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Published, August 2014
Banking Rebooted by John Bertrand and Chris Skinner
Becoming a Digital Bank is a bit like asking for directions.
The awkward answer is that we would not start from here.
Unfortunately, ‘here’ is where we are.
Where is ‘here’?
‘Here’ is where most of the deposit account systems are.
Systems that were built before the Internet became part of our lives, but now we have the mobile Internet showing that all of these systems need renovation to cope with the demands of this digital age.
Many deposit account systems were built on a raft of ancient codes, lacking a cohesive technical architecture. They are a collection of software packages running on a variety of releases, all with localised codes across the enterprise. Few systems are ever turned off in case something breaks, and it has led to the attitude of ‘if it isn’t broken, don’t fix it’.
‘Here’ is where we are challenged by change, and specifically the changes required for regulations.
Virtually the entire Know Your Customer (KYC), Anti-Money Laundering (AML) and related bank regulations around clients have become law in the last five years. Add to this the new Basel III rules, with its emphasis on liquidity, and the increasing requirements for capital ratios, and intra-day balance movements become a core part of running a bank. This increases the costs of keeping and moving cash-like securities at light speed, and further highlights the need to digitise the enterprise. Having an industrial age workflow approaching 100% Straight Through Processing (STP) is good, but not good enough
This book aims to show how adapting to the digital age is not only a priority, but is the only thing that will be sustainable for a bank long term.
By moving the data input from the enterprise to the clients on their smartphones and tablets, the workflow is reduced. The overall internal costs drop as activities become more transparent and the likelihood of being non-compliant is reduced.
It will then be possible to see what is happening inside the enterprise and focus on how to bring in better working practices and innovation.
Embracing a digital age with a digital bank offer is therefore one of the most critical changes we will see in banking over the next decade, and this book aims to explain that change.
Table of Contents
Chapter 1: What is digital banking?.
- Designing the Digital Bank . Deconstruction. What does this mean for the physical bank?Transformation Bank design versus architecture.
- The digital architect .
- The Digital Bank demands a Digital Bank .
- Time to de-silo.
Chapter 2: The implications for retail banks.
Chapter 3: The implications for corporate banking.
- The cash management process .
- Paper is the enemy of efficiency in the digital age .
Chapter 4: The increasing use of mobile .
- This is revolutionary, baby.
- Simple mobile systems .
- Sophisticated mobile services.
- Other mobile financial services.
- The bad news about mobile .
- Making a payment is becoming available to all.
Chapter 5: Changing the payments structures.
- The final frontier for payments – same day international payments.
- Payment fees – who pays?.
Chapter 6: Foreign exchange markets move first into the digital age.
- Currency exposure management.
- Margin (or increased leverage).
- Living in a multi-currency world .
- Digital means intraday banking .
- Alerts to intraday liquidity will become essential.
- Degrees of liquidity.
- The digital supply chain .
- For the digital age – the e-invoice. The right data creates inherent benefits .
- Funding outside the banks.
- Invoice financing can be open to all .
Chapter 7: How does a bank make money out of being social?.
- What has a social network got to do with banking anyway? .
- Social finance is starting to arrive.
- Social money and payments.
- Virtual currencies.
- Social lending and saving.
- This is why social lending works .
- Twitter – ideal for customer complaints? .
- Social funding and investing.
Chapter 8: Designing digital banks for humans .
- What does this mean for the future?.
- Building a customer advisory bank .
- Social and banking.
- Do customers want branches?.
- Branches are alive and kicking .
- Banks designed for humans, not money.
- Building human relationships through digital channels.
- Human touch.
Chapter 9: The implications for banking infrastructures.
- Back to the future with Cash Back .
- The Internet of things.
- Consistency of channels is a critical part of the Digital Bank .
- The multichannel myth.
- Banks reflect where they come from electronically.
- Bringing design thinking into banks .
- mBank, Poland: a bank that killed its parent.
Chapter 10: The importance of data for the Digital Bank.
- Data as a currency .
- What is ‘Big Data’?.
- Banks as secure data vaults.
- Amazon as a traditional bank.
- Information as a competitive weapon.
- The future basics of banking: data leverage.
- The predictive, proactive bank .
- Banks need to radically shake up and wake up.
Chapter 11: The impact of data on bank processing.
- What does this mean for transaction banking?.
- Physical cash.
- Data is the key.
Chapter 12: The implications for fraudsters and launderers .
- Cyberwars: a far bigger threat .
- So how should a bank protect itself from hacktivists and cybercrime?.
- Real-time alerts.
Chapter 13: Banks as a digital police force.
- How digital banking allows the bank to avoid the underworld .
Chapter 14: Digital Banks and the bank-to-client relationship.
- Real-time and personal.
- Banking on the cloud .
- The component-based bank .
- Banking becomes plug-and-play .
- The component-based bank .
Chapter 15: Strategies to become a Digital Bank .
- The Apple of banking.
- Creating a cool and fair bank.
- Why incumbent banks could disappear.
- Conclusions: the Digital Bank of 2020 .