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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
After the world went digital last year, the digital identity crisis began taking on new life. Most fintech players are involved in digital identity in some way, and Experian is no exception.
We recently spoke with Eric Haller, Experian’s Executive Vice President and General Manager of Identity, Fraud & DataLabs, to get an idea of how digital identity is changing.
In the interview below, Haller offers his expert opinion and shares how enabling technologies such as AI and the blockchain are impacting how firms think about digital identity.
Digital identity has been on the radar of financial services firms since the dawn of online services. How has this past year of digital acceleration changed how firms approach digital identity?
Eric Haller: The pandemic has shifted segments of the population to the web that weren’t as engaged online as they were prior to the pandemic. For this segment, shopping “face to face” felt safer in many ways. But with a biological threat surfacing, the risks of shopping in the physical world traded places for online risks. All of a sudden, online services seemed much safer.
This plays out in our research where we saw a 20% increase in online shopping this past year with 43% of consumers believing they will even increase their online activity over the next year. And with this shift, 55% of consumers say security is their top priority in a digital experience.
Tell us about the role that AI plays in enhancing digital identity verification for banks.
Haller: To validate someone’s digital identity, literally hundreds of data elements are evaluated to assess whether an individual is a bot, an imposter or the person they claim to be. And all this data is collected, analyzed, and acted on in milliseconds. AI allows for these complicated links and behaviors to be tied together in a variety of ways quickly, efficiently, and accurately to assign the correct conclusion to each customer.
If everything goes well for a legitimate customer, the experience is smooth sailing and both the consumer and merchant conduct “fraud free” business. Most often, there is no fraud. It only happens a very small percentage of the time. But it’s important that if it is a bot or an imposter, that the models in place are precise.
The blockchain seems like a valuable enabling technology when it comes to proving identity. Is this an idea you’ve seen gain popularity? Or is it more of just a fad?
Haller: The portability of a trusted identity in a digital ecosystem integrated with a blockchain could serve a lot of value for consumers and businesses. But it requires quite a bit of effort to get both those that want to share their identity and those willing to invest in accepting it participating in it.
If there were a lot of businesses that would accept a particular blockchain based ID, consumers would put in the effort to have on and use it. If there were a lot of consumers with it, businesses would put in the effort to invest and accept it.
Which side grows with scale first? There are many chasing this ideal. I wouldn’t characterize it as a fad — just very ambitious and challenging to achieve.
How are businesses in financial services applying technologies like machine learning and AI? What obstacles and challenges remain for companies looking to deploy these technologies and how can these roadblocks be overcome? What does it mean for businesses to be “resilient” and why is “resilience” as important for businesses in today’s dynamic and uncertain times as “agility”?
We caught up with Jeff Fried, Director of Product Management for InterSystems, last week to address these and other critical questions for financial services companies in the COVID – and post-COVID – era. Fried was featured during our FinovateWest Digital conference last month, where he led a keynote address titled, “The 7 Steps to Using Machine Learning to Improve Your Business.”
For more insights from Jeff Fried into how businesses can make the most out of the current crisis, check out our feature Giving AI and Machine Learning the Business.
From fears of a cyberspace-based New Cold War between Russia, China, and the U.S., to emerging fraud threats to financial services companies, small businesses, consumers, and work-from-anywhere employees, the issue of cybersecurity is likely to loom large over all technology discussions in 2021.
To this end, we caught up with Uri Rivner, Chief Cyber Officer of BioCatch. Headquartered in Tel Aviv, Israel, and a Finovate alum since 2014, BioCatch offers an AI-driven behavioral biometrics-based platform that enables online identity verification and reduces fraud by providing account opening and account takeover protection, as well as defense against social engineering scams.
I would be remiss if I didn’t take this opportunity to ask a cybersecurity expert about the massive breach involving SolarWinds and, allegedly, Russian hackers. How do you think about this incident as a professional and how should we think about it as individuals, consumers, etc.?
Uri Rivner: This is the broadest, deepest cyber espionage campaign in a decade; the last wave of this magnitude was attributed to China, which launched a massive industrial espionage campaign some 10 years ago against hundreds of major U.S. and global corporations. I was on the receiving end of that attack during my time at RSA, which was breached in March 2011, and it was a watershed event with far-reaching implications. It galvanized the U.S. intelligence community to action, brought cyber awareness in Corporate America to the Board level, and injected a real sense of urgency to the cyber security industry.
The SolarWinds campaign has a similar effect. When FireEye – the gold standard in endpoint protection and cyber intelligence against state-sponsored attacks – is itself breached, people take notice. When dozens of high-security networks deploying every imaginable combination of state-of-the-art tools and security procedures are compromised, everyone raises an eyebrow. Those who wonder whether the cyber security scene is growing into a new “bubble” received a very clear message: listen, folks, let’s get something straight – cyber security is still unfinished business.
What was the big theme in cybersecurity in 2020? Do you believe this trend will remain as strong in 2021?
Rivner: The big theme in cybercrime in 2020 was the impact of the global pandemic on fraud and identity management. Fraud teams worldwide had to operate from home, resulting in deficiencies that fraudsters were quick to exploit. Online account opening and account takeover fraud surged, and potentially billions of dollars were scammed through government stimulus package fraud. When the dust settles in 2021, we should see the financial sector adopt new, automated fraud controls to close those gaps.
With banks accelerating their mobile-first strategy and releasing new, high-risk functionality available only for mobile platforms – e.g. P2P payments – we should expect 2021 to feature more mobile-based social engineering and malware attacks. Mobile authenticators such as fingerprint and selfie biometrics will suffer from the same fate as any other “strong authentication” technology – they’ll be circumvented using end-users as “moles” to tunnel below the security fences.
You have outlined a variety of cybersecurity trends you think we will face next year. You talk about the rise of “mule detection” as a priority for fraud detection teams. Can you elaborate on how widespread this has become and what is being done to fight it?
Rivner: Thousands of bogus U.S. bank accounts are opened each day online for the purpose of serving as “mules”. Opening a fake bank account is easy as identity records are traded in the dark web, and it’s cheaper to create your own digital mule account than to recruit a living-and-breathing collaborator to funnel your funds. Fortunately, banks use new, next-generation technologies. Device reputation highlights compromised devices used by criminals, while behavioral biometrics can identify when a genuine user uses long-term memory to enter personal information; whereas fraudsters are not familiar with the victim’s personal data and can’t type it the same way.
Outside the U.S., “work from home” mule recruitment is surging given the constant lockdowns and economic crisis caused by the pandemic. But consider this: say a user normally holds their device in a certain way, has a certain typing cadence and finger press size. All of a sudden you spot a different personality inside their account, with new habits and gestures, and the “guest” always checks in shortly after money is received… You just detected a mule, sharing their account with a “controller.” Often these “mule herders” control dozens, or even hundreds of mule accounts.
You’ve also noted that regulators worldwide are taking greater notice of social engineering scams. We’ve known that these are some of the most powerful ways that systems have been penetrated. What are regulators doing to help fight social engineering scams?
Rivner: Social engineering isn’t new, but deep social engineering is a new and dangerous mutation. This is when cybercriminals convince the user to log into their bank account and simply move money to another account belonging to the fraudster. This is done so cleverly that it has become a real epidemic – first hitting U.K. banks a few years ago, and then spreading to mainland Europe and Australia. It’s likely to reach North America in 2021, and banks are far from being ready to deal with this massive problem.
Global regulators are paying close attention to what’s happening in this front. They’re likely to demand strict and immediate measures to protect the vulnerable population from such scams using a combination of traditional transaction monitoring and next-gen capabilities such as detecting signs of hesitation, duress, distraction or being guided based on subtle behaviors measured on the user’s PC or mobile device.
On the technology front, you’ve pointed to the growing attention fraudsters are giving to fintechs and the emerging industry of mobile-first banks. What are the vulnerabilities here and what can fintechs and neobanks do to fix them?
Rivner: The mobile transformation in the financial sector is not evenly spread geographically. In Europe and Asia, mobile-only banks, payment apps and fintech are old news. In North America, the revolution is much more recent, and revolutions are always the best drivers for financial crime. Many U.S. banks offer Zelle, a peer-to-peer payment service, only through mobile apps and not yet via online banking. Additionally, the number of mobile-only financial services, loan providers and other fintechs is skyrocketing.
Crime rings that have focused their online fraud strategy solely on web applications have to adapt fast. Expect to see heavy showers of Mobile RATs and help desk scams, mobile-focused social engineering, mobile overlay malware, rogue apps, mobile emulators and other nasty fraud schemes. Fintechs and neobanks use a risk-based approach in which passive, frictionless device and behavioral biometric controls trigger active biometric controls in case of an anomaly.
You’ve said that one interesting development in fraud technology is the greater role they are playing in “trust and safety.” What do you mean by this and why is it happening now?
Rivner: The banking industry has been using advanced device and behavior analysis to fight fraud, but those technologies are also poised to play a major role in trust and safety. The problem is not stopping cyber criminals, but rather identifying genuine end-users who misuse the system, circumvent controls, gain unfair advantage over other end-users in, say, a marketplace or a gaming site, and generally breach trust and safety controls.
The global pandemic accelerated digital transformation and exposed many of these risks. For example, remote workers who have been vetted and background checked can share their accounts with others who haven’t so they can punch in more hours, creating new security exposures for the company that employs those workers. Once something like this happens, a company can lose things that are sometimes more important than actual money: accountability, fairness, trust and reputation.
Is open banking key to enabling banks and other financial institutions to keep up with ever-evolving customer needs and expectations? With trend drivers as unpredictable as technological innovation on one hand and a once-in-a-generation pandemic on the other, what strategies and tactics can financial institutions embrace in order to best serve their customers now and in the future?
We caught up with Clayton Weir, co-founder of business banking solution provider FI.SPAN, to answer these questions and more. Based in Vancouver, British Columbia, Canada, and founded in 2016, FI.SPAN turns banking services into branded banking experiences that are embedded within the ERP and accounting systems of the bank’s business customers.
A recent report indicated that almost 90% of innovation managers fear that integration challenges themselves are an obstacle to digital transformation. Are they right?
Clayton Weir: Yes, I believe they have a valid argument for considering this an obstacle to digital transformation. Forrester and Avoka published a great study on how many large IT projects at enterprise banking and financial services firms get delayed, overrun, and even more disappointingly fail to deliver all of the business value promised.
When you look at the biggest drivers of a failed software project, a disproportionate amount of blame tends to fall on some failure to properly scope the mission in terms of vision, customer needs, and potential constraints.
In addition to the inability to properly staff the program with the right skill mix, I believe those risks become heightened in a domain area like embedded/ERP banking. A team has to understand the nuances of client ERP systems, bank legacy systems, treasury banking, accounting workflows, banking workflows and deliver a program that can exist and add value within all of those different constraints. Not only will most banks and contracted build partners be unlikely to have some of those perspectives sitting on the bench, it also will be hard to deploy the right mix of people to the initiative concurrently.
Technology has moved too far too fast for the banks to build those capabilities themselves. Buying companies that can bring those services to market is not impossible, but well outside the purview of most commercial banks. The best way to go for B2B banks to manage the impact of rapidly evolving customer expectations is to partner with agile, innovative fintech services that not simply meet expectations, but exceed them.
Why do you believe that open banking is the missing link in helping banks make digital transformations?
Weir: Over the next few years, it’s likely that governments will force financial institutions to become more transparent with their data and share information of the client’s choosing with their peers because of open banking. By having a freer flow of information between these parties, both banks and fintechs could develop new apps and services to better serve the needs of their customers. Open banking will make it easier for customers to access fintech products or even open accounts with other financial institutions, but they’ll transact with others through their main bank’s platforms. Rather than getting frustrated with their bank’s limitations, customers will be grateful for how much easier it is to work with their institution.
What do you see when you look at the prospects for open banking in the U.S.? What will drive it forward?
Weir: Many businesses are feeling neglected by banks, when we look into some of the niches that are cropping up; fintechs can come in and support this happening, starting to find ways to serve small niches across the board.
Open banking is a big part of this conversation, and there is market-based momentum around open banking. Open banking is showing up as a direct response to the market opportunity. Meaning, the demand from consumers to use third party apps is increasing. If your bank doesn’t work with those apps, it’s a massive disadvantage for you. If a customer can’t use a certain app because you don’t offer it, they’re going to find a different bank that can offer them a better experience.
Effectively, there is going to be more and more momentum in the marketplace, so as the European and Australian open banking regimes mature, the scope will go above and and beyond what the U.S. has done. As multinational banks, fintechs and developers start to develop other offerings around open banking infrastructure in those other markets, it’s going to dial up the customer expectations in North America. Even if open banking is slow to adopt in the U.S. and Canada, the best things that come out of open banking will undoubtedly surface North America. Multinational banks are going to bring the best of their open banking infrastructure to their North American banks and use it in competitive and interesting ways.
What is the environment for open banking in Canada – where FI.SPAN is based?
Weir: Canada is lagging somewhat behind some other countries, such as Europe and Australia, where governments have mandated open banking and the sharing of customer information. However, adoption in these locales has been slow, while technical issues have made open banking difficult to implement. At some point, the Canadian government will follow suit and mandate open banking, but the sooner banks come on board – and some may get ahead of legislation and create better user experiences now – the better. Everyone should want to see open banking succeed, as it will make it easier for a bank’s business clients to operate, which then further increases economic innovation and competitiveness.
If Canada’s banks are going to become global financial innovators, they need to be more open-minded when it comes to working with fintechs and embrace key trends which include open banking, authentication and digital identification, payments modernization, and embedding financial services within other applications.
Why does the global health crisis – and its economic fallout – represent a special opportunity to embrace open banking? Has COVID-19 made it harder in some ways to advance open banking?
Weir: Quite the opposite, we see it as having brought about digitization and innovation at a quicker pace than pre-pandemic. I think what has essentially happened was that businesses suddenly needed to eliminate manual and paper-based processes, they looked to their banks for help implementing digital solutions quickly. This has pushed banks to start rethinking their innovation goals, and they’ve started asking what efforts will have an immediate impact on the client experience. The fact that embedded banking has suddenly become ubiquitous means that FI.SPAN is now positioned to bring about a huge shift in how businesses consume banking products.
How does FI.SPAN fit into this effort with regard to open banking? How is your company making a difference?
Weir: We make it easy for banks to extend their service offering to their business clients by embedding commercial banking applications within the organization’s ERP or accounting software. The most innovative banks are partnering with fintechs to deliver better payment services they believe will make their customers happier, their relationships stronger, and drive revenue.
Fraudsters are taking advantage of the increased number of transactions taking place online in today’s pandemic environment. Thanks to this shift, along with other recent payment trends like BNPL, the digital payments environment looks a lot different than it did just a year ago.
To get a better idea of the specific changes that have taken place, as well as those that have yet to come, we spoke with Vesta CIO Tan Truong. In our conversation, Truong offers his insight on recent payment industry trends, provides advice for merchants, and offers tips on how banks can help their small business clients fight payments fraud.
What recent changes have you seen in the payments space, and what changes do you foresee in the sector next year?
Tan Truong: The pandemic has really supercharged the acceleration of e-commerce growth – by some analyst accounts, the industry has jumped about five years ahead of its already steep growth trajectory. Total online spending in May, at the height of the pandemic, was up 77% year-over-year. But even many brick-and-mortar sales are no longer traditional in-store purchases, thanks to the rising popularity of curbside pickup options that allow consumers to make a purchase online and have merchandise dropped right into their car by a sales associate within minutes.
Unsurprisingly, fraud has also skyrocketed as consumers and retailers both look to prioritize health and safety by embracing contactless transactions. Some researchers are projecting that retailers will lose about $130 billion in revenue due to CNP fraud between now and 2023.
Buy Now Pay Later (BNPL) is the newest trend in payments. What type of risk management is required in this new frontier?
Truong: Buy Now Pay Later has seen incredible traction in markets like Australia and Latin America, but it has only recently started to take off here in the U.S., particularly among Gen Z shoppers.
One big area of risk here is around disreputable or fraudulent vendors taking advantage of the companies that offer BNPL services. If they haven’t properly identified whether it’s a legitimate or illegitimate merchant, they could easily fall victim to a scheme where a fake merchant submits falsified orders using stolen consumer PII, then collects payments for products it allegedly sold but did not ship. Since BNPL vendors assume the risk on these transactions, they would be left holding the bag.
In terms of risk for merchants, regardless of the payment method it is crucial that merchants follow established best practices to remain one step ahead of bad actors. There are several key areas they should be focused on to eliminate fraud and increase approvals:
Prioritize Anomaly Detection: Look for obvious irregularities in ordering habits which may suggest that a buyer is exploitative. These may include orders placed late at night during hours when customers are unlikely to be active, and orders for a high quantity of a specific product or at the upper end of the price scale.
Conduct a Digital Footprint Assessment: The four pillars of the digital footprint – device, IP, phone, and email – can provide crucial signals to understand the origins of a payment. For example, the lack of geolocation information or a mismatch between distances from the billing address to the IP geolocation can be a key indicator of fraud. Likewise, email addresses which are either linked to no-name providers or uncommon email hosting firms can be a bad sign, as can those that do not actually feature the name of the buyer. Email addresses that are just a string of letters and numbers are often a sign of randomization, a tactic often used by fraudsters to make identity detection difficult. Also keep a close eye on a customer’s phone number, since having multiple numbers associated with a single device can be a red flag.
Implement Data-Driven Machine Learning Strategies: Use fraud prevention tools that can build upon features and profiles targeting a range of factors – like user behaviors, session information, order history, and key attributes like products purchased, order amounts, times those orders were placed and shipping address. This is a much stronger approach than employing a rules-driven reactive strategy.
What are some things most merchants don’t think about when it comes to payments fraud?
Truong: Too many merchants are so hyper-focused on the idea of preventing fraud altogether that they hurt themselves in the long run. Nearly every merchant knows what their fraud rate is, but relatively few know their approval rate or understand the relationship between the two. A very low fraud rate isn’t necessarily a good thing. Depending on how the merchant got there, it may indicate that they are rejecting a large number of transactions. Most merchants don’t know how much revenue they are turning away through their fear of fraud. A shift in perspective is needed.
Fraud is a serious problem, and merchants really have no control over its growth; they can only control their reaction to it. If they are preventing fraud by rejecting any transaction where they’re not 100% certain of its legitimacy, there’s a very high chance they are suppressing revenue and turning away many genuine customers. False declines are a lot more damaging than many merchants realize. According to a recent report from Sapio Research, 33% of U.S. consumers said they would never again shop with a particular merchant if that merchant had falsely declined their payment.
Throttling questionable transactions is short-term thinking: it puts undue pressure on profit margins, reduces sales revenues and the number of good transactions accepted, and negatively affects customer loyalty and brand reputation.
How can banks help their small business clients in fighting payments fraud?
Truong: E- and m-commerce were supposed to be the great equalizer for small and midsized merchants, but they have been hardest hit by fraud as they are unable to match the spending power of larger companies who spend about $4 fighting fraud for every $1 of fraud committed. As a result, many smaller merchants combat fraud primarily by not approving any questionable transactions – an approach that inevitably has them leaving revenue on the table.
Banks can help their small business clients by incentivizing them to find and implement anti-fraud technologies that will go beyond limiting their fraud risk and help them prioritize maximizing revenues.
Vesta recently teamed up with data network provider Plaid. Tell us how this partnership can reduce nonsufficient funds.
Truong: Plaid provides a secure connection between consumers’ banks and the fintech apps they want to use, so the integration was a really important step for us. It allowed us to launch a Guaranteed ACH product that enables automated clearing house payments while reducing fraud and fees incurred from non-sufficient funds. Since Plaid is connected to more than 11,000 banks in the U.S., Canada, and Europe, the real-time visibility they provide allows us to get an accurate sense of a customer’s account status, minimizing a merchant’s risk around fraud or just bad budgeting on the behalf of a consumer.
Merchants have been very reluctant to accept ACH payments due to the time it takes to settle charges and increased risk of fraud involved. At the same time, ACH payments cost significantly less to facilitate than credit or debit card purchases – a gap that is especially eye-opening for large purchases. For example, a $5,000 transaction could cost the originator anywhere from $0.25 to $5 when made with ACH, or $90 if made with a credit card.
So the partnership with Plaid enabled our Guaranteed ACH offering, which in turn addresses two of the major barriers to broad adoption of ACH payments – speed and trust. It also opens up opportunities for millions of Americans with bank accounts but no payment cards to be able to shop online.
This is a guest post co-written by Dr. Anette Broløs, an independent fintech analyst, and Dr. Erin B. Taylor, author of the book Materializing Poverty: How the Poor Transform Their Lives.
Have you ever thought how strange it is that financial solutions for women should be marketed in pink? Or what financial services firms are missing by not fully meeting female customers’ needs? After all, studies indicate that financial services are missing out on nearly $800 billion in profits because they do not provide services developed with women in mind.
We set out to answer these questions in a recent report, published by the European Women Payments Network (EWPN) in partnership with Keen Innovation.
What was the impetus of this report?
It is well documented—across countries and cultures—that women undertake most daily household economic activities (transactions and decisions). Women control or influence 80% of financial decisions and 85% of consumer spending.
Women’s income, retirement savings and investments are lower than men’s – but are now rising fast. And though 25% to 30% of entrepreneurs are women, they only access 2% to 5% of venture capital.
We wondered why so few financial services were developed for women – and why this does not seem to be a concern for researchers. We found that there is a nascent industry developing in this area, and there are products on the market for women to invest, insure, save, manage money, access credit, and more.
We discovered more than 60 organizations and their range of new services provided for women or primarily used by women.
We found that these services are anchored in women’s everyday life situations, and are often delivered in a community setting that offers learning possibilities. Organisations like Ellevest or Voleo help women start saving and investing, and companies like I Fund Women support female entrepreneurs. Financial management apps, such as Nav.it, help women see an overview of their finances and feel more comfortable with their economy.
What are you hoping that readers get out of the report?
We hope that readers from all parts of the industry will consider following up on the potential to serve women better. We hope they will design and develop services with and for their customers.
We also hope that this first overview will bring about more studies in financial decision making and people’s ability to talk about their finances. Research shows that people generally, but especially women, are under-equipped to have the conversations they need to help them make informed decisions.
Finally, we want you to help us update the ecosystem. We are planning a new publication that looks further into the market for financial services for women and the characteristics of the companies that offer them. We invite you to tell us about your own efforts to develop financial services for women, and your experiences in trying to close the gender gap.
Dr. Anette Broløs of Broløs Consult is a network leader working with strategic innovation and partnerships. Broløs spent six years as CEO of Copenhagen FinTech Innovation and Research, and has extensive experience as a C-level banking executive. She is co-organizer of the Research section of the European Women Payments Network.
Dr. Erin Taylor of Canela Consulting is the author of the book Materializing Poverty: How the Poor Transform Their Lives. Taylor has been designing and carrying out empirical research since 2003 in diverse contexts across the globe. She is co-organizer of the Research section of the European Women Payments Network.
Partnerships between nimble fintechs and trusted banks are essential as we look to build back our economy. Mary Kate Loftus, a panelist in our FinovateFall Strategic Partnerships session, knows this well. As head SVP, Director of Digital for M&T Bank, she fields potential partnerships each month. We sat down with her to discuss what M&T looks for in a partner and where she sees the industry going.
How do you determine your needs for a fintech partner?
Mary Kate Loftus: With all things, we start with our customer. Our teams dive deep into the customer experience through journey mapping, and from this, we can see the pain points and what we need to create. Going about our innovation and partnerships from this perspective, rather than looking at our competitors and building to parity, allows us to create a truly differentiated experience.
When it comes to partnerships, we consider if we are best suited to meet the needs of the client or if we need to turn to an outside source that’s already focusing on these needs very deeply. Banks, like M&T, are able to work closely with their clients in a way that many fintech organizations are not able to do. But often fintechs, free of a complex organizational structure or process, are able to innovate in a very focused way. This ying and yang – the bank’s customer expertise and the fintech’s area expertise – allows for a truly meaningful partnership.
Once we identify a partnership need, we see if we’re aligned in our corporate purpose. This step is critical – it ensures that our approach will be both effective and long-term. Our purpose is to improve the lives of our customers in a meaningful way, and we look for partners looking to achieve the same.
What makes you take a meeting with a potential fintech partner?
Mary Kate: Referrals from existing clients, friends, connections, or colleagues are always a great way to start a potential partnership. Beyond that, I get excited to meet those who come with a clear vision of the problem they’re able to address and a strong understanding of our corporate promise. For us, it’s not enough to simply have a capability, but rather, we build for measurable results and long-term partnership.
Once we’re in the meeting, it all comes down to talent. We want to work with creative, imaginative, curious people, and we’re looking to see those qualities on day one. Together we want there to be a good energy in the room and, equally as important, great ideas.
Lastly, we’re looking to learn from our partners. What can you teach us about what we’re not yet doing?
Can you discuss the PPP rollout and how you overcame the challenge?
Mary Kate: M&T’s successful PPP rollout was thanks to a strong set of existing partnerships and a creative team that was ready to scale nearly overnight.
Before the pandemic, we were working with Blend for our mortgage digital originations so we were already aligned in our purpose. The leadership teams from both organizations were just starting conversations on how we could work together more when the PPP program was announced, and so we knew they were the partner to tap. A cross-functional team brought in Salesforce and Docusign – two other existing partners – to complete the experience.
Within minutes of the program launching, we had thousands of applications. Together, we were able to lead the country in loan fulfillment– 96% of first round loans went through within days — giving $7 billion in funds to small businesses. More importantly, our partnership allowed us to still meaningfully vet the applications, and we’re proud to say that two thirds of the loans issued went to businesses with less than 10 employees.
Our PPP response was led by Eric Feldstein, M&T’s SVP who oversees Business Banking. It’s a success story about the importance of having strong leaders with digital expertise leading a line of business. I believe this successful rollout in a time of real crisis for many will create lasting loyalty in our customer base.
What near-horizon banking technology are you most excited about?
Mary Kate: I’m a big believer in the science behind behavioral analytics and how you motivate customers by understanding how people think.
Every customer is going through a different experience. If one client is going through a life change like having a child or going through a divorce, it’s important to be able to anticipate financially what that journey might look like for them. As we are able to embed more artificial intelligence and meaningful insights, we’ll be able to guide customers toward better decisions that then will improve the quality of their life.
This is why we’re so focused on experience mapping to identify customer journeys — from there we’re able to understand what the moments that matter most are for different segments of customers. When you apply data and insights against those experiences, you’re then able to build a personalized micro-experience. What we’re doing today is lightyears ahead of what we were doing in the past, and I can’t wait to see how much more we can do in this space.
The pandemic is only going to accelerate this. We’re seeing a blend of work and personal lives, and with this, I think the financial services industry will play an even bigger role in making a difference in people’s lives.
What role does the need for diversity play in banking partnerships?
Mary Kate: Diversity plays an absolutely critical role in these partnerships.
At M&T, we know the more diverse voices we have in the room the better decisions and outcomes you can drive for customers. As an institution, you must reflect your community and customers, so you need to draw from a broad range of experiences in order to drive the best business performance and outcome.
When choosing a partner, we look at who we’re working with. We look at what systems are in place and watch out for those that could create outcomes that we don’t want to drive, and, conversely, for those that will drive us further.
This goes back to what I was saying earlier about learning from a partner. Yes, we want cutting-edge technology that will solve customer pain points, but sometimes these pain points are solved through systems, processes, or approaches. We’ve found that by working with a diverse set of partners, we’re able to think in more comprehensive, customer-centric ways.
Mary Kate Loftus is the Senior Vice President, Director of Digital for M&T. She joined the Bank in 2018 as the Head of Strategic Planning for the Consumer & Business Bank. Mary Kate is a career banker with over 20 years in financial services with experience in Digital, Branch Management and Contact Center. Mary Kate holds an MBA from Canisius College, is a 2013 graduate of the Consumer Banker’s Association Executive Banking School and is a member of their Digital Channels Committee in addition to other industry forums
These days, you would be hard-pressed to find anyone whose job hasn’t changed because of COVID-19. And since payroll plays a major role in customers’ careers, we wanted to explore the ins-and-outs of how the “new normal” is impacting this subsector of fintech.
Today we caught up with DailyPay Chief Innovation Officer Jeanniey Walden to gain a better understanding of what the payroll and benefits space looks like in 2020.
The recent public health crisis has altered our way of life in many ways. How have you seen it change the employee benefits and payroll space?
Jeanniey Walden: The public health crisis changed everything about life as we knew it, overnight. This impacted every aspect of the workplace, especially in the employee benefits and payroll space. Business leaders had to reimagine, redevelop, and re-engineer how every element of their business works, while simultaneously supporting time-sensitive matters including payroll. The pandemic also drove HR and payroll leaders to leverage technology to design successful remote workforces, leveraging video, virtual coffee dates, mindfulness support and more. They also need to ensure employees were well taken care of, as dynamically and normally as possible, in a new world. On-demand pay is one of the technologies HR and payroll leaders pushed to the forefront in the payroll space supporting not just their employees’ financial needs during the pandemic but also the entire household. Concerns over access and timing of pay were eliminated with the adoption of this new technology.
In fact, DailyPay’s on-demand pay usage has been selected for use by 80% of Fortune 100 companies offering on-demand pay during the wake of the pandemic. And as many Americans became financially insolvent, a recent study indicated a 30% increase of on-demand pay usage relating to an increase in household dependency on a DailyPay user. To exacerbate the problem, unemployment benefits and deferral housing protection are expected to end in July, leaving many people scrambling to find more income.
We expect the changes in payroll and benefits will continue to evolve the hopes of alleviating financial stress as we try to acclimate to our new normal.
In what ways does the traditional payroll process have to reinvent itself to fit into the post-COVID digital era?
Walden: Throughout COVID-19, when and how fast employees get their pay has never been more important. Having access to their own funds has become the lifeline during the pandemic, not just for employees, but for their families as well.
As the pandemic evolved, many new people began using DailyPay to support ever-changing household needs, including their ability to make bulk PPP purchases, purchase data plan extensions on the cell phones, and even enable them to visit the grocery store or pharmacy early, before they became crowded, reducing their chances of getting sick. Today, access to on-demand pay offers families whose significant other has lost their job maintain a sense of normalcy in supporting the household.
The pandemic exemplifies how the current bi-weekly payroll cycle fails to timely and financially cover employees’ necessary and unexpected emergency costs. This is a wake-up call to companies to abandon the traditional payroll process and migrate to a digital, contactless pay solution which provides employees access to their earned pay and eliminates the two-week wait time that employees usually encounter with the traditional payroll process. Speed and safety are prioritized through digitization which ends up saving people valuable time and money.
Let’s talk diversity. How can companies attract a more ethnically diverse workforce?
Walden: Diversity in a company’s leadership and workforce is not just the right thing to do, it’s the smart thing to do. In this current social climate, employees are less inclined to work or apply to a company that is not taking any initiative to create a more diverse workplace. Now more than ever, employers need to take charge to create an inclusive, diverse culture that communicates their corporate values to their staff. Through regular diversity training and open dialogues with employees, companies can consistently reevaluate and update its workforce policies.
To continue to grow, companies need to learn how to retain their diverse employees. This can be easily done by offering employees benefits and opportunities to grow as an individual. Some benefits employers can offer workers are diversity programs, mentorship, inclusive workplace policies, and on-demand pay that provide employees flexibility.
While companies’ attitudes toward diversity can’t change overnight, employers can commit to taking action every day to promote diversity. Businesses need to understand that a “diverse workforce” isn’t a momentary trend and shouldn’t treat it as a tool to simply recruit candidates. It’s a long-term commitment to support and elevate all prospective and current employees.
One of the tricks to curating a diverse workforce is creating the right culture. What are some creative ways that small companies can ensure less turnover during such a volatile time?
Walden: The combination of younger generations in the workplace and the current health crisis has increased the pressure on employers to deliver a better employee experience. Employees expect employers to step up and meet their current needs for personal safety, financial security, and remote work culture amid the pandemic. But they were already pushing for an improved workplace experience before COVID-19 — and those demands haven’t gone away.
While it might feel prudent to put employee experience on the back burner while your organization copes with the pandemic, now’s actually a great opportunity to test how your culture holds up remotely. Because, as you’ll learn in the next point, remote work often goes hand-in-hand with building a better employee experience.
To prevent incurring such high costs and turnover, small businesses can offer their employees financial benefits that are mutually beneficial to the employer and employee. That is why an on-demand pay benefit is gaining so much traction. According to a DailyPay survey, our partners saw a 45% decrease on average in turnover since implementing the solution. In addition to soaring retention rates, employees find their productivity and happiness increase just knowing that they have the option to get their money when they want.
What is the safest way for banks to go live with new tools in the height of a global pandemic? Remotely, of course!
This is the reality that many bank and third party providers have faced over the past few months. Despite the complications that COVID-19 has brought to banks’ operations, many are still moving full speed ahead on projects with third party providers.
Naresh Kurup
Naresh Kurup, Marketing Director at banking financial crime risk management firm Clari5 has experienced this first-hand. After the pandemic hit, Clari5 was forced to quickly move to a work-from-home setting while onboarding two new clients completely remotely, something the team had never done before. We caught up with Kurup to get the details.
In the height of the coronavirus lockdown, you were able to help two new bank clients start projects. Tell us more about this.
We leveraged the coronavirus lockdown situation as an opportunity to excel, for our customers and for us. Amidst the din all around about how the pandemic has been negatively impacting firms and systems worldwide, we had some noteworthy achievements during the lockdown, including three new client wins.
The two projects that we started were both large enterprise fraud management projects for banks (one of them is the Philippines’ second largest bank). Both banks were agreeable to starting their projects during the lockdown – a testimony to the faith in our capability.
We also had another prominent new bank go live with our enterprise fraud management solution, despite the nation-wide lockdown, via a 100% remote implementation.
Our cloud-based project management framework – called Clari5One, has been helping us work seamlessly and virtually. In fact, we have been working at 150% productivity.
So, we actually have been having a silver lining in the Covid cloud.
Were there any hesitations from the banks’ perspectives? If so, how did you deal with their concerns?
There were a few initial apprehensions around remote project initiation and implementation as this is not the standard practice for large enterprise implementation projects.
We modified and extended our project management framework to the banks for higher real-time synchronicity and shared visibility of the delivery management plan.
In the case of the bank client going live during the lockdown, it was mutually agreed that the entire implementation would be performed remotely. Everything from requirement discussions, to integration strategy and configuration, to implementation rollout for the go-live would be conducted fully remotely.
Also, high operational rigor, advanced tele/videoconferencing tools, real-time communication, and continuous updates assured the banks that our project team were completely in-sync throughout the project journey.
These factors were instrumental in the banks gaining confidence that the projects would proceed exactly as per plan, despite the situation.
What was the biggest challenge of remote implementation?
Given the nature, scope, and scale of these projects, typically large enterprise fraud management solution implementation projects demand large teams from either side working together physically closely.
But, given our project management platform, advanced communication tools, and the heightened diligence because of the situation, instead of working alongside the banks’ fraud risk management department officials, our remote project team dovetailed seamlessly with them. So, we were very much present, but virtually.
In fact, the CIO of the bank that went live on Clari5 EFM said, “We are an execution-oriented organization that sets sight on a goal and achieves it, despite roadblocks. We are pleased that Clari5 imbibed our vision, and went live with the mission-critical, enterprise-level fraud risk management solution, despite COVID-19. We appreciate team Clari5’s efforts to keep our operations running and being supportive at every step. Happy to have Clari5 as our valued partner.”
Also, as with any conventional project management, we had no margin for error and were all set to achieve the targets on time, despite managing the projects remotely.
Lessons learnt include project management hyper-optimization, integration approach, methodology finalization, remote infrastructure setup, SIT/UAT support, and final thrust for go-live.
In fact, if it weren’t for the virus, we wouldn’t have had an opportunity to demonstrate that yes, we indeed can remotely activate and implement.
What technology/ tools have you found useful in implementing projects with clients remotely?
As a young fintech company we are equipped and enabled in processes and technology that support ‘work from anywhere’ for most of our staff. So, transitioning to a ‘complete’ remote working situation for project implementations in the wake of the coronavirus lockdown wasn’t exactly a big leap for us.
Since implementation of the Clari5 suite requires close interactions with client teams as well as tasks and activities that are required to be done on premise, we transitioned them to Clari5One – our cloud-based project management framework that has multiple technologies as components.
Clari5One helped us with –
Detailed requirements gathering, demo of use cases, technical specifications interactions
Installation / configuration of Clari5 application components
System integration tests and support for use acceptance tests
Production deployment, go-live, and post go-live support
Project governance (reviews, interventions, and decisions)
Issue tracking, work allocation, and status tracking
If given the choice between an in-person implementation and a remote one, which would you choose?
Undoubtedly, remote.
Being an enterprise product company, we work very closely with client banks to help them achieve their risk and compliance requirements completely and consistently. Project implementation proficiency and on-time delivery have been the hallmarks of our success, which we have achieved consistently in implementations across geographies. But COVID-19 tested our hypothesis.
The outcome has been a mindset shift in our project implementation approach. We had experimented with remote implementations in the past, but the COVID-19 lockdown provided a live environment to validate our remote implementation hypothesis. The leading bank going live boosted our confidence to manage an entire project remotely.
We are now honing our remote implementation expertise for other projects on the anvil. We are currently implementing an EFM project for Philippines’ second largest bank using our remote implementation methodology.
Given the clear advantages of people deployment efficiency, cost economies, and much shorter go-live timeframes, we expect a substantial number of future implementations to be managed remotely.
Suffice to say, remote implementation of large banking enterprise solution projects will become the new normal.
In the midst of the myriad challenges COVID-19 has thrown up for financial institutions and the people and businesses they serve, the crisis is also propeling innovation forward, proving the worth of past technological investments, and shifting the view of digital initiatives from a ‘nice-to-have’ to a ‘need-to-have’, particularly in a time of social distancing.
Against this backdrop of crisis-galvanized change, senior content producer Laura Maxwell-Bernier caught up with Sunayna Tuteja, Head of Digital Assets and Blockchain at TD Ameritrade, to talk about how she is seeing this play out, and how financial institutions should approach digital transformation to ensure relevance in the ‘new normal’.
We are also delighted to announce that Sunayna will be expanding on the themes covered in our conversation at FinovateFall in September, where she will look at the next phase of this trajectory, how changed consumer behaviors will drive further change, and what role technology will have as the dust settles.
Laura Maxwell-Bernier: Crises like COVID-19 have historically shown us how quickly technology can go from a nice-to-have to a real necessity for consumers. How are you seeing this play out in the context of COVID-19?
Sunayna Tuteja: Innovation often gains traction in times of turbulence. We are certainly witnessing that play out at massive and magnified levels in the context of COVID-19. Technologies and trends that were already in motion reached escape velocity – in scale and speed of both investment and adoption accelerating in the span of weeks vs. years. Examples include tele-medicine, online learning, and omni-channel commerce. The necessity of solving a pain point combined with a sense of urgency is activating laser-focused action that otherwise might be slowed down by inertia. In short, digital transformation is now a matter of business resiliency, representing an ultimate shift from “nice-to-have” to “need-to-have”.
Perhaps my favorite example is the Supreme Court of the United Sates (SCOTUS), an institution steeped in tradition which until recently conducted all oral arguments in person, behind closed doors and without cameras present. They too have had to adapt and transform. Last week the SCOTUS moved to hearing arguments via tele-conference, and also opened it to the public to listen in real time. While the new format may lack the usual pomp & circumstance, it ushers in an era of transparency & inclusivity. It’s a joy to witness this epic transition. Necessity is the mother of invention, or in this case adoption!
LMB: What similarities are you seeing in the way financial services organizations are responding to COVID to how they responded after the 2008 financial crisis? What lessons should we be drawing from this in our planning for the longer-term repercussions of COVID?
Tuteja: An imperative for institutions (private and public) to innovate is the rapidly closing delta between novelty and necessity. It wasn’t that long ago that the notion of banking and trading on your mobile device was unfathomable – mobile phones were for playing Candy Crush and Angry Birds! But within a matter of years, driven by a shift in consumer behaviors and expectations plus the rise of Fintech, incumbents have had to evolve and for many, the nice-to-have digital venues are now need-to-have primary on-ramps to attract, engage and retain consumers. Ergo, shocks like the global financial crisis and COVID-19 further reinforce and validate that tapping into the power of nascent yet powerful technologies to break down barriers and create next generation products/client experiences must be an evergreen endeavor. You need to maintain a persistent and pervasive focus on client-centric innovation to keep up with and surpass the evolving expectations and norms.
At TD Ameritrade, we saw this thesis come to fruition as we embarked on transitioning our employees to work from home in a matter of 10 days whilst serving millions of clients during tumultuous market conditions. The firm’s steady investments over the years in capabilities like cloud, Artificial Intelligence, messaging, mobile etc. enabled a speedy and smart transition.
LMB: What implications do you see this crisis having for the rate of adoption of digital assets – stablecoins, CBDCs and the like?
Tuteja: Digital assets are uniquely qualified for these present times. Be it as an investment vehicle akin to bitcoin’s value proposition of ‘digital gold’ or the prospect of modernizing payments, remittances, money movement or banking the unbanked/underbanked driven via stablecoins, digital wallets and CBDCs, the opportunities abound. It’s fertile ground for projects in the digital assets space, including DeFi efforts currently focused on solving these important problems. Again, this momentum is driven by heightened need as we reimagine and reconfigure our day-to-day norms in the time of/after COVID. For example: In my role leading emerging tech and partnerships, I had the opportunity to work with several Asia Tech firms in China. As someone who needs her daily dose of Starbucks, it was always amusing when I tried to pay for my drink with cash or credit card. In a society that has adopted end-to-end digital payments driven by digital wallets embedded within messaging apps like WeChat, the notion of a cash or physical credit card interaction could not be more antiquated. While the proliferation of digital wallets and QR codes have been slow to gain momentum in the U.S., current circumstances may mark a significant shift as consumers are more conscious and concerned about what they touch and who touches their card.
In this new world order, businesses will have to strike a balance between efficiency and resiliency, and as business leaders we must deliver a compounding and comparative advantage to our constituents – customers, employees, and the communities we serve. All of which will enable a good deal of change management and digital transformation to ensure long-lasting relevance. Yet in these times of hyper-change, innovation guided by the voice of the customer is always in vogue.
The confluence of these developments combined with the current macro environment garner an important inflection point in the proliferation of this nascent technology & asset class. It is therefore incumbent on the institutions that consumers know and trust, to lead with prudence and pragmatism in addressing this growing demand from consumers for education and access to digital assets, and continue the journey of bringing Wall Street to Main Street.
LMB: What does the path forward for digital transformation look like as a whole, and what do you anticipate the long-term effects on technology adoption being?
Tuteja: I’ve long maintained that anything that can be digitized will be digitized, it’s a matter of timing and led by the consumer, with technology as the enabler vs. the driver of change. An evergreen approach is key because the timing and pace of adoption is often influenced by external factors as we are witnessing at the moment. I’m reminded of examples like Webvan and Pets.com, which are often cited as failures of the dot.com bubble. Yet their contemporaries, Instacart and Chewy.com, are gaining tremendous adoption today. As an organization, you don’t want be caught off guard and unprepared, hence a persistent evaluation of the evolving consumer needs combined with a “perpetual beta” mindset in deploying new technologies is critical.
While starting with the technology can be alluring, it can lead to “shiny object syndrome” and innovation theater without much value for the end constituents. The not-so-secret secret sauce is an obsession with customer-focused innovation. A myopic focus on solving gnarly problems to deliver meaningful value by breaking down barriers that enable consumers to take charge of their financial future with confidence. If that’s powered by blockchain and AI, great, but the tech ought be secondary to the problem statement. The litmus test we apply is: What is the problem we are solving? Why is this problem worth solving? And why are we or is this tech uniquely qualified to solve this problem? It’s always better to be solving the hard problems and shipping pain-killers vs. vitamins. A strong anchor to the problem statement is also useful in maintaining focus on investing in, experimenting with and operationalizing new capabilities while averting the trappings of fads or fear of missing out.
In this new world order, businesses will have to strike a balance between efficiency and resiliency, which will enable a good deal of change management and digital transformation to ensure long-lasting relevance. Yet in these times of hyper-change, innovation guided by the voice of the customer is always in vogue.
We’ve heard a lot about how the coronavirus has made an impact across the fintech realm, but what about in the crypto space? With an unstable stock market, why weren’t investors fleeing to alternative, blockchain-based assets?
To get an inside view on these questions and more, Finovate’s Adela Knox spoke with Max Lautenschläger, managing partner and co-founder of Iconic Holding, a Germany-based company that manages and sells crypto asset investment vehicles and invests in blockchain and crypto-focused companies via its in-house accelerator.
How has the coronavirus pandemic disrupted traditional investments?
Max Lautenschläger: Personally, as a supervisory member of the biggest independent financial advisory company in Germany, I am monitoring the German financial market closely. I was surprised how good the day-to-day business is going in this very special time, which is forecasted to be one of the biggest economical depressions in modern history. Moreover, it’s positively surprising how much this pandemic is pushing us towards a more digital financial ecosystem. Consumers are adapting to the “new normal” and are suddenly forced, but also willing to make decisions online. Investment advisors and financial consultants on the other hand are realizing the potential of using online tools for signing documents, online identifications or video calls for customer acquisition and retention. Financial institutions seem to finally understand how important digitization is for the daily operations with millennials, which have a very different expectation of financial services. Even though the whole financial industry is suffering, it will also have a positive impact long-term.
By looking at the best performing stocks since corona started, you can also see that more and more money is getting invested into themes like data, remote working, online education, and sustainability. In this pandemic people are realizing the shift the world has already made and want to be exposed to the increasingly important topics.
How has this impacted the appetite for digital currency?
Lautenschläger: It’s very important to understand what was going on when corona hit us out of the sudden. We’re not in an economic crisis yet, but the initial shock led to a so-called liquidity crisis, which makes investors liquidate their holdings -if possible- to cash. All asset classes suffered severely, even “safe havens” like gold decreased by more than 10 percent. Cryptoassets crashed in those extraordinary times, as well, even though they’re said to be non-correlating to other asset classes. Nonetheless, this crisis just confirms what we already know: central banks can print money and are increasing the circulating supply constantly. The beauty about crypto is that code is law, which means that the supply-demand-relationship is predefined. Over the last couple of weeks more and more institutional money has been invested into crypto assets which also led to a new peak in commitments to traditional financial vehicles like the Grayscale Bitcoin Trust.
Secondly, the discussion of introducing a blockchain-based Euro or US Dollar is again one of the top priorities for central banks all over the globe.Libra, despite its weaknesses, seems to be a solid backbone infrastructure for those digitized currencies and could help to accelerate this development.
What is the biggest myth about cryptocurrency?
Lautenschläger: Most people I talk to think that crypto assets don’t have any intrinsic value and research from big financial institutions are trying to support this hypothesis. But this is entirely wrong! Let’s take Bitcoin as an example. Digital gold, safe haven, store of value — a lot of phrases have been used to describe Bitcoin, and to a certain extent, I agree with all of them. For me, Bitcoin is a commodity like gold, other rare metals or rare earth, which can be modeled by the stock-to-flow ratio. On the other hand, there are blockchain protocols which are the infrastructure for decentralized applications. The value of those protocols and their native tokens is derived from the number of deployed applications and the level of engagement. Users will use the infrastructure that offers them the applications they need and developers will go where the users are.
How is cryptocurrency performing in the current pandemic climate?
Lautenschläger: First it crashed like all the other asset classes. The reason for this is that corona -at first- didn’t cause an economic crisis, but primarily a liquidity crisis. Studies in behavioral finance suggest that people tend to convert all liquid assets to cash to be prepared for an upcoming crisis. But even though crypto
tanked even more than the stock and commodity markets it is still the best-performing asset class of 2020. With the monetary policy of the ECB, FED, and BoJ you can clearly see the vulnerability of our system, which makes more and more people lose trust in central bank policies and money in its current design. This is why crypto was born in 2009 as a reaction to the financial crisis.
What are the biggest benefits and reward of investing in digital cryptocurrency?
Lautenschläger: First of all, crypto has a low correlation to traditional and alternative asset classes, which makes it a perfect portfolio diversifier. Recently, we conducted a study in collaboration with the Frankfurt School of Finance and Management, which clearly shows that an allocation of 1% to 5% of crypto to a traditional portfolio not only generated additional returns, but also increased the sharpe-ratio severely, which is the most well-known risk-to-return measure.
Is the demand for crypto assets limited to professional investors or is it something that everyday investors are looking into as well?
Lautenschläger: Crypto assets were originally completely retail driven by individuals who believed in the potential and the idea of an intermediary-free world, in which everyone is financially included. Nowadays, we see more and more high net worth individuals and family offices investing into the space. The lack of professional, enterprise-grade financial vehicles is still an issue and makes it hard for institutions to enter the space. But recent developments like the European AML directive and the German crypto custody license are first indicators that crypto assets are becoming “bankable.” This is also what we have been working on for years at Iconic Funds: make crypto accessible through traditional, regulated vehicles.
Financial services organizations have significant and unique roles to play in the societal responding to COVID-19 – both as we are in the midst of the global pandemic and as we emerge and eventually start to rebuild and recover. In light of this unprecedented challenge, Senior Content Producer at Finovate, Laura Maxwell-Bernier, spoke with Norman Buchanan, First Vice President of Design & Transformation at Alliant Credit Union, to discuss the implications of these unprecedented times for the customer experience and member engagement.
LMB: Thanks for taking the time to join me today. Let’s start with how customer experiences are changing… what does a good customer experience look like in these unprecedented times?
Norman Buchanan: The definitions and fundamentals of member experience stay the same no matter what external forces are at work. Throughout our 85-year history, Alliant has been committed to serving and supporting our members in good times and in bad.
However, times like these do reinforce the human condition and highlight the importance of a human-centered member experience. Establishing authentic, empathetic connections in these times is even more appreciated and critical during the crisis.
LMB: So, how can financial services institutions offer support and reliability to customers when they need it most?
Buchanan: It is critical for financial institutions to show support to our members and customers in this crisis. At Alliant Credit Union, our lending, product management and marketing team quickly developed a new unsecured loan product offering for our existing members within the first week of the crisis. In addition to our unsecured loan product, we have also made our Payment Deferral, Modification and Payment Reduction programs more readily available and easily accessible. These offerings are critical to providing a small amount of relief and peace of mind to members who are experiencing a sudden and dramatic change to their financial condition.
We have been doing scenario planning for the last 10 years and some of the scenarios track closely to what we’re seeing in the market now. We’ve prepared for times like these and will continue to monitor the situation every day so we can make rate change decisions that are in the best collective interests of our more than 500,000 member-owners nationwide.
LMB: How is Alliant Credit Union responding from the customer and member perspective?
Buchanan: During this uncertain time, we are focused on four priorities: continuing strong service to our members, employee and member safety, helping members impacted by COVID-19 and keeping members and employees informed.
Alliant instituted an initial work from home policy on March 13 and implemented a 100 percent virtual work from home call center within 3 business days to help support our members. We had never implemented this type of a call center before in Alliant’s history, (and honestly something I never thought we would ever see) but we were able to accomplish it in rapid time thanks to our resilience as an organization.
Our contact center NPS Scores for the first month of being 100 percent remote are 2 points higher than the same period last year. We mobilized a 100 percent work from home call center and have had slightly improved YOY satisfaction response from our members. This is something our credit union takes a great deal of pride in having accomplished.
LMB: With social distancing now the norm, how can we harness digital services to best serve customers and engage members?
Buchanan: Digital Transformation has been the lynchpin of Alliant’s strategy over the last five years. As our CEO, Dave Mooney puts it, “Banking is something you do, not a place you go.” This strategy has driven the transformation of our Mobile and Online Banking offerings based in research and continual feedback from our members as well as investment in our call center infrastructure and analytics. This strategy enabled Alliant to be in a position to close the majority of our branch network in 2018 so that we could focus on serving our members needs exclusively through our digital and phone channels.
LMB: In your opinion, what is the biggest challenge COVID-19 presents us in terms of delivering best-in-class customer and member experience?
Buchanan: The COVID-19 situation highlighted that a frictionless member experience needs to be supported by a frictionless employee experience, especially when that employee experience is 100 percent remote!
Areas of the operation that historically have been underinvested in automation have been highlighted by this historic experience. Operations like loan deferrals and modifications, which typically handle transaction volumes in the teens per week for us, have been overwhelmed by the current environment. This allows us the opportunity to re-prioritize our focus to ensure that we can support our members with optimized and automated back office processes. That will be an immediate legacy of the COVID Member experience challenge.
