Stop me if you’ve heard this before – banks have to behave more like fintechs if they want to maintain past levels of profitability. But in concrete terms what does that mean? The answer isn’t simply technology that delivers faster services, it’s also technology that delivers it in better ways.
That’s Strands‘ mission, its VP for the Americas Cesar Richardson said. Strands integrates and customizes solutions into a bank’s personal brand and banking experience, going beyond the aggregation and presentation of data to providing contextual messages that anticipate individual client needs in advance.
Mr. Richardson said Strands’ origins date back to 2008 when the company developed a recommendation tool which could analyze music and recordings based on historical use and recommend similar titles a user might enjoy. Apple bought the intellectual property in 2009 and the resulting cash infusion helped the company pivot into the finance space.
And there are plenty of business cases to utilize both enriched data and raw transactional data, Mr. Richardson said. Strands can take a data cluster and determine which customers are most likely to buy certain items and connect them with those products.
While conscious of the intrusive nature of some types of advertisements or suggestion mechanisms, Mr. Richardson said this is not the case with Strands’ personalized capability. For most non-financial services, the user has to opt in.
“With financial services, it is slightly different,” Mr. Richardson explained. “A bank is looking to see how it can use this to help with a problem that can be solved by a product.”
Strands’ algorithms analyze behavior patterns and projects those patterns into the future, providing the user with the ability to address a problem before it actually becomes one.
“You can offer that as an insight,” Mr. Richardson said. “You can solve a problem before it occurs such as payroll. You have time to move money from savings, get a loan or increase your credit limit.”
The anticipatory nature of the technology allows financial institutions to improve their customer service by suggesting moves that make sense, Mr. Richardson said.
That technology is also easily integrated. Strands customizes its solutions into a brand’s unique brand and digital banking experience, so it does not interrupt the style of interaction with its customers. That capability appealed to Huntington National of Columbus, which recently became the first North American bank to adopt Strands’ technology. Huntington National of Columbus is implementing Strands’ Personal Finance Manager and Business Financial Manager.
“What this is really helping banks to do is shift their business model to new revenue streams and finding out how to use the data they have,” Mr. Richardson said.
This is happening as the European Union prepares for the adoption of PSD2, the Revised Payment Services Directive. Customers own their data, and can choose who gets access to it. That means they can order shoes off Facebook and let Mark Zuckerberg do the rest.
It also means opportunity at all levels, Mr. Richardson said.
“That’s going to create a huge level of agility for fintech companies to create value.”
Banks’ problems with technology and why it is so hard for them to switch course are well known. If they do not want to lose their customers, they are going to have to master contextual situations that provide them insight into the market and individual customers.
Banks providing analysts with information such as default rates and the average invoicing levels for different sectors of SMEs are two of many examples of the data nimbler organizations should be able to provide.
“This is the shift that’s going to start occurring as banks become fintech companies,” Mr. Richardson said.