Why front-to-back self-service is the future of next-generation banking

It's no secret that banking is one of the sectors most affected by the digital transformation. By digitizing and automating their processes, banks can both improve and simplify them. However, it is important not only to optimize the efficiency of an organization itself, but also to drive a better overall customer experience. Following the footsteps of their digital native counterparts, traditional banks are trying to empower customer journeys towards more self-service and autonomy, especially at the front-office level. But what about the back-office ?

Changing customer expectations, competition from new digital-first players (Fintechs...), shrinking margins and constantly changing standards in the banking sector, are pushing traditional banks to put technology at the heart of nearly all aspects of business operations. Front-office jobs are the first category to have been digitized, in an effort to make their practices and standards leaner and more agile. For instance, today a client can sign up for a new account in less than 10 minutes in a simple and secure way via the Internet.

However, in a real-time, on-demand, self-service world, customers are expecting to be able to do more things on their own without having to speak to an agent, throughout all relevant stages of their customer journey – and not just at the front-office. Thanks to digital native workflows, banks can go even further by introducing more self-service options into their back-office processes as well. This will enable them to meet staple consumer expectations such as speed, autonomy and convenience, without sacrificing the image or security of the front and the back-office.

What is self-service in banking and why should we care ?

Self-service banking is about enabling customers to do their day-to-day banking on websites, portals, and mobile applications, without having to go to a local branch. The most common tasks that clients can do on their own are checking account balances, transferring money between accounts and paying a beneficiary. We have gone from having real face-to-face conversations with tellers in person at the local branch, to mobile banking and calling into a call center.

These innovations are convenient for clients : by enabling them to perform more tasks on their own, in the moment and on their own devices, they enrich their customer journey. However, self-service options are incomplete for many of the banking processes customers depend on, especially at the back-office level. For example, to get a simple answer to a simple question such as how to declare a change in address, they usually have to contact call centers, instead of finding the solution on their own with the help of digital solutions such as chatbots and dynamic FAQs. This leads to broken customer journeys, where banking workflows redirect clients to non-electronic tools that are slower and less convenient for them.

On the contrary, by automating repetitive and low-value-added tasks that should be Do-it-Yourself such as customer service, banks could achieve efficiency gains and optimize the costs of support functions. Doing so would enable them to restore margins that have been losing ground to fintechs in recent years. But that's not all. Just like a well-thought-out self-onboarding platform can do wonders in increasing the conversion rate, customer retention could be optimized by introducing more self-service solutions into customer-facing back-office processes.

Digital native workflows: the champions of front-to-back self-service banking

A workflow is the representation of a series of tasks grouped together in what is known as a business process, i.e. a set of linked activities that lead to a specific operational result. Examples of such processes are account opening or loan contract creation. Workflows are said to be digital native when they are genetically digitized, i.e. they manage each task of the business processes via the web and mobile.

Today, although traditional banks' legacy systems have been partly modernized by the digital transformation, a significant proportion of their workflows still escapes integration. Not all tasks in their business processes are managed by a software. This results in incomplete workflows, where breaks require manual intervention and paperwork, such as when banks must staff employees upfront just to assist or support customers in completing requests that could easily be completed digitally.

Conversely, digital-first workflows offer customer seamless self-service by modeling automated and digitally complete customer paths. Only the complex operations require human intervention linked to specific expertise (analysis, decision-making, customized management, etc).

However, self-servicing the front and back-office raises a number of questions that are not obvious to most traditional banks. Indeed, front-office self-services such as self-boarding present a triple constraint: maximizing the customer acceptance rate, minimizing the risk of default and fraud, and providing a quasi-instantaneous return (time-to-yes). For banks, this means being able to obtain information about the customer in real time without disrupting the customer's experience, for example by taking them off the platform. Therefore, they need automated workflows that allow the customer to fill in a form, verify ID, upload supporting documents and sign electronically, all on the same interface. In addition, these workflows must integrate open banking connectors (APIs, or Application Programming Interfaces) that give them access in a matter of seconds to their customers' banking data and allow them to compare it with other sources such as the National Refund Incident Files or the Anti-Money Laundering lists. This raises the question of data confidentiality, as regulations on open-banking vary greatly from one jurisdiction to another: in some countries (UK, EU...), the creation of open banking APIs or open APIs is stimulated by the regulatory framework, while others (USA, Canada...) have a much more liberal approach and leave the sector to act alone.

In the same way, introducing more self-service options at the back-office raises questions about security and compliance. Indeed, tasks that are more complex than just answering the question of a customer, such as a maturity extension, require some checkups. The identity of the customer needs to be verified – to ensure that no one is making the request in his place – but also that he is not blacklisted or suspected of anti-money laundering. Another constraint is technical: traditional back-offices generally lack customizable workflow management tools, which they must acquire. For example, a loan renegotiation or an early repayment are events that generate risk, so they require a scoring algorithm and open banking connectors fully integrated into the workflows to support decision making.

If you want to learn more about Basikon's digitally native, configurable, API-centric workflows and how they enable you to manage your business processes in an agile and secure way, request a demo here!.