The UK is one of the most advanced countries in the deployment of digital channels, with customers interacting through mobile channels, on smartphones and tablets, as well as online, through branches and call centres.
“Most people in the UK now have a smartphone and mobile banking actually overtook online banking for some banks in terms of log-ins or transactions in 2013,” says Serge van Dam, segment lead, digital channels at Fiserv. “It’s no longer an emerging channel; it’s actually the preferred way through which consumers want to interact with their bank.”
Financial institutions need to remain current and respond to this constantly evolving trend. Some are already offering customers the ability to “live chat” with customer services representatives, and over the next few years all serious players will look to increase the range and quality of the services they offer through mobile and online channels.
Some banks in the UK are now reducing their branch and call centre infrastructure in response to this, adds Mr van Dam; a trend seen in other mature markets, such as the United States and Australasia, and which is likely to continue in the future.
Alongside this, other global trends are developing, contributing to a fast-moving environment in which banks need to be able to react quickly. Non-cash payments are growing at a rate of 8-10 per cent a year, says Sunil Sachdev, managing director, international payments at Fiserv, and the nature of these payments is changing with the arrival of digital, such as payments made through mobile phones, whether at the point of sale or between individuals, as well as online transactions.
“In emerging markets you see strong growth around newer channels in the mobile and online space, given the dearth of traditional payments and banking infrastructure in those markets,” he says. “In the developed markets, cards continue to dominate the non-cash space, due to the lack of standardisation, which fragments the user and merchant experience.”
Much of the growth in non-cash can also be attributed to a rise in innovative pre-paid products across the world. These products support a wide variety of uses with the common theme of combining financial discipline with greater portability and security of funds.
In developed markets pre-paid products have helped unbanked and under-banked people gain greater access to the convenience offered by online and mobile channels, something they did not necessarily have before.
The rapidly changing landscape in the financial services sector means institutions need to quickly identify and stay abreast of both consumer trends and changing customer demands. Mr van Dam points to research conducted by Fiserv which highlights that consumers view the various digital channels very differently, and as such require different and well thought-out approaches.
“Mobile is all about doing things quickly and on the go, while a tablet is more like a magazine-type experience, often on the couch at home. It’s a portable rather than a mobile device and people expect that user experience to be very digital-like,” he says. “Online has become the channel for work, mostly for data input and manipulation.”
Fiserv facilitates the movement of more than $1 trillion every year, through 20 billion electronic transactions, and its online banking systems are used by more than 55 million customers
The notion of having an “omni-channel” strategy is not a one-size-fits-all solution, he believes, referencing the different ways in which consumers use social media sites on their phones and PCs, as a template for the future development of digital financial services.
Yet despite the need to innovate, or partner with organisations that can do so on their behalf, financial institutions also need to ensure they have robust real-time security and back-end systems that can cope with the demands of new channels.
“There are a lot of exciting technologies around mobile and digital payments, and new payment corridors opening up, whether that’s to the under-banked or cross-border transactions,” says Andy Mellor, product manager for financial control solutions at Fiserv. “But all the traditional controls that were in place in typical branch or head-office infrastructures – fraud detection, money laundering and tax evasion monitoring, compliance or fundamental processes such as reconciliation – also need to be taken into the new world.”
From a security perspective, ensuring robust processes are in place which can detect and prevent malicious activity is essential, says Greg Hughes, information security officer at Fiserv. Simply developing software to accomplish certain tasks is not enough.
“A complete understanding of the financial services landscape and the security controls necessary to prevent fraud, and to properly provide financial services and process transactions is critical here,” he says. “Institutions need to ensure their technology providers follow and embed practices which ensure the variety of threats facing the industry are proactively and continually addressed.”
Fiserv facilitates the movement of more than $1 trillion every year, through 20 billion electronic transactions, and its online banking systems are used by more than 55 million customers. This means its process and security set-up is tried and tested across the full range of traditional and digital channels, while demonstrating a strong track record in developing innovation required to ensure customers and their brands remain at the forefront of their markets.
“Banks need to focus on being banks as opposed to technology companies,” Mr van Dam concludes. “That’s where we come in as their partner, to ensure that through sustainable innovation they continue to be relevant to the customers they have today and their customers of tomorrow. It’s part of our DNA.”
Steve Tait, president – international group, Fiserv, addresses the market dynamics that have influenced the company’s transformative move to consolidate international operations – and why Fiserv is one to watch
What’s happening in the financial technology sector? And how is this impacting Fiserv’s clients and Fiserv itself?
Fiserv is one of only a few companies that has strategic front, middle or back-office technology operating in pretty much every major financial institution in the UK and Ireland, but is a company name that many people may not have heard of. Our business outside the United States focuses on mobile, online and core banking platforms, payments, risk management, compliance, cash management and logistics, and investment services.
Focus on all these areas is increasing, driven by our clients’ top-of-mind agenda to better serve their customers, increase operating efficiencies and, of course, grow their own businesses. To address this agenda, our clients want us to help them look more holistically at strategy and enabling technologies, and develop a more consultative approach, based on in-depth understanding of their customers’ needs and requirements. Fiserv realised 18 months ago that we could better serve our clients by bringing the entire international organisation together – around 5,000 people in total, supported by an additional 15,000 people in North America.
Can you give any examples of how financial institutions benefit from this?
We are basically a one-stop shop for financial sector technology. We have the depth of knowledge and “best of breed” solutions, along with a cohesive organisation for our clients to deal with. That’s pretty powerful. Ensuring security around digital channels and emerging payment types is a good example of banks benefiting from this approach. It’s much easier now for our clients to engage with us on next-generation digital banking and payment strategies with essential financial crime risk management and financial controls as an inherent part of the technology offering.
What is different about Fiserv? What’s at the heart of what you do?
It sounds a cliché, but our people are at the heart of what we do and give us our difference. More than 14,500 financial institutions around the world rely on Fiserv. Our people help to move our clients’ goals from possibility to reality, earning their trust each day through engagement and leadership, and by delivering on our commitments. I was at a large financial services conference in Dubai the other week, talking about ACLEDA Bank’s Unity mobile banking service in Cambodia, which is literally changing people’s lives. Fiserv associates spoke with passion about the service and their involvement, which focuses on helping people migrate from being under-banked to banked customers, through the bank’s Unity service.
So, what’s on the horizon for Fiserv? How are you going to make sure that the success continues?
We continue to evolve strategy because it intelligently informs the decisions we make, such as which countries to move into, which technology to invest in and so on. I used to think of Fiserv as financial services technology’s best kept secret, but with our new initiatives in global payments, increasing adoption of our mobile and online banking platforms, and associated risk and compliance technology, all that is about to change. Watch this space.