August 5, 2019
Over the last 20 years, Consumer banking behaviors have dramatically changed. From the first SMS’s being exchanged in 1999, to the introduction of mobile banking via web applications and of course, the launch of the first US mobile banking application by Wachovia (now Wells Fargo) and the current buzz around Chat banking via WhatsApp, Facebook Messenger and other communications platforms. We have, in fact, evolved from SMS to application development and back to messaging applications. Messaging was and will remain highly influential in the financial market, for at least the next 10 years.
In today’s market, consumer behaviors have, yet again, changed…
People don’t pick up the phone and call each other anymore unless it’s to talk to “Mom”. People don’t leave or listen to voicemails unless it’s the debt collector. People are so inundated with emails, that the thought of another is either daunting or irrelevant to them. 20 years ago, all the above was being adopted and used widely with great success... not so much anymore.
Traditionally, banks often rushed into prolonged, expensive and inefficient professional service contracts with application developers. They often lacked a robust understanding of what, for a little while, was a very mysterious and seemingly complex developmental industry. They did not seem to fully understand or envision the impact, business models or the simplicity of mobile application development, and this translated to an abundance of issues when launching into market, and customer’s user experience.
Those were the days when mobile banking companies extracted hundreds of millions of dollars from investors and clients. They managed to carve out a niche domain of mobile devices and device application development, which the incumbent core banking and internet banking providers didn’t quite understand or deliver.
Among many other mobile banking companies, one mobile banking company, quickly identified that mobile banking was simple in concept and that “surely the clients would soon identify this”. Correctly enough, they did, but it was soon realized that this was an unsustainable business model due to a variety of consumer factors that were overlooked or perhaps disregarded.
In fact, they managed to turn mobile web application development into an "art" and were able to onboard 40 to 60 banks per month, that’s all by stretches of imagination, which is a staggering feat. They offered this at the whopping price of a few thousand dollars per bank.
Since then, the bar has shifted significantly and proximity payments using near-field communication (NFC), QR codes or other forms of mobile payments have become table stakes for banks. What used to be plastic is now digital and consumers can indulge in a buffet spread of products and services on demand and instantaneously, with safe and secure payment options.
The western banking world, busy with its’ profitable home markets, growth and local innovation, barely gave a serious consideration to, for example, M-Pesa and other mobile money and mobile banking innovations in emerging markets. While these efforts remain interesting, the narrative has now shifted from how to build and launch mobile payments platforms to AI (Artificial Intelligence), Natural Language Processing (NLP), Machine Learning and Conversational Banking!
I have dedicated large parts of my career to helping banks and wireless operators develop consumer applications, primarily in the space of banking and payments. I have also supported partners with analytics, to optimize and identify areas for improvement. I have worked with incredible teams who have made it a non-event to develop platforms which can do the work for our partners or allow them to manage their users’ experiences, in the same easy to do manner that consumers in the US can receive a credit card on their phone, all by the click of a button. My colleagues have battled relentlessly with internal stakeholders, vendors, and clients in the belief that it shouldn’t be that difficult or expensive to reach the customer base with meaningful, innovative and rich services. Most often, we have been told that, "It's just not possible", and more often than not, these sentiments have been proven wrong.
– Status quo is not an option in 2018 and beyond.
So, what does retail banking innovation mean today and what activities do consumers engage in?
In fact, 64% of consumers will send a message rather than typing an email or making a phone call. That is by all accounts an overwhelming insight. On average, 65 billion WhatsApp messages are sent every single day.
Global mobile retail revenue is currently over $650 billion for 2018. It has now become a human reflex to perform transactions and make purchases instantaneously via our mobile devices.
I believe that conversational banking technologies peppered with AI, NLP and machine learning will become the third distribution arm of banks around the world, together with mobile banking and branch network.
Let’s envision a scenario. Imagine a bank customer texting their preferred bank’s banking profile on their chat platform e.g.: WhatsApp, Facebook Messenger; “Hi bank, what's my balance?” … and the customer immediately receives a personalized response delivering their balance. Or imagine if a customer could text, “I need a new credit card”, and immediately a quote and subsequent adjudication is initiated on their behalf and submitted to them. In first world markets, a credit card could and should, be applied for, adjudicated and provisioned to Apple, Samsung, Google or another "pay" solution in the blink of an eye and without having to speak to a single person. This is the near future we foresee, and we at Clickatell have just enabled ABSA Bank in South Africa (formerly part of Barclay’s Group), to be the World’s first Bank available on WhatsApp, with GT Bank, UBA and First bank in Nigeria following thereafter.
We believe that the convenience, and personalization that conversational banking (Chat Banking) provides, will create immense uptake from consumers globally and rapidly amplify revenue for banks while simultaneously creating an impeccable long-term customer experience.
Due to these changes, democratization and progress, no doubt that banks will soon, if they haven’t already, start decelerating their investment in product road-mapping and technology capital expenditure on mobile banking, and begin spending billions of dollars on AI, NLP and machine learning.
Imagine the complexities and difficulties experienced in the journey of building a conversational banking application. I become exhausted just thinking about it.
The reality is that conversational banking has been taking place in Africa for the past 10 years with exceptional success. Tens of millions of users engage in conversational banking each day throughout Africa.
I know, Africa isn’t New York, in the sense that there is a lot less red tape, but people across the African continent have managed to figure it out, safely, securely, and with great success.
They use a little-known application that is embedded in every available mobile device called USSD. Essentially it is a session-based form of SMS with a dramatically improved user experience. That’s only part of the excitement though, because of a lack of high-end smartphone penetration and the affordable data packages to go with them, enterprises started using this technology and that inadvertently proved to be an exceptionally good decision tactically. Strategically, the real advantage is that banks have already set up the infrastructure to support the messaging apps which are rapidly absorbing loyal consumers.
We are now seeing a massive wave of new and existing clients and partners contacting us for help on how to scale and how to get adoption for a broader palette of channels that their client base engages with. Brands like WhatsApp, Facebook Messenger, Viber, WeChat and Line are being activated in real time to millions of consumers.
These are certainly some of the most innovative banks in the world and their millions of active users are supporting them on next generation platforms.
We create efficient solutions based on an in-depth understanding of businesses, and their unique customers:
Our .Core product enables integration to a vast bouquet of digital products from airtime to bill payments on any of your electronic platforms and facilitates payments.
Our .Control product enables you to manage your customer’s user experience (menu’s) and control your workflows within minutes, this removes the need for developers and other resources and brings the turnaround time down from weeks to minutes.
These solutions combined, allow organizations the ability to be extremely agile in volatile markets and offer their clients exactly what they want, when they want it, and create greater financial inclusion, which is any businesses dream. With this innovation, any business can now vend digital products across multiple channels, accept payments via direct debit, change and edit menus internally within minutes, add new products and offerings that immediately add value to their consumers and deliver an exceptional customer experience for all transacting clients. That, coupled with the amplified revenue streams, lowered resource costs and dedicated support from technical to marketing, makes Clickatell Transact much more than a provider, it makes us partners to our clients!
The next steps hold even greater things for conversational banking, which we will always strive to be at the forefront of, in Africa and the World. With WhatsApp Banking already receiving immense uptake from consumers, we are already preparing the next phases and unique personalization and engagement… which are absolutely revolutionary. Soon we will all have our own “personal bankers” on our preferred messaging platforms who know us and understand our purchasing behavior and make life especially simple with effortless transactions and payments. We are already on the journey, leading the World with banks in Africa, and cannot wait for the upcoming phases!
The key for banks during this next phase of banking innovation, is to not fall into the trap of sales decks and vaporware presentations which promise conversational banking for just “$1 million”. The reality is that setting up these services is exceptionally simple and cost-effective, and the right platforms offer plenty of opportunity for growth and innovation far into the future.
The next wave will be to support the customers with the voice-based interfaces developed by Amazon, Google, and Apple. This will be another beast for banks, but some have already started, and the services will inevitably evolve and become relevant over time. The question remains, is it the right horse to put your money on, with access to limited capital expenditure, to invest in today?