As the chief member experience officer at VyStar Credit Union in Jacksonville, Florida, Joel Swanson focuses on ensuring that the financial institution takes a member-focused approach to everything it does. It’s a strategy that manifests in a variety of ways.

Some of them are experienced by members every day, such as the excellent services and products VyStar provides to its more than 900,000 members. They include great loan rates and benefits such as early direct deposit, rewards on credit cards, low- or no-fee accounts, financial wellness education, interactive touch screen kiosks in branches that provide financial tools, and online financial calculators.

Others involve the larger community as a whole, including support for local events and charitable organizations.

Joel Swanson said it’s an approach that benefits the financial institution’s members, employees, and the communities they serve. “It’s all connected,” Swanson noted, adding that VyStar leadership instilled that idea in the credit union’s motto: “Do Good. Bank Better.”

For example, the credit union’s charitable VyStar Foundation provides corporate sponsorships to nonprofits that focus on programs that help young people, military service members and veterans, and community building.

Recipients in the foundation’s first round of funding included Beaches Habitat for Humanity, Five Star Veterans Center, the Northeast Florida Women Veterans Inc., and the Alachua County Coalition for the Homeless and Hungry. In all, the VyStar Foundation provided a total of almost $200,000 to 10 recipients.

The financial institution also makes arts and culture a target of its community efforts. VyStar recently sponsored the Jax River Jams concert series for a month in Jacksonville. This free event drew thousands to downtown’s Riverfront Plaza to watch a diverse lineup of headliners like “It Wasn’t Me” hitmaker Shaggy, country star Chris Lane, and local indie rock, hip-hop, reggae, and country bands.

Swanson attended the event, calling it an “amazing month of amazing talent” for Jacksonville and the surrounding region. The concert series, which started as a way to bring people back downtown as the worst of the COVID-19 pandemic waned, also featured food trucks on-site. People are allowed to bring chairs and blankets to enjoy the show. VyStar has sponsored the event for three years.

“Everyone knows that VyStar is about doing good in the communities we serve,” Swanson said in a video from the event. “That includes everything there is in that community, whether it’s arts, culture, or musical entertainment.”

He added that bringing the party to Jacksonville “has been really, really meaningful and just wonderful to see.”

A History of Helping People and Supporting Communities

VyStar Credit Union started in 1952 as Jax Navy Federal Credit Union, serving military personnel and civilian employees at Naval Air Station Jacksonville. Operating as a not-for-profit organization, it’s always used the money it makes to improve services to members.

In 2002, the financial institution changed its name to VyStar Credit Union. Since then, it’s experienced substantial growth, expanding to 69 branches in Florida and Georgia and providing services to military service members and veterans all over the world.

Its services also have expanded to include not only traditional banking functions such as savings and checking accounts but also innovations such as online financial management tools.

Today, VyStar, which started with 12 members and $60, has more than $13 billion in assets. Despite the growth, VyStar remains true to its roots, with a commitment to personalized service, community involvement, and the financial well-being of its members.

Joel Swanson said that in addition to growth in membership, the credit union has focused on innovations in technology that can improve the delivery of services to members, including better self-service options.

Joel Swanson Brings Extensive Experience to VyStar Credit Union

Joel Swanson brings a diverse professional background to his role as VyStar’s chief member experience officer. Before joining VyStar, he worked as a business systems analyst at Schroeder Consulting Services from 2006 to 2007. Following that, he dedicated 11 years of his career to Alaska USA Federal Credit Union in Anchorage.

During his tenure at Alaska USA Federal Credit Union, Swanson held various positions of increasing responsibility. He served as the senior business systems analyst from 2007 to 2011 before becoming applications supervisor from 2011 to 2012. He then worked from 2012 to 2017 as the vice president of electronic services, before becoming senior vice president of branch administration.

Swanson also is an active member of the community as an individual. He serves on the board of the Jacksonville Zoo and Gardens and the Boys & Girls Club of Northeast Florida. Additionally, he served previously as chair of the Light the Night Executive Committee for the Leukemia & Lymphoma Society.

In his job as chief membership experience officer, Swanson focuses on providing a personalized, simplified experience to every member of the credit union. His background in technology has served him well in this space. He’s especially interested in what fintech brings to the table, something he said the VyStar leadership team agrees on.

He said in a recent interview that while awareness of the competitive challenges of fintech and tech companies in the financial services industry is important, committing to taking action that improves services to customers is key. VyStar leadership, he said, is willing to take those steps.

“The whole leadership team here at VyStar is aligned and works together on defining the strategy,” he said. He later added, “It is so fun to be first and to have a CEO, a management team, and a board that wants us to be first.”

The CRM you select will have a significant impact on the productivity of your team. Therefore, you'll want to choose one that meets all your needs and provides all of the essential features of your agency. Here are some of the things you should consider when selecting an ideal CRM software for insurance agents:

Understand Your Needs

When it comes to software, it's important to understand your needs and work backwards from there. However, deciding on the most important functionalities can be confusing if you're still unsure what CRM features are right for you and your business. To help you get started, here are some questions worth asking yourself as you plan out a system that will work best for your unique situation:

• What problem am I trying to solve?
• What are my goals?
• What do I want this system to do for me?

It may seem silly at first glance, but defining the problem before starting a solution helps eliminate some common issues. Like you shouldn't buy something because others have told you or by getting overwhelmed with offers on different platforms without considering their real value. Once you know where you're going, it's time to start selecting your CRM.

Easy To Learn And Use

Once you've selected the best CRM for insurance agents, you want to ensure that it is easy to learn and use. To maximise the return on your investment, you need to easily train new employees or subcontracted workers in how to use the system. You also want your existing users to be able to pick up where they left when they return from vacation or after taking time off for other reasons.

In addition, it should be intuitive. Most people don't like learning new software systems because they can be complex and confusing. So look for one with an interface that is intuitive enough. It helps the users figure out how it works without having someone explain everything step-by-step each time they have a question about using the system.

Customer Service Is A Priority

Customer service is a critical component of any customer relationship management (CRM) solution for insurance agents. However, customer service shouldn't be viewed as an afterthought to your CRM but rather a key differentiator in your overall communications strategy.

When evaluating a CRM system for your agency, it's important to remember that the ability to provide outstanding customer service should be the main focus of your evaluation process. You want to select a platform that will make you stand out from the competition. It must provide exceptional support and dedicated resources towards this goal. You can't afford to sacrifice this aspect in pursuit of other features or benefits.

It isn't just about being nice. Customer service is one of the most effective ways to differentiate yourself from other agencies in your local area. It's also crucial because it makes people feel valued, and when they feel valued, they will likely stick around. In addition, it means more referrals and new customers down the line.

Focused On Insurance Agents

It's important to understand that a CRM for insurance agents is different from a CRM for other businesses. The main difference is that insurance agents are focused on handling the specific data and processes that come with working in the industry. It's not just about being able to track leads or send out emails. It's about doing it all with accuracy and efficiency, so you can focus on closing more deals and making money.

The best way to figure out if you're using the right tool for your business? Ask yourself these questions:

• Does this CRM software have features to help me manage my daily tasks?
• Is this software easy to use when I need it most?
• Will this software allow me to scale my company without starting from scratch with every new client?

Mobile-Friendly

It should be available on mobile devices if you're looking for a CRM. It is important because most customers use their phones to complete transactions while they are out and about. Therefore, your customer will expect your company to have a mobile-friendly platform they can access through tablets or phones.

It also helps if the CRM syncs with your phone so that all your contacts get updated in real-time. For example, if someone calls while you're driving and wants their information changed or updated, then having this option can save time and effort on both ends of the call.

Lastly, look for one that's easy enough for users who aren't tech-savvy. For example, does it have a simple 'wizard' feature where agents can easily add new prospects?

Your CRM Should Fulfil The Needs Of Your Agency Without Unnecessary Features

A CRM that's too complicated can be a real headache. It should be easy to use to focus on your clients and appointments. In addition, the CRM should be customisable. You don't want to waste time learning how to set up your accounts or add custom fields. That's why it's important to find an affordable and user-friendly solution.

Lastly, the best CRM will have a mobile app so agents can access their data anytime and anywhere.As an insurance agent, choosing a CRM that can boost your business efficiency is important. However, with so many options available on the market today, you may not know where to start. The advice mentioned above will help you make an informed decision and select the best CRM for your company.

Michalis Michael, CEO of DigitalMR, explores these findings and what they mean for the future of banking.

When we are finally on the other side of the coronavirus pandemic, several key sectors will be remembered positively for the way they took charge and handled the crisis, from healthcare to supermarkets and logistics companies.

Banks, on the other hand, are unlikely to fare as well in the eyes of consumers. A social intelligence report compiled by DigitalMR analysed customer sentiment amongst the top 11 global banks during the period of February 2018 to April 2020 and found customer relationships hit an all-time low during the peak of COVID-19.

In today’s digital world, dissatisfied customers can switch provider with the click of a button and, if banks are to emerge stronger, they must take heed of lessons from the lockdown period and prioritise customer experience in a way that they have never done before.

Here are five of the main customer service lessons banks should take from the coronavirus lockdown according to artificial intelligence.

1. They need to be adaptive

The banks that received the most positive sentiment during lockdown were those that were reactive and quick to adapt their approach in line with what their customers truly needed. Unfortunately, they were in the minority and, despite so much bank advertising claiming to be "by your side" and "in this together", many failed to practice what they preached. In such times of adversity, banks needed to truly demonstrate they were listening to their customers by providing personalisation and products that reflected their needs at specific moments in time. Moving forwards, they must take a more customer-centric approach and provide real solutions in response to new and emerging challenges their customers are facing.

The banks that received the most positive sentiment during lockdown were those that were reactive and quick to adapt their approach in line with what their customers truly needed.

2. Digital is king

Our world today is undeniably digital, and the pace at which disruptive technologies are arriving is accelerating. Arguably, digitalisation in the banking sector moved at an even rapider pace during lockdown, when even those unfamiliar with online banking were forced to bank from home as banks scaled back physical channels and human-led advisory. Despite this, many banks did seemingly little to speed up and optimise their digital processes to account for a surge in online enquiries and applications for Government support, such as the Coronavirus Business Interruption Scheme [CBIS]. To put themselves in better stead post-coronavirus, banks must become innovative and embrace digitalisation so their responses to emergencies like COVID-19 are quicker and more effective. There is no getting away from the fact that digital transformation is vital if they are to be fit for purpose when it comes to lending in the future.

3. It pays to be efficient

Our analysis of customer sentiment throughout lockdown shows that lengthy wait times to speak to a customer service adviser was one of the main frustrations, with some customers experiencing waiting times of four hours plus, and banks like Barclays pulling their customer service functions completely.

Crisis-stricken customers need quick support and solutions, and banks must work hard to address efficiency if they are to improve customer experience moving forwards. Much of this will be achieved by enhancing digital self-service for customers and implementing immediate measures to ensure they have the operational capacity to act quickly. COVID-19 has proven that automation and using data to make efficient decisions is essential for handling increased demand for credit and delivering faster decisions.

[ymal]

4. They must act in times of need

Despite the Government saying in March that banks were required to grant temporary reprieves on mortgage repayments to help families struggling financially during the crisis, our research shows that many failed to issue them. Whilst payment breaks are not a long-term solution for those in financial trouble and could raise bank liquidity concerns, customers in distress need to know that they can turn to their bank for extra support. Many consumers will be considering a switch post-lockdown, so it’s critical that banks offer the trust and services that they demand.

5. They must adapt their fraud strategies

Another key concern amongst customers during lockdown was inconsistencies surrounding fraud, with many consumers worried by their bank’s lack of response to fraud calls, and banks such as HSBC reported to have been overzealous with fraud concerns by cancelling cards when not required. According to Proofpoint, a cloud security and compliance specialist, 80% of accredited banks were unable to say they were proactively protecting their customers from fraudulent emails, and 61% have no Domain-based Message Authentication, Reporting and Conformance [DMARC] record whatsoever, putting customers at heightened risk during the pandemic. To regain customer trust, banks will need to enhance their fraud detection activities to mitigate new financial crime typologies, as digital transactions increase and electronic payment growth accelerates.

Whilst our findings related to banking customer sentiment during lockdown are somewhat scathing, banks can still emerge stronger from the crisis if they learn from their shortcomings, implement the necessary immediate measures and take advantage of opportunities. By embracing digitalisation and using artificial intelligence to inform their responses to customer needs, banks can successfully navigate the new normal, support disproportionately affected customers and renew consumer confidence.

Richard Billington, Chief Technical Officer at Netcall, explores the changes that AI has brought to the business world,.

From the recommendations we receive on Amazon or Netflix to the AI-driven camera software used to improve the photos we take on our smartphones, AI forms parts of the popular services that are used multiple times a day. Even the map and Satnav applications we use rely on AI. Company chatbots are a more well-known use of AI, and can now be found on nearly every company website you visit. In fact, it’s been predicted that 80% of companies will be using chatbots this year.

However, consumers today are getting ever harder to please. The growing ramifications of the ‘Amazon Effect’ means that today’s customers expect instant gratification when liaising with companies – placing more pressure on business leaders to provide more, faster and better. Digital banks such as Monzo and Starling are continuing to build upon these expectations by enabling customers to open accounts in a matter of minutes. And that’s not all: companies are now under pressure to offer 24/7 customer service through a multitude of communications channels, including Twitter, Facebook messenger and other social media.

Furthermore, as millions of individuals are quarantined and isolated amid the current COVID-19 outbreak, never has there been more pressure on customer service teams to facilitate rapid and seamless responses to enquiries on a broad range of issues. In a time of crisis, a customer’s interaction with an organisation can leave a lasting impression, and potentially impact future trust and loyalty – another headache for CEOs, CIOs and CTOs.

Digital banks such as Monzo and Starling are continuing to build upon these expectations by enabling customers to open accounts in a matter of minutes.

AI-enabled systems are increasingly being viewed as the perfect solution for optimising customer service – as it’s extremely beneficial in allowing companies to provide agents that are ‘always on’, as well as hyper-tailored experiences for customers. However, some businesses are yet to harness these technologies – along with their benefits.

The barrier businesses must overcome

For many business leaders, a lack of the right skills in the right place has hampered their ability to implement AI across their company’s customer service function. According to an IBM institute of Business Value study, 120 million workers in the world’s twelve largest economies will need to retrain as a result of AI and intelligent automation.

Other business leaders may face budgetary constraints and can find themselves put off by the significant investment often required when integrating AI systems in their existing IT infrastructure. Misunderstanding surrounding AI can also mean that some CEOs are understandably concerned that the solution they are putting into place may end up being not quite right for their needs. Therefore, concerns over wasted time, money, and other resources often result in a rejection of adopting new technology. However, these concerns will be outweighed by the repercussion stemming from an inability to unlock the true value of this technology – and potentially fall behind in today’s fast-paced market.

Unlocking the benefits of AI

Smaller businesses tend to fall short of the IT foundation and personnel needed to remain up to date with the latest technological advancements in enhancing customer service. But it will ultimately be these investments that enable business leaders to contend with customer demands and flourish in an ever-evolving landscape. Adopting these low-code solutions will enable resource-poor teams to quickly test specific features or workflows without the need for specialised technical skill – enabling employees to innovate and implement significant change, without relying heavily on the IT department.

[ymal]

Low-code is helping companies surpass shortages within multiple digital skills, including AI, by removing the need for highly-trained developers who have traditionally been relied upon to bring new applications to the forefront. In fact, in a recent analyst report, Forrester predicts that savvy application design & development (AD&D) leaders will no longer try and reinvent the wheel and instead will now source algorithms and insight from their platform vendor or its ecosystem. Implementation consultants will now be able to differentiate themselves using AI-driven templates, add-ons and accelerators – particularly industry-specific ones.

With low-code software solutions, everyday business users are able to ensure automated and AI-driven solutions are up and running quickly and easily. Due to the lack of complex coding, the process of integrating AI is instantly simplified, and easily accessible by a range of workers across a variety of business sectors, regardless of size. The ability to test applications before implementation ensures business leaders are able to explore the capabilities of AI without investing valuable time and effort. As a result, they will be empowered to unlock a wave of new possibilities for AI development across a range of functions.

By breaking down walls between IT and other departments within organisations, low-code technology can be utilised to help bring teams together to work collaboratively on applications that rapidly improve processes, by harnessing the knowledge of customer facing wider-business teams. And as COVID-19 continues to cause ramifications for businesses across the globe, business leaders must respond with agility to keep up with increasingly complex customer demands. Speed of implementation and the technology that can help organisations get there is therefore essential when it comes to staying afloat and competitive. And, where many workforces are currently struggling from unprecedented circumstances, the adoption of AI processes through low-code applications can help minimise workloads and free up workers– enabling them to focus on more strategic tasks within the organisation, by automating some of the more mundane processes.

Nowadays banking is closely interlinked with technology. It’s also no secret that digital banking is many people’s preferred method of interacting with their money. Changes to the way we bank over the last decade and our increasing reliability on digital platforms have led banks to change their business models. Controlling money through online services has created a seismic shift in the industry and those who haven’t adapted are struggling to stay relevant. Jean Van Vuuren, Regional VP for UK, Middle East and South Africa at Alfresco, examines how challenger banks have pushed the industry forwards.

Despite the introduction of challenger banks to the industry, many of us still rely on large, traditional banks to keep our hard-earned money safe. So how do these institutions take inspiration from the new emerging banks and put it into practice whilst keeping themselves relevant to a society that is increasingly reliant on technology? And what is next in the wave of digital transformation for financial institutions?

Using AI as part of the customer experience

Banks prioritising the customer experience has increased by leaps and bounds in the last 5-10 years, but it doesn’t just end with the launch of an app or the re-design of an online experience. The customer experience needs to be revisited regularly and continually play a core role in the adoption of the latest technology available.

For example, the future of AI in the banking world is very exciting and is completely transforming the customer experience. Voice banking, facial recognition and automated tellers can help create a completely personalised experience for each customer. Someone could walk into a high street bank, AI sensors at the door could use facial recognition to let the teller know who has arrived and they could automatically pull up all the information about their account without having to ask for their bank card or details.

The customer experience needs to be revisited regularly and continually play a core role in the adoption of the latest technology available.

As technology gets more sophisticated, this opens up possibilities for banks to focus on advising customers rather than spending time on transactions and processes.

Trusting the security of the cloud for confidential documents

The cloud has completely transformed the way in which we store information on our smartphones, computers and within the enterprise. However, as with any technology it comes with potential security risks. Trusting a third party with your data feels risky in most industries because you no longer feel in control of it, but banks are often trusted with our most precious data – not to mention our money. Therefore, maintaining confidentiality is of upmost importance to banks in order to maintain the trust of their customers.

Financial institutions should make sure that they are not relying on security embedded in cloud platforms to do the heavy lifting. Implementing governance services that provide security models, audit trails and regulate access – even internally, and confidently demonstrate that compliance is key for an industry with so much access to personal information. Whilst working in the cloud offers flexibility, it needs to be made secure with intelligent security classifications and automatic safeguarding of files and records as they are created.

This also brings up the issue of legacy platforms from a security and feasibility standpoint. Fund management companies find that legacy platforms are very expensive and not cloud ready. There is very little room for innovation and it is hard to adapt them to meet customer demands. Even if a fund management company has migrated to a Saas or Paas solution, quite often regulatory obligations and the potential dangers posed by hacking and data breaches mean that they sometimes go back to using an on-premises solution. Instead of backtracking, financial institutions should spend time to understand what the best cloud option for them would be and how they would implement it within the confines of governance and compliance.

[ymal]

Going paperless

Discussing going paperless in 2020 may seem like going back to the past, but for many financial institutions making the transition to fully paperless operations is still a work in progress. This is also a key area where challenger banks which have never had paper-based processes have an advantage, they don’t have to adapt simply because they were born paperless. There is also a new generation of consumers that embrace and often expect paperless banking.

While the fintech industry is intrinsically paperless, banks are still adapting to phase out paper support, but this transition should be an integral part of updating the customer experience. The paperless movement involves moving from simply depositing checks via smartphone to a complete digital experience from end-to-end.

Going paperless also provides an added layer of security in accordance with a rising tide of regulations and government mandates. With digital records, automated management processes allow companies to set up rules around metadata to file records, put security procedures around them and also deleting personal information within retention regulations.

Keeping pace with challenger banks who are born of today’s technology

In recent years, the introduction of technological advances such as digital ID verification, e-signature and risk analytics are transforming the way financial service providers interact with their customers. New challenger banks build whole systems in as few as two weeks and automate as much as possible.

By their very nature, challenger banks are pushing their competitors to be more agile and they are growing exponentially, something which the high-street banks had underestimated when they first entered the market. Created for the digital first generation, challenger banks won market share by putting customer-centric products at the heart of their business. They are also able to improve the product and the user experience quickly according to customer feedback.

Customers are flocking to the disruptors in the market who offer exciting functionality. Challenger banks providing customers with new online features, ones that let them take control of their finances, are thriving in the market. In the modern day, banks need to embrace new technologies and digitise processes to create a customer-oriented business and, ultimately, succeed in the market.

It is forecasted that mobile banking is set to be more popular than visiting a high street bank branch within two years. And as the banking industry continues its digital journey, Mark Grainger, VP Europe at Engage Hub, says consumers are coming to expect more control over their data, greater convenience, and “anytime, anywhere” accessibility.

Mobile-first consumers

So far, most banks worldwide have handled the mobile era in exactly the same way, simply shrinking down traditional bank accounts and putting them on a smartphone screen without offering real innovation or engagement.

But simply pouring millions into innovation hubs and piecemeal digitisation strategies isn’t going to deliver the kind of results that will win over those tempted by the challenger banks. Traditional banks need to shift gears and use the valuable information they already have to provide customers with seamless interactions across different channels.

At the same time, banks need to understand that the digital banking revolution is more than a mobile app. It’s about creating an entire experience. The implications of failing to facilitate a seamless cross-channel customer experience – one that lives up to growing customer expectations – is huge. Today, consumers have more choice than ever before, thanks to the rise of fintech start-ups and digital-only banks, and if they do not get the level of service they’ve come to expect, they will not hesitate to take their business elsewhere.

Subscription service model

Using a service model patterned after Amazon Prime or Netflix may seem odd to many retail banks, but challenger banks are already experimenting. Would consumers pay a subscription to get the same service they do with Amazon and Netflix? The answer is yes.

Revolut is already showing itself as a front runner in subscription-based banking. The challenger provides a ‘freemium’ model, which gives users a free UK current account and a free euro IBAN account that offers no fees on exchanging in 24 currencies, up to £5,000 a month. Revolut also provides monthly subscription plans with higher thresholds for no fees, as well as instant access to crypto-currencies, cash back, travel insurance, free medical insurance abroad, airport lounge access and priority support.

Research shows that in the UK 57% of people would be willing to pay an extra monthly fee for additional services from their banks. Most consumers – 45% – would like additional media services such as Netflix and Amazon while 40% prefer earned cashback and 37% would pay for overdraft facilities.

Considering that at present, 72% of customers don’t pay any monthly fees to their banks it’s fair to say that there is a great potential for financial institutions to leverage these services and elevate their game when it comes to competing against challenger banks and unconventional financial services.

[ymal]

Trust and value

Furthermore, traditional banks have a crucial asset compared to challenger financial institutions, and that is trust. Traditional banks have a much longer and seemingly more robust security record.

The paradox is that many people trust their primary financial provider but distrust the financial services industry overall. Therefore, banks that want to persuade their customers to adopt new models and pay a potential monthly fee have to prove that they have customers’ interest at heart.

One way to achieve this is through transparency. The financial services industry still lags behind other sectors when it comes to transparent policies, costs and customer data. This needs to change and they need to show that they are keeping pace with the market trends and customer expectations.

Another crucial aspect banks need to keep in mind when it comes to monthly subscriptions is the added value they would bring to customers. If they agree to additional costs, consumers will also expect extra benefits and not just the same things they used to get for free. Without additional value added, it will seem that banks are trying to simply make some extra money thus confirming customers’ distrust in financial institutions.

If they agree to additional costs, consumers will also expect extra benefits and not just the same things they used to get for free.

Bank of America, for example, learnt this lesson the hard way when they wanted to charge their customers a $5 fee for using their debit cards for purchases. The backlash was swift and strong, and the bank had to cancel the plan within six weeks.

To avoid such situations, banks need to focus on their customers’ financial health and create personalised and holistic value propositions that will provide a competitive edge against challenger banks and convince millennials that they can provide safe and innovative solutions for life’s complex challenges.

By understanding these strategies and embracing the changes in consumer buying behaviours, financial institutions will be able to create new ways to generate recurring value for their customers and new sources of predictable income.

Key skills

However, in order to transform their approach to digital transformation and subscription models banks will also need the right skills and capabilities.

A new CBI/TCS report highlights the UK’s rapidly accelerating digital talent gap as new technologies transform the way we live and work. Currently, the UK is losing out on £63bn a year as companies struggle to find people with digital skills. Areas of banking that need to be a focus for investment include the use of AI in customer profiling, money laundering detection and improving customer services. All of these investments require emerging technology to be implemented, and employees with the skills to manage it. Banks will need to implement training programmes, smart hiring strategies, and strategic digital transformation programmes to attract tech talent and implement a customer experience to rival challenger banks.

And whilst providing subscription services to their customers might require considerable resources and a significant shift in strategy and policies, engaging the new generation of digital-first customers is paramount if traditional banks want to remain relevant and fend off challenger financial institutions. Harnessing this opportunity will provide a critical competitive edge, inspire loyalty and make customers feel valued.

Many industries have already adopted this system and have reaped significant benefits already. It’s high time for traditional banks to challenge the current status quo as well and reap the benefits of a subscription model.

That is why, when the Competition and Markets Authority ordered the implementation of so-called Open Banking almost three years ago, everyone excitedly welcomed the prospect of upstart new banks and other fintech companies using technology to challenge the Big Five. Here Kevin McCallum, CCO at FreeAgent , talks to Finance Monthly about the different ways big banks are making the most of Open Banking.

More than a year after roll-out began, however, it looks more like the little guy is not yet making the inroads expected. In the new Open Banking race, it is the incumbents which are still leading the field.

When the CMA found insufficient competition in banking, it was no surprise - almost 90% of business accounts are concentrated with just four or five institutions, while 60% of personal customers had stayed with their bank for more than a decade.

The central solution was to be Open Banking, starting with requiring banks to allow rivals and third-party services access to customers’ account data - subject, of course, to the necessary permissions. This, the theory went, would spur competition through innovation - we would see banks reduced to interchangeable commodity services, mere infrastructure providers, with nimble, agile third-party services innovating on top, spurring the banks in to action.

In the same timeframe, we have certainly seen the emergence of digital-only challenger banks like Starling, Monzo, Tide and Revolut. While all of them offer 2019 features like savings round-ups, spending analysis, budgeting and merchant recognition, most of the innovation has happened within the walled garden of the traditional account.

Starling and Revolut are already registered for and engaged with Open Banking. Starling is now supported by MoneyDashboard and Raisin UK, while Revolut’s API is supporting connection to many third-party apps. But it’s fair to say the upstarts were expected to dive in to Open Banking faster and deeper than this, some consider them to be behind the curve.

What we have seen, instead, is the big banks leaning heavily in to Open Banking.

HSBC was amongst the first to offer account aggregation, the practice through which consumers can access account data from rival banks, inside a single provider’s own app, initially through a separate Connected Money app.  Barclays, Lloyds and RBS/NatWest have since gone as far as offering the facility inside their core apps.

Of course, the big banks are incentivised to pull in rivals’ account data. Being the first port of call for all finance matters is attractive, whilst account data from other institutions can be used to aid product marketing and lending decisions.

In truth, we have begun to see the first signs of innovation amongst third-party services which plug in to those accounts. CastLight is helping lenders more quickly understand customers’ affordability, Moneybox is helping users round up spending in to savings, Fractal Labs uses knowledge of account activity to help businesses better manage their cash. We have even seen a large bank powering such new-style services in the shape of TSB’s loan comparison service, powered by Funding Options, which surfaces products from across providers.

But, even so, these use cases are not a step-change from the kind we already had before, albeit using less sophisticated methods of data collection. At FreeAgent, where we have offered bank account integration through more rudimentary means for several years now, we sense strong customer demand for efficient, API-driven bank account access. Most onlookers, and digital-savvy customers of the new-wave banks, expected more than this by now.

Why has the pace of Open Banking innovation to date been relatively underwhelming?

First, only the UK’s nine largest banks were mandated by the CMA to make account data available through APIs by the January 2018 deadline.

Ironically, the upstarts have been relatively more free to sit back. Indeed, unlike the legacy holders, they have no burning platform they need to quickly save; for them, the future is growth.

In fact, though, as smaller, less-well-resourced entities, they also have to plan out their investment more carefully than wealthier institutions, rather than dive headlong in to costly initiatives. Monzo is on-record as saying it will embrace the possibilities slowly, exploring whether to build features like account aggregation “in 2019”. When you’re a bank - even a cutting-edge, agile one - “move fast and break things” is a hard mantra to follow.

Furthermore, actual technical implementation of Open Banking is, shall we say, non-trivial. Adoption is complex, and far more complex for account providers than for third-party accessing services. In many cases, writing native code to enable integrations, whilst it may be considered messy, has been more straightforward than adopting Open Banking APIs.

Finally, the big banks, the “CMA 9”, have pushed compliance with Open Banking right down to the wire. Whilst they have been first to the punch, had they managed to launch sooner it may have encouraged the upstarts to compete more quickly.

It won’t stay like this forever. The Open Banking timeline has been an ironic inversion of the class of companies we typically expect to be canaries in the mineshaft of technical trailblazing. But banking innovation is about to become more evenly distributed as the balance between big guns and small players levels out.

From September, all banks, even the smaller ones, must be compliant with Open Banking standards. That is going to be an interesting moment for the new wave - can you really be considered the plucky upstart when you are subject to the same compliance framework as the lumbering giants?

Further regulatory compulsions on the big banks - and one in particular - could further spread Open Banking innovation downstream.

As part of conditions attached to its £45 billion government bail-out during the banking crisis, RBS has been compelled to funnel £700 million in previous state aid in to measures supporting business banking competition.

This so-called Alternative Remedies Package includes several pots of innovation funds, and the scheme’s independent administrator has just made the first innovation awards - £120 million to Metro Bank, £100 million to Starling, £60 million to ClearBank. Metro is promising “radically different” business banking, including “in-store debit card printing, lightning-fast lending decisions, fully digital on-boarding, integrated tax”; Starling says it will build “full suite of 52 digital banking products to meet the needs of all sole traders, micro businesses and small SME businesses”.

Even more awards are due to be made through 2019, likely spurring new use cases for Open Banking, and more besides, that many had not yet dreamed of. This level of funding is going to be an enormous catalyst for the kinds of companies that are really well placed to deliver.

The pace of technology adoption doesn’t always happen as quickly as it sometimes can feel.

Sometimes a great idea can take a long time to bubble up and gain widespread adoption. Shortly after the invention of the horseless carriage, Michigan Savings Bank is said to have forecast: “The horse is here to stay but the automobile is only a novelty - a fad.”

Technology becomes successful when innovation becomes normalised, when enough adoption has been seen that what, once, was considered new fades away and becomes part of the furniture.

Although we have spent the last couple of years talking about the Open Banking initiative, and although its roll-out has been slower than expected, this should not distract us from the likelihood that, in a short while, the innovation and adoption cycle around it will have accelerated to the extent we see many, many new use cases all around us spurring more services and more competition.

The ultimate test of Open Banking, then, will not be who is first to market - it will be when we no longer talk about it at all.

To put this into perspective, the U.S. banking system alone held an estimated $17.4 trillion in assets at the end of 2017, whilst it also generated a staggering net income of $164.8 billion.

Banks are set to become more profitable in the future too, with advanced technology such as artificial intelligence (AI) expected to introduce more than $1 trillion in savings by the year 2030. This highlights the impact that technology is continuing to have on banking, with this relationship growing increasingly intertwined with every passing year.

In this article, we’ll explore this further whilst asking how the most recent innovations are impacting on banking in the digital age.

1. It has Ushered in the Age of Digital and Mobile Banking

Whereas banking used to require standing in queues and liaising with tellers, most transactions are now completed through digital means. In fact, an estimated four out of every 10 UK customers now bank using a mobile app, and this number is set to increase incrementally in the years to come.

So, whether you want to make an instant payment, transfer funds or open a brand new account with a service provider such as Think Money, the quickest and most efficient way of doing this is through digital means.

Technology is also making digital banking increasingly secure, with methods such as 2-step authentication having transformed the space in recent times.

We’re also seeing a significant rise in the use of biometric security methods, including advanced techniques such as fingertip authentication and facial recognition. These options provide the ideal compromise between high security and a seamless customer experience, and this something that remains at the very heart of banking in the digital age.

2. It’s Using AI to Improve the Customer Experience

We touched earlier on AI, and how this will enable banks to make considerable savings and become more profitable in the future.

AI is also having a considerable impact from a consumer perspective, however, especially in terms of the banking experience that they enjoy.

Take the use of chatbots, for example, which can enhance the onboarding process when positioned as helpdesk agents. More specifically, they can answer the most basic and commonly asked questions and anticipate popular requests, enabling customers to resolve their queries as quickly as possible.

AI can also afford bankers a more detailed look at their customers’ behaviours and financial history, making it easier for them to provide real-time insights and offers that offer considerable value.

3. It’s Improved Data Protection in the Banking Sector

In the first half of 2015, it’s estimated that around 400 data breaches took place in the U.S. alone.

This number has fallen in recent times, as banks have identified the core issues that compromise customer details and introduced measures to provide more robust data protection.

Aforementioned biometric and 2-step authentication techniques have helped to secure users’ passwords, for example, whilst phishing scams and malware are also being combatted by 128-bit encryption and higher.

As a customer, you can also take advantage of secure wireless connections to safely access your bank accounts in the modern age, negating the risk posed by public networks and unsecured Wi-Fi hotspots.

Last week TSB lost around 16,000 customers following a serious IT meltdown. This event serves as a display to how important customer service and customer experience are in the commercial banking sector.

In light of TSB’s recent customer service blunder, Jonny Davis, vice-president of global client management partnerships at Fraedom, comments on how banks can enhance their solutions and services delivery.

The TSB story should serve as a reminder of the importance of customer service and the customer experience. Times have changed – businesses have more choice in who they bank with and can switch banks relatively easily, as we have seen from TSB’s customer losses. In this day and age, it’s unacceptable for banks to have faults on this scale.

Over the last decade, customers have come to expect more from their banks, largely thanks to technological innovation which provides seamless mobile transactions, generally responsive customer service and fast transaction times. These services are now seen as a given and banks, whether consumer or commercial, falling short of these expectations is seen as a failure. With ever-growing customer expectation banks must adapt or innovate in these changing times.

A recent survey conducted by Fraedom found that account management and customer service are priorities for 71% of commercial clients. Ultimately, people want more from their banks and this often means more automation, a focus on online banking and a more personalised service. Customers are looking for the banking system to change and up their game when it comes to customer service. In fact, we discovered that 95% of commercial banking clients want their providers to supply the same aggregated account views and real-time transactional information that their personal apps do. This is one area where commercial banks must innovate to keep up with customer expectations.

The recent development and adoption of technology within the banking sector has certainly given way to an increase in our expectations, as consumers, both in the personal and commercial sphere. We have now come to realise that we can do more and more without ever having to step foot inside a bank or even talk to another human being – and we now expect it. With more than 70% of consumers willing to receive computer-generated banking advice according to Accenture, this is a great way for banks to offer the 24/7 service customers have come to expect. Nowadays, customers see no reason for an adherence to ‘office hours’ when chatbots can provide a solution to this thanks to their 24/7 availability and intelligent access to customer information.

Chatbots are just one area in which banks can innovate beyond the basic banking apps to provide a better customer experience, with other areas including biometrics, security and AI. For instance, banks can provide an added value service by incorporating AI into their existing services for spend analysis or risk identification. This would raise banking services above the level of a commodity, improving brand consideration and customer loyalty and cementing their relationships with clients.

TSB’s experience should be a lesson to its peers about the power of their customers. If customers aren’t happy with the service they are being provided, then it is highly likely they will take their banking elsewhere. It’s therefore up to banks to innovate and use technology to provide faster, safer and more intuitive solutions for their customers.

One of the hottest and most contentious issues facing banks today is how and when to utilise Artificial Intelligence (AI) within a business. AI has transformed many industries and consumers everywhere are becoming increasingly used to the idea of driverless cars, conversational chatbots and suggestive recommendation services.

While AI is relatively new in the financial industry, there are significant concerns and limitations that banks must get their heads around. For example, there is much fear surrounding the integration of AI in workplaces as people believe it will result in job losses and ‘robots’ ruling the world. Even the Bank of England has expressed concern, with their Chief Economist predicting a disruptive fallout from the rise of AI that could make many jobs obsolete.

But when applied in the right way, AI can bring endless opportunities, taking away tedious tasks and amplifying what we do as humans. Tanmaya Varma tells us more.

 Where does AI fit?

Discerning how best to use AI, without alienating customers or employees, is a complex issue. Within the finance sector, AI is already being implemented to support with tasks such as fraud detection and management, and credit card and loan risk assessments. JPMorgan Chase, for example, uses image recognition software to analyse legal banking documents. It is efficient and accurate, extracting information and clauses in seconds compared to the 360,000 hours it takes to manually review 12,000 annual commercial credit agreements. This sort of capability could transform the lives of many banking employees as they will no longer be consumed by administrative tasks but can focus on value-added roles instead.

AI is perfectly suited to many straight-forward roles within customer experience. As much as 98% of all customer interactions are simple queries and bots can be used to monitor and streamline these engagements. For example, RBS’s chatbot ‘Luvo’ has the ability to respond to basic customer queries; and can therefore reduce the need for as many customer service employees.

Over the last couple of years, Goldman Sachs, JP Morgan Chase and Charles Schwab have introduced robo-advisers that are able to manage investments, collect financial data and use predictive analytics to anticipate changes in the stock market. While some employees are concerned about competing with this technology, we’re already seeing the use of bionic advisers in the finance sector. These combine machine calculations and human insight to provide a more efficient and comprehensive analysis, whilst also still maintaining the superior customer service clients have come to expect from their financial adviser.

The robots’ limitations

AI has such great potential but there is still one key thing missing – emotional intelligence (or EI) and when customers are involved, this really matters. Where a bank might pay less for a fully automated interaction, the justification for paying more for the human touchpoint is the real value of emotional intelligence, something that computers can’t really provide… yet.

Responding to the emotional cues that your customer displays is an extremely important part of a business relationship, and the ability to read and comprehend these signals plays a huge part in tailoring the customer experience. The big challenge for banks now that chatbots are so readily available is to consider when and where this key human trait is required.

Chatbots can’t easily detect a shift in tone or tension in a conversation and aren’t able to quickly appease a customer. For example, while a robo-adviser is great for an inexpensive and basic service, the issue comes when you have a more unique or sensitive financial situation such as debt or divorce. In this sort of more complex circumstance, a human adviser is perfectly positioned to respond to the nuances of the conversation.

Collaboration is key

There is a great opportunity for AI to go hand-in-hand with human employees - chatbots can be used to streamline the experience, deal with straightforward customers and put more complex enquiries through to the most suitable team member. In this way, banks can bring humans and technology together to provide a superior customer service.

Another example of AI working in tandem with human employees is Relationship Intelligence technology. With thousands of contacts on a database, no adviser can possibly be expected to remember what stage each customer interaction is at and build strong relationships with all of them. Instead, AI can provide insights into who your prospects are, which ones are most beneficial to pursue and when the right time to get in touch is. It can instantly make available information and data from all over the internet about any potential prospect from just a name and email address.

As technology advances, banks are having to walk a fine line between looking for cost-saving efficiencies and smarter ways of working, while ensuring their customers continue to receive excellent and personal service. They also do not want to alienate their workforce and create panic that long-standing staff are slowly being replaced by robots. AI can offer a lot but it doesn’t have the human’s ability to build and maintain vital relationships and collaboration between technology and humans is key here. The successful adoption of AI in the workplace is the issue and opportunity of the moment and one that banks will be contemplating for years to come.

It has emerged that TSB could be facing £16 million in fines for the catastrophic meltdown of its online banking software which prevented customers from accessing their bank accounts and using their debit cards. On the back of our Your Thoughts this week, Yaron Morgenstern, CEO at Glassbox Digital, discusses the important lessons we can learn from this ordeal.

Almost a month after the crisis emerged, mortgage account holders are still unable to access accounts online, while business customers continue to face problems making online payments.

TSB’s response to its customers’ fury is more revealing, with customers unable to get through to customer service teams, even after fraudsters have drained their accounts. Any financial organisation that truly values its customers can learn a number of lessons from this meltdown. Providing a positive and consistent customer experience is vital in today’s digital environment – and this is likely to get even more important as your clients move away from human interactions, such as in bank branches and via call centres.

In the aftermath of TSB’s IT disaster, the question is: how can organisations create digital engagements that are responsive to clients’ needs and at least as successful as human engagements?

Be ethical

A digital footprint is the only way to understand the issues your clients are experiencing, whether they are on a similar scale to the TSB crisis, or as tiny as a minor frustration. However, the Cambridge Analytica scandal has reminded business of the importance of considering ethical data collection when measuring your customer’s experiences.

These recent events, and the distrust that surrounds tech giants and data collection, have showed that financial organisations must inform their online users how their data is collected, stored and used. More importantly, it must be remembered that customer data is on loan to businesses for a given period of time and not owned by the organisation. As such the data collected must be relevant to the individual customer and be able to offer them a distinct advantage in the customer experience.

Be helpful

In light of this mistrust it’s more important than ever that you demonstrate the advantage your processes offer to customers and clients. We are now in a world where there are all kinds of service users, devices and operating systems operating in the financial services environment. This landscape will only become more complicated as the amount of IoT-enabled devices continues to increase. How organisations connect with customers will also evolve in line with these technological advances.

Digital mapping allows businesses to know precisely what browser, device and operating system each online user is operating on, and therefore to know more about the experiences users are having than ever before. The upshot for customers is that these organisations can offer an improved digital journey at every touchpoint in return.

Be responsive

In this digitally-enabled world, organisations should be more capable of staying in touch with their customers. Digital processes need to identify customer pain-points and solve these problems before they begin to mount up like they did at TSB. And instead of operating in complete silos, IT and customer service teams must work together. When considering the TSB disaster, you cannot help but wonder how prepared other parts of the business were for the back office switch.

How can you react immediately to any issues that emerge? Customisable alerts can be set up that go out to IT, customer service, marketing and web development departments that warn about problems on the website and app. With these alerts in place, all teams have full visibility of digital problems and there are no nasty surprises. Similarly, if a user then approaches a customer service representative with a problem, the handler of this complaint should be able to effortlessly tap into the online session data and identify what the issue is and where it lies.

Be pre-emptive

The TSB fire was stoked by Sabadell’s development team, who before the IT crash were publicly toasting what they thought was a successful migration of customers to a new platform. Whilst this is a PR disaster, it also demonstrates how little they understood about the potential pitfalls they were facing. With such a heavy reliance on online experiences, it’s important your teams consistently prepare for failures, in order to best react.

Financial services firms must put in place processes that prevent online glitches (however small these may be). If they do so, businesses will enjoy increased customer loyalty and retention. Rather than simply employing digital mapping when moving legacy systems over or updating a customer portal, it should be engaged day-to-day.

Can you do it?

The finance industry is more reliant on the online experience to retain and win customers than ever before. Despite this, not all banks and insurers are doing it well. Making sure that your IT and business processes are ethical, ongoing and integrated will help guarantee customer loyalty and retention. This approach will insulate businesses from IT disasters like the TSB fiasco – or at least allow them to respond properly in the event of a crisis.

The ongoing TSB IT meltdown has been strong evidence of the risks and challenges financial institutions face daily. It has caused mass uproar from customers and severely tarnished the bank’s overall reputation.

TSB started a long-planned move of 1.3 billion customer records from its former parent company, Lloyds Banking Group, to Proteo4, a platform built by TSB’s Spanish owner, Banco Sabadell. The change-over, which started on Friday 20 April, was supposed to be completed over the weekend by 18:00 on Sunday. But on Monday morning millions of customers were unable to use online or mobile banking or had been given access to other people’s accounts.

Error messages and glitches meant paydays and company salaries were turned upside down across the UK. This has understandably caused a chain of problems across many sectors. TSB’s overall response has not been appreciated by the public and its customer service methods have been hugely questioned.

Below Finance Monthly lists some of Your Thoughts on TSB’s IT failure and its customer service approach.

Mark Hipperson, CTO, Centtrip:

Looking more closely at what happened and how the events evolved, it appears that some key IT best practices might have been omitted, such as:

1. Production system access: it appears developers had access and were making live fixes to production. This is a big no-no in software development even in an ultra-agile DevOps environment.
2. Rollback plan: when it all went wrong, it appeared there was no contingency plan or option to revert back.
3. Incremental proving: it would have been more appropriate to first validate each change to ensure it was successful before moving to the next.
4. Testing: It is pivotal to confirm all changes have been implemented successfully and work well. There are many different types of testing: user, operational, data migration, technical, unit and functional, which would have helped identify any issues before customers did.
5. Early Live Support: it is crucial to make sure sufficient highly skilled staff are available immediately after the release in case things still go wrong.

And last but not least is proof of concepts (PoCs), which would have revealed any tech and planning errors. TSB should have run PoCs on test accounts, or even staff accounts, before the full release.

Alastair Graham, spokesperson, PIF:

Small business customers have reached a nadir in their relationship with traditional banking partners. Branch closures and the move of services online have meant that few now receive any active guidance or support from their bank in helping to grow their business.

At the same time, many feel that even basic banking services aren’t meeting their expectations. Even without issues such as the recent TSB banking crisis, businesses would like improvements to be made.Whether that is quicker account opening processes, simple lending or transparent and fair charges, the demand for alternatives is growing.

Tech innovations, combined with legislative changes such as Open Banking, mean that more products and services are being launched, designed specifically to meet the needs of small business customers. SMEs have already shown they will trust other providers when their banks fail to provide adequate services. This has been particularly evident where prepaid platforms offer more versatility, while still being a safe, secure and flexible method to transfer money.

Yaron Morgenstern, CEO, Glassbox Digital:

In today’s digital age, customer experience is more important than ever. This banking app drama has revealed how important it is to measure your consumer’s experience with complete visibility of any problems. This should really be an ongoing effort, and not just when you plan large scale back office migration. There are three fundamental tenets to an effective customer experience: observation of the customer journey via touchpoints, reshaping customer interactions, and rewiring the company’s services to align with customer expectations.

It is only through advanced digital analytics and AI technology that organisations can understand what is going through their customers’ minds. These are powerful tools for mapping out customers’ digital journeys from the moment they visit a website. This all goes to the heart of improving conversion in the digital customer journey.

Fabian Libeau, EMEA VP. RiskIQ:

The fact that TSB’s IT meltdown dragged on for such a long time, meant that customers were locked out of their accounts for extended periods. It also made them vulnerable to digital fraud in the form of phishing. TSB itself has warned more than five million customers that fraudsters have been attempting to take advantage of its IT breakdown to trick people into handing over information that could enable them to steal their money. Criminals exploiting brands to defraud stakeholders in this way is nothing new, and we know that financial institutions are a much-loved target for hackers, given the highly-sensitive and valuable information they’ve been entrusted with – it is therefore no wonder that cybercriminals are queuing up for an opportunity to impersonate the bank online.

Andy Barratt, UK Managing Director, Coalfire:

In the grand scheme of things, the TSB incident is perhaps not as significant an event as a nation-state hack like last year's WannaCry. But it has still left many, including the ICO, concerned that a major 'data breach' occurred just weeks away from the implementation of the EU’s General Data Protection Regulation.

The power to hand out major fines that GDPR affords the regulator means that the price of poor data protection is about to become far easier to quantify. When the regulation comes into force at the end of the month, a breach like TSB’s would certainly require a Data Protection Impact Assessment and measures put in place to ensure a similar incident doesn’t happen in the future. At the very least, TSB will have put themselves on the ICO’s radar as ‘one to watch’ when GDPR comes into effect.

While the share price of Banco Sabadell, TSB's Spanish parent, wasn’t overly affected by the incident, there could still be a significant financial consequence for the bank. We now know that a large number of customers are affected so the cost of rolling back any mistaken transactions as well as offering support, and potentially refunds, is likely to eat up a lot of operational resource. This event should be a reminder that data protection and the safeguarding of personal information has to be to priority for financial institutions.

Andy Barr, Founder, www.10Yetis.co.uk:

The best thing you can say about the TSB approach to public relations throughout its issues is that it is going to become the modern benchmark for university lecturers on how not to approach crisis communications.

From the very outset, TSB has failed in its approach to handling this ongoing crisis. Its messages have been wrong, even from its highest-level member of staff, the CEO. He has repeatedly issued statements that have been incorrect and that he has had to retract and apologise for.

TSB’s brand reputation is now circling the plughole and its Spanish owners could very well be forced down the route of a re-brand in the mid to longer term in order to try and recover their reputation. I fully expect a classic crisis communications recovery plan 101 to be rolled out, once this all dies down. Step one; apologise (usually full page ads), step two; announce an independent investigation, step three; a member of the C-Suite gets the Spanish Archer (El-bow), and then step four; another apology before trying to move on.

Whatever the final outcome, this has been a public relations disaster for TSB and they are very lucky that at the time that it happened there was so much other “hard news” going on such as Brexit, rail company re-nationalisation and, of course, Big Don, over the pond, constantly feeding the 24-hour news agenda.

Danny Bluestone, Founder & CEO, Cyber-Duck:

The TSB fiasco shows that many organisations vastly underestimate data migrations. Moving data on such a scale from an incumbent system to a different one is an inherently complex task. There are several steps to follow for a successful migration.

First and foremost, it begins with a considered strategy for structural changes that ensures no legacy data is made unusable and new functionality is accounted for. Banks like Monzo test new features within alpha and beta modes, so new pieces of functionality are tried and tested before a mass general public release. TSB would have been wise to utilise test scripts and automated testing to auto-test thousands of permutations from login to usage of the system. Relevant applications that monitor errors could have then detected issues early on.

TSB could have also used a run-book for deployment so all steps of deployment are documented. When an error was detected, TSB could have rolled back without data loss. Problems could also have arisen if TSB failed to use a testing environment that was identical to the production environment. As if there is even a slight difference, the user experience can break.

With regards to the application hosting, TSB should have an active engineering team monitoring performance 24/7. In our experience at Cyber-Duck – from working with numerous institutions including redesigning the Bank of England’s digital website – there really is no excuse for users to suffer. Complex data migrations can be dealt with in a secure and efficient manner if best practice methodology is followed.

Adam Alton, Senior Developer, Potato:

Software is difficult; Microsoft still hasn't finished Windows. Trying to write a new piece of software or create a new system, and then migrate everything over to it in one go is likely to go badly. The chances of it working are incredibly slim. Instead, a migration in several parts would be better. Release small, release often. When Mark Zuckerberg said "move fast and break things", you could interpret that as "you're going to break things, so do frequent and small releases in order that you break as little as possible before you get a chance to fix it". The problems with TSB's migration appear to be multiple and disparate; error messages, slowness and capacity problems, users shown the wrong data. It seems unlikely that these stem from a single cause or single bug, so it would seem that they tried to do too much at once.

Coerced optimism: when under pressure to get something to work, it's easy for a team of developers to wishfully believe that something is finished and working because they can't see any problems, even though their experience tells them that the complexity of the system and the rushed job they've done means that it's extremely unlikely to be free of issues. I wouldn't be surprised if IT workers at TSB fell into this trap, leading to the premature announcements that the problems were resolved.

Denying that you have a problem is always a bad idea. Amazon Web Services (AWS) provide a detailed status dashboard giving a continuous and transparent view of any issues on their systems. They don't deny that they occasionally hit problems but instead have a process in place for actively updating their customers with as much information as possible. This transparency and openness clearly win them a huge amount of customer trust.

Senthil Ravindran, EVP & Global Head, xLabs, Virtusa:

Fortunately for all involved, it seems as if the worst of TSB’s IT debacle is now behind it. But its botched migration led to more than 40,000 customer complaints in what was arguably the most high-profile banking error we’ve seen this year. Worse still, the technology itself isn’t to blame here – both previous owner Lloyd’s and the Proteo4UK system used by new owner Banco Sabadell have a good record in handling data. Instead, the responsibility here rests solely with TSB.

It mostly boils down to a lack of proper preparation on TSB’s part. Banks carry out small data migrations regularly, but a large-scale migration such as this typically calls for months of preparation. Actually moving the data isn’t the tricky bit; drawing the data from the siloes it’s stored in across the business and knowing how it’ll fit within the target system is the real challenge. This is why banks are increasingly looking to ‘sandbox’ the testing process; creating a synthetic environment with the data they hold to gauge how it’s likely to fit within a new system of record. Granted, this approach to testing doesn’t happen overnight, but when applied properly, it reassures banks that the actual migration will run smoothly.

This method would likely have spared TSB the disaster it has faced. Yet in reality, we’ll likely see similar high-profile stories appear over the coming months thanks to the combined pressures of GDPR and open banking. The former is forcing banks to bolster their data handling practices in order to avoid hefty financial penalties, while the latter is forcing banks to expose their data to all manner of third parties. Both initiatives are incredibly difficult for banks reliant on decades-old legacy IT systems to manage (indeed, it’s likely that the GDPR deadline this month may have added pressure on TSB to rush the migration through), and as the reality of this new banking environment begins to set in, expect to see other examples along the same lines as TSB’s.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!