A recent article from Altfi.com shows that mass adoption of app-based finance could still be some way off in the world’s largest financial market. Recently published research by the Sykes Institute showed that only 17 per cent of American consumers plan to primarily bank with an online-only digital bank one year from now. In addition, just under a quarter (23 per cent) said they would feel comfortable receiving personal finance advice based on their banking habits from a robot or automated system.
This resonates with what we’ve seen when talking to our customers in the UK. While there is a universal desire for frictionless services – influenced no doubt by the advances in retail sector – the ability to interact with a human is still critical for many when it comes to their banking. Money is simply too important for many, and financial matters can involve complicated decisions that customers don’t want to leave to an app or chatbot service.
Nick Fahy, CEO of Cynergy Bank, the UK’s first human digital bank – a High Tech – High Touch – bank that combines cutting edge technology with top quality relationship management. He is a highly experienced financial professional having worked within the banking sector for over 20 years across the UK, Ireland and Australia.
What has been the traditional company response to financial technology innovations nationally?
There is a heavyweight of expectation that technical innovations will be a catalyst of dramatic change which will bring about higher levels of customer engagement and more innovative products at a higher cadence.
This has only been exaggerated since the pandemic as companies have had to adapt quickly to meet the many challenges and the new customer needs.
It is fair to say that engagement in new technology has not been uniform across the sector. This is in part because some of the traditional players were restricted by legacy IT systems that needed upgrading. And from reading comments from some in the media – it could be assumed there was also faith in the regulatory burden that existed in becoming a provider of full banking services. The idea was that it was easy for Fintechs to look at specific aspects of banking – the most obvious example being forex – but that there wouldn’t be a true ‘Amazon’ moment in the sector.
However, the pandemic has crystallised a trend where the traditional banks were pivoting to tech. The realisation may well have been that the banks finally understood that their customers have very different expectations of all services they engage with – driven by the best in class tech they engage within everyday life.
How has this changed over the past few years?
The pace of change has increased dramatically with most companies aligning their IT digital transformation with their business strategy, any company which hasn’t is now being left behind the competition.
Of course, all of this needs to be looked at in the context of the pandemic. While there was much already happening in the sector – the pandemic has significantly accelerated trends.
The introduction of initiatives like CBILS, Breathing Space & RLS and the use of new technologies has enabled banks to react rapidly and bring new products to market in timescales never seen before in banking.
For the customer this has resulted in a more frictionless onboarding and origination journey with minimal manual intervention and paperwork.
Is there anything that has created a culture of change inside the company?
Cynergy Bank was formed in November 2018 – when private investors purchased the UK operations of Bank of Cyprus. This gave the bank’s leadership the opportunity to redefine the type of bank it was – moving from one that focused largely on the Cypriot ex-pat community to a ‘human digital bank’ for customers who value a face-to-face relationship enabled by the latest technology.
At Cynergy Bank, our core values underpin our culture and set out the type of organisation we want to be. Attracting, developing and retaining the right people is vital to remaining a bank focused on enduring relationships. We also know that how we deliver our service is crucial. That’s why we’ve created our Customer Promises for business owners and savers.
These promises mean that we try and do the right thing and put the customer first. Our relationship first approach means we make sure our customers are always in good hands with people who are readily available, knowledgeable and, understand their business in order to make quick decisions.
At Cynergy Bank, there is a deep focus on creating relationships with our customers and keeping up with their changing needs. Additionally, due to the successful delivery of digital products like CBILS in a very short space with demonstrable benefits showcased within the company, more lines of business are keen to leverage the same technology. Cynergy Bank reached a significant milestone earlier in 2021, lending over £300m to SMEs through the British Business Bank’s Coronavirus Business Interruption Loan Scheme (CBILS). The bank was able to assist both existing and new customers, with 40% of loans going to existing customers and almost 60% to new customers.
What FinTech ideas have been implemented?
An Agile DevOps framework has been introduced dovetailing with a cloud-first, cloud-native strategy enabling rapid development along with DevOps tool’s automation enabling an orchestrated, repeatable route to live. In parallel, a Zero DC Cloud Migration initiative will enable legacy applications to benefit from the scalability, availability and security of a cloud-based infrastructure.
What benefits have these brought?
Adopting the use of restful API’s and microservices for integration of new SaaS services and legacy platforms has enhanced development and functionality and the ability to retrofit new functionality into existing legacy products, so both new and existing bank customers can reap benefits of the new technology.
Do you see any other industry challenges on the horizon?
We think that increased regulatory oversight will divert resources away from Fintech innovation and hinder its growth. This could also lead to inefficient outcomes for regulators. We must encourage regulators to move slowly as we need time to study and find its applicability and market needs to settle.
Open Banking could bring a new set of intermediaries in banking. Think of the new apps like Snoop and various utility bill apps. These services automatically move consumers between the best deals. A banking app could exist shortly that moves consumers money around savings accounts – for example. Certainly – the advocates of Open Banking – see this as a boon for consumers.
Can these challenges be aided by FinTech?
With the introduction of AI and machine learning the burden of Regulatory Risk & Controls can be lightened and resources focused on areas of interest. Also known as RegTech, a growing subset of Fintech, which market regulators can use for surveillance and fraud detection as well as using these techniques for disclosure and risk assessment.
We are redefining what it means to be a relationship bank in the digital age. It’s all about getting the right balance – with a seamless blend of personal, face-to-face service enabled by amazing technology.
If a customer prefers more face-to-face contact, for instance on a more complex matter, we will put them in touch with the right team member. We use technology to enhance personal relationships, not replace them.