As stores remained closed, shopping behavior has forcedly pushed the long-time sceptics finally online. Especially middle and upper-class customers have moved into the arms of global financial service platforms due to their purchases on eBay, Amazon and Alibaba. In addition local digital payment solutions to satisfy high frequency consumption such as supermarket, restaurant, pharmacy and hardware deliveries are being solved by the businesses themselves through complicated and workaround solutions. Solutions such as online money transfers prior to delivery, or swipe payment upon delivery are clear examples that illustrate that DC banks are unable to deliver easy digital solutions that in other parts of the world have become commonplace.
Firstly, most Latin and North American markets use online credit card purchases much more. Whilst DC consumers have no qualms using credit cards for international online shopping on Amazon or Alibaba, and are even willing to accept the additional transport & handling and import duties, DC banks’ high fee and charge models discourage businesses from offering this option to local customers. The European online payment platforms offered jointly by banks such as the Dutch iDeal are also lacking locally as banks generally prefer cut-throat competition instead of collaboration. With Central Banks not allowing fintech disruptors to enter the banking space, consumers are the ones left paying the ultimate price.
Because it is too costly for banks to keep building proprietary technology innovations, partnerships or acquisitions are the synergies required to solve the needs of business and retail consumers. DC banks with international parents companies can leverage technology solutions already commonplace in other larger home markets. But the synergy with outside and local solutions is also further complicated due to a lack of local digital skills amongst banking and fintech professionals. Most banking systems also lack a flexible design through APIs to enable synergies with other platforms.
Some of the most common synergy needs in the global financial market, that can have significant local adoption and cost impact are: Voice & Video-Banking, eWallets, Robotic Process Automation (RPA) and Psychometrics.
Voice & Video Banking
Synergies with voice and video banking solutions, are the easiest to deploy for all DC banks. Voice & video banking enable the seamless servicing of remote customers. With the growing popularity of voice-controlled devices and an increasing number of people using voice searches, banks will need to align their products and services to this trend. Voice authentication makes banking more convenient, video banking has removed the hassles involved in completing Know Your Customer (KYC) protocols.
Customers can now simply display their documents during the video session, interacting with a digital avatar from the bank.
It doesn’t need human interaction, relieving companies and their customers from having to schedule an appointment.
It also removes issues with document uploads, problems with file formats and “readability”. Still DC banks will probably best use video banking to provide face-to-face online consultation and build client rapport, especially with the Baby Boomers and Gen X population.
Prior to the pandemic, consumers wouldn’t think twice about handing a cashier a credit card then signing with a store’s pen, or swiping a debit card and entering a PIN. But now waving a phone over a payment terminal — a completely contactless process — is intuitively the safer option. The Dutch Caribbean has not made this move yet. But as DC banks drag their feet on digitizing their payment solutions and making these cheaper, e-wallets are entering the DC banking space. Globally e-wallets have existed since 2010. Since the pandemic e-wallets have started to become more popular and people began using smartphones to conduct transactions. There now is a need for DC banks to either partner with- or purchase an e-wallet solution. DC banks should look at acquisitions or synergic partnerships with Fun Miles’, Fortunacard, CX Pay’s Chip, Pagadera and Girasol, which are examples of existing platforms that can further facilitate this evolution.
Robotic Process Automation
Robotic Process Automation companies, platforms and services require an integration with the core banking systems. This synergy solution is being used by banks and financial services providers to streamline operations, curtail costs, minimise human error, save time, and offer better customer service. With the help of this technology, virtual assistants can also be created to address simple and frequently asked questions and play a critical role in ensuring compliance.
Because of limited payments and credit behavior information in the Dutch Caribbean and limited (positive & negative) credit scoring solutions, Psychometrics has become the most practical solution to fast and high quality loan generation. Psychometrics has already made a foray into the financial services industry, especially in North America and parts of the Middle East & Asia. Using psychometrics to replace lengthy credit analysis or due diligence processes is an effective tool for DC banks. Psychometrics uses all publicly available online information and records, local & foreign data platforms, credit card usage information, loan and repayment history of the customer with the DC bank, and merges all this with personality traits and language usage in paper & digital print or on social media, to predict the likelihood of loan repayment. Psychometrics also use questionnaires in the loan application process to judge personality traits as well as scan the entire digital footprint of applicants for troubling signs. Incredibly powerful algorithms complete this process and display a result within seconds. Whilst this seems complicated, such services are available as a subscription from large technology providers. This would make it much easier for taking personal loans and faster for entrepreneurs to raise short-term financing for their small businesses. Such alternative credit scoring solutions will not only dramatically lower costs, but also result in the financial inclusion of the so far underbanked.
Synergy tot he rescue
Because DC banks have a big gap in technology services, the best solutions are partnerships, or add-on services to its core banking backbone, to help bring the added value that post-pandemic customers desire. Any delays in these synergies will not necessarily have destructive effects on DC banks, but for example the payments domain will shrink and DC banks will witness the reduction in an important fee-driven cash-cow income. The longer the wait, the more DC customers will keep using and attaching themselves to external solutions outside of the banking ecosphere.
The first step is for banking leaders and directors to become much more tech savvy than they are today. The next step is
to dare to make the required changes and no longer overthink
DC culture and its adoption of intuitive digital solutions.