers
Competitively superior
Open banking’s rebellion
3. Why is Connected Banking so important?
Ans: The following reasons make connected banking important:
Customer Experience
Product innovation
Operational efficiency
Risk and compliance
