Having committed to a digital transformation in 2021, ARBM is focused on providing customers an all-encompassing Islamic banking solution. The Bank will deploy Moneythor’s Personal Finance Management (PFM features) to deliver rich in-app functionality and power highly personalised experiences for their customers.

The Moneythor solution is powered by real-time data, coupled with machine learning and behavioural science techniques to provide data-driven personalisation capabilities for digital financial management. This will allow ARBM to lean into its customer centric values and strengthen its digital engagement capabilities whilst reinforcing its position as a leader in Islamic banking.

As Al Rajhi Bank Malaysia builds out a full spectrum of Shariah-compliant products, the Moneythor solution will enable ARBM to respond to the requirements and needs of consumers and allow them to deliver a market-leading digital proposition at the same time.

Arsalaan Ahmed, Chief Executive Officer, Al Rajhi Bank Malaysia: “The partnership with Moneythor will give ARBM a competitive edge in launching a state-of-the-art digital banking capabilities, which will be differentiated through innovation, customer experience and reliability. To seize the opportunities in both digital bank and Islamic finance, we have tapped into various innovative partners and proven solutions, and we are pleased to count Moneythor as one of them to power the personalised money management features of our upcoming digital bank services.”

Olivier Berthier, Chief Executive Officer, Moneythor: “We are thrilled to be a partner of Al Rajhi Bank Malaysia’s new digital bank. We look forward to delivering personalised customer-first digital banking experiences for the bank’s users with best-in-class PFM features and financial wellbeing services. We are excited to collaborate with such a forward-looking financial institution and to bring those innovative Islamic finance capabilities to life for consumers in Malaysia.”

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To learn more, see how the Moneythor solution can help add modern PFM features to your banking app, read our handy guide to PFM Solutions for Banks or contact our team.

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The Moneythor solution is powered by real-time data, machine learning and behavioural science techniques to help banks improve functionality and power highly personalised experiences for their customers across digital channels.

As a leading bank in Saudi Arabia and being at the forefront of digitalization, Moneythor’s engine and data-driven personalisation capabilities allow SAIB to focus on customer centricity and to enhance its digital engagement capabilities whilst deepening its relationship with customers by providing them with a more intuitive experience to address their financial needs and goals, both short and long-term.

SAIB’s PFM is the first service in Saudi Arabia providing consumers with a solution that serves them with personalised, contextual and actionable recommendations and insights into their day-to-day finances.

“We are thrilled to be partnering with SAIB for this new service provided to their digital banking users in Saudi Arabia,” said Olivier Berthier, CEO at Moneythor. “We wish to congratulate SAIB on a smooth integration project to deliver best-of-breed customer-first digital banking experiences with enhanced financial wellbeing capabilities, which is a central tenet of our solution. It is a pleasure to collaborate with forward-looking financial institutions like SAIB who share the same priorities, and we look forward to implementing the additional use cases we have in store for local users.”

“SAIB customers deserve a unique digital experience beyond traditional internet banking offering with more data driven digital services, and we enable the customers to understand their financial behaviour and provide them with smart recommendations using our PFM platform, which can support their financial decisions,” said Faisal Al-Omran, the CEO of SAIB.

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To learn more, see how the Moneythor solution can help add modern PFM features to your banking app, read our handy guide to PFM Solutions for Banks or contact our team.

The post SAIB taps Moneythor to roll out intelligent PFM appeared first on Moneythor.

This transformation of banking from in-branch and over the phone services to fully functioning digital-only banks has been made possible thanks to the internet and the global increase in smart-phone usage. Customer preferences for online services have been a driving factor for the emergence of digital banking.

Spurring on this transformation has been the emergence of a whole new industry; fintech, which stands for financial technology and encompasses any business that is using technology to create financial products and services. Some of the most profitable and innovative companies in the world fall into this category of industry and without it the leaps and bounds that have been made in banking and the wider financial services sector would not have been possible.
 

1. Digital Banking Vs Online Banking

While the two may seem interchangeable, there are distinct differences between digital and online banking.

Online banking involves the availability of a subset of data and transactional capabilities residing in core banking systems so that they are accessible to customers online, typically over the web, and include features like account management and statement access. Unlike online banking, digital banking aims to transform the entire customer journey so that all banking activities can be carried out online in a self-service way and removes the need to visit a physical branch.

Entirely digital customer journeys are becoming commonplace with both incumbent and new banks adopting digital-only banking, a move that has been supported by big investments in technology and new regulations and has led to branch closures and a decrease in the use of cash.

2. Evolution of Digital Banking

Since the founding of the world’s first bank, Monte dei Paschi di Siena in Italy in 1472, it is safe to say a lot has changed and banking as we know it has evolved greatly. Technological innovations such as the debit card, over-the-phone banking and online statements are some of the innovations that were driving the banking industry throughout the 90’s and early 00’s. But it was with the launch of the iPhone in 2007, that the idea of digital banking became a potential reality. Like many other industries, the increase in smartphone usage has forced the banking industry to rethink how they serve their customers and a whole new era of banking has emerged where customers can manage every element of their finances with the touch of button and in their back pocket.

While the iPhone and other smartphones made banking accessible, there are a number of other technologies that have pushed the transformation of banking forward.

• AI

Artificial Intelligence is an area of computer science that aims to create intelligent machines that can work and act like humans. AI powered machines have traits that allow them to solve problems, learn, perceive and reason.

In banking, AI transforms customers experiences and makes interactions with a banks’ digital channels simple, efficient and smart. AI can be used to enhance fraud detection, streamline internal processes and provide personalised insights.

• Natural Language Processing

Coupled with AI, natural language processing can be used to build conversational chatbots helping banks to automate processes and deliver real-time intelligent customer service.

NLP and AI in the form of a chatbot reduce the costs and time associated with serving banking customers and support the delivery of personalised and contextual recommendations and content.

• Data & Personalisation

Data has emerged as the key to creating rich customer experiences. Without access to data and the ability to manage it, it is impossible to provide personalised customer experiences online.

Technology advances such as machine learning have given banks the ability to analyse and categorise exponentially more data about their customers than ever before. Data and personalisation will become the new battleground for incumbents and challengers, with customers choosing their bank based on the level of customisation and support they receive through a bank’s digital channels. Data has emerged as a key strategic element for banks and has become a competitive advantage for those banks that have already invested in personalisation.

• Cloud Computing

Cloud computing, often referred to as “the cloud,” is the delivery of computer services, databases, networking, software, analytics and intelligence over the internet. At its most basic, it is a replacement for hardware storage for data and applications, but when used to its full potential, it can become a catalyst for digital transformation and a game changer for how banks operate.

In banking, the cloud is the go-to server system for challenger banks and has positively contributed to their speed to market, improved customer experiences, reduced costs, enhanced security and improved collaboration.

• Biometrics

Biometrics which are automated methods of confirming a customers’ identity by their biological characteristics and traits, are helping banks to provide simple, one-touch banking securely and with reduced risk of fraud.

Fingerprints, facial and voice recognition are becoming the new methods for unlocking bank accounts, onboarding new customers, approving transactions and accessing personal information.

• APIs

Application Programming Interfaces or APIs are a group of tools or protocols that are used to create and share banking products and services. They allow third parties to connect to a bank or financial service provider and access its common tools, services and valuable assets, such as financial information, customer accounts and product catalogues.

APIs have made innovation in digital banking simple, convenient and cost-effective and have encouraged partnerships between banks and fintechs. APIs are having a transformative effect on banking and this is set to continue into the future.

While technology has provided the tools for digital banking, government regulation at national and international levels has been a driving force behind its mainstream adoption.

• Open Banking

Over the last number of years, the concept of Open Banking has emerged as one of the keys to innovation for traditional financial institutions. By allowing third-party providers (TPPs) to access banks’ customer account data, banks and fintechs can create improved services for customers and speed up innovation in an industry that has struggled to digitalise at the same pace as other sectors.

What is Open Banking?
Open Banking is the secure sharing of bank financial data and services with third parties through open APIs enabling those companies to develop financial products.

First introduced in the UK and Europe, Open Banking initiatives and regulation have taken off around the globe. Countries like Australia, Hong Kong and Mexico have all introduced variations of regulation that promote the adoption of APIs to share banking data between banks and non-banks. Open Banking sets out to increase competition and to reduce some of the barriers to entry that were preventing newcomers entering the market. It also looks to make banking simpler for consumers providing them with tools and insights that allow them to manage their finances more effectively.

Secure access to data allows third parties to provide personalised and customised digital banking experiences to customers that carve out competitive advantage for newcomers in an industry that is notorious for its high barriers to entry.

• Digital Banking Licenses

In Europe, new banks have been establishing themselves over the last few years, using a European fintech banking license to disrupt the market there and bring customer-centric banking to the region.

The rise of new digital banks that has been happening in Europe and the UK is expected to be replicated in South-East Asia with the launch of digital banking licenses. Digital banking license schemes have been launched in Hong Kong, Singapore, Malaysia and the Philippines. While the schemes are at varying stages – with Hong Kong seeing the launch of beta digital banks and Malaysia still at the stage of accepting applications – the high volume of applicants applying for licenses across all countries shows the potential growth opportunities for banks in South-East Asia.

The granting of digital banking licenses, is seen as a way to bring new digital-only banks to the market to face head-on issues such as high levels of underbanked and unbanked populations in the region. These licensing programmes are granting licenses to the applicants who can best support local communities with digital banking services that enhance their lives.

The licenses that are being granted are generally full banking licenses, with some that allow SME and commercial digital banks, others that allow recipients to set up a retail banks, and a number that cover both SME and retail banking.

The mix of new technological innovation and supportive government legislation has opened up the banking industry to a wave of disruption. The use of new technology has had implications for both incumbents, fintechs and other market participants and has led to lower costs in lending, payment systems, financial advising, and insurance and overall better products and services for consumers. Regulation like Open Banking has changed the way incumbents and fintech players interact and digital banking licenses have made it possible for digital-only banks to emerge. All of this has naturally increased the level of competition in the market, new entrants are creating rival products and services that are cheaper, digitalised and more efficient to use. There are many new types of competitors emerging that incumbent banks need to keep a watchful eye on:

• Digital-Only Banks

In the last decade digital-only competitors have been set up with the aim of providing banking services online and without branches. The move away from branch-based business has allowed these new players to provide financial products and services at lower costs. With a strong focus on innovation and agility, these digital banks have created effective and personalised customer experiences in much shorter timeframes than incumbents could.

In Europe digital-only banks like N26 and Monzo have signed up millions of customers with their digital-only, free bank accounts, debit cards and cheap exchange rates. In Hong Kong, digital banking license grantees such as Mox, ZA Bank and others are in beta stage and incumbents like Goldman Sachs have launched separate digital banks to compete with the newcomers.

• Fintechs

While there are many fintechs that aim to work alongside incumbent banks, there are also those that are directly competing with banks on a certain product or service. These are not fully functioning digital banks but are financial service providers that rely heavily on digital.

Examples include M-Pesa, the telco-backed remittance company that makes money transfer possible by mobile-phone in Kenya. Ant Financial, the Chinese mega lender that uses tech to grant loans in record times of 3-4 minutes and TransferWise, the UK headquartered fintech that provides cost-effective money exchange and transfer.

• Big Tech

Big tech firms including Google, Amazon, Facebook and Apple, have all launched versions of financial products over the last year. This group of tech companies already dominate a number of industries and have large and loyal customer-bases that would be keen to try their financial products.

 
Digital banking has changed the way people manage their finances and created a more competitive and agile banking market. Here are some of the key ways it has changed people’s lives:

• Financial Inclusion

1.7 billion people across the globe are unbanked. This means they do not have access to a bank account, lending facilities or savings options. Thanks to the increased prevalence of smartphones and internet connectivity more people than ever are accessing banking services online.

Simpler online KYC processes have also made it easier for those who cannot go into a branch to set up an account to get access to banking facilities online. Along with access to accounts, people can now also access financial literacy tools helping those who need it most to effectively manage their money.

There is huge potential in unbanked markets and many of the new digital-only banks that are emerging in South-East Asia are expected to go after these unbanked populations.

• Access to Lending

Customer data has always been a central decision-making factor for financial institutions – bankers may make lending decisions based on your credit score while insurers might look at your driving record or require a health check before issuing a policy. But as people and their devices become more interconnected, new streams of granular, real-time data are emerging which support more efficient and speedier decision-making processes. This is particularly beneficial for SMEs who in the past have struggled getting access to finances when they needed it.

• Personal Financial Management

Personal Financial Management or PFM refers to the digital tools that consumers use to manage their financial situation. Through clearer, digital categorisation of transactions, users can view budgets, analyse trends and track bills online.

PFM tools give customers the ability to manage their finances in an educated and transparent way leading to better financial planning and overall financial wellness. Customers can use PFM tools to take control of their finances by setting up and managing budgets, track progress of their financial goals and set-up notifications and nudges to manage overspending. For small and medium-size enterprises, similar tools are available under the BFM acronym for Business Financial Management and extend their functionality to cashflow management and other business matters.

 
Digital banking has transformed how we manage our finances and how banks serve their customers. Ongoing innovation in digital banking engagement platforms, technology and regulation will continue transforming banking. What will digital banking look like in the future?

• Data Transformation

Data offers companies a way to grow into new sectors and capitalise on new opportunities. Most big tech companies are successful because of the efficient way they manage customer data. In the future, data transformation will play a crucial role in the success of the bank and will be made simpler by innovative tools and technologies such as AI-powered analytics to track and monitor, distributed file systems that allow for easier access to data and cloud technology to make operations leaner and more efficient.

• Banking-as-a-Service or BaaS

BaaS involves banks providing third parties with access to core systems and functionality so that they can integrate digital banking engagement platforms and payment services into their own products. From a bank’s perspective, it involves embracing a more modular way of working and allowing an ecosystem of fintechs and software providers to connect to the bank through APIs.

BaaS provides new revenue streams and improved customer service for banks and faster speed to market and reduced costs for fintech. In the future, incumbent banks will function as platforms that allow customers to choose services personalised for their needs from a range of providers.

• All Banks will be Digital Banks

As technologies such as AI, IOT and cloud computing transition from emerging to transformative, they will cause aspects of banking to become unrecognisable from what we experience today – changing the channels, services and role that banks play in our lives today.

Already we have seen huge shifts in customer preferences when it comes to banking. While more and more customers are embracing digital banking we can expect fully-digital, personalised and one-touch banking to become the norm in the future. A side-effect of this will be a reduced need for in-branch services, as the high level of personalised experiences that will were previously only found in-branch become available online and through a banks digital channels.

Government regulation aimed at digitalising and democratising banking, will continue to push the finance industry forward and encourage a new breed of digital banks and digital banking engagement platforms to emerge.

Digital banks have the capacity to serve groups of the global population that previously been unbanked, increasing access to financial products and services and creating entirely new markets for digital-only players.

In the future, customers will still need to save, borrow, invest and make payments. Digital banks, thanks to technology, shifting customer preferences and government regulation, will continue to help customers find smarter and better ways to carry out these tasks and manage their financial lives digitally.

Updated: 29 April 2022.

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DBS Bank is leveraging the Moneythor solution to provide its customers with personal finance management (PFM) capabilities enhanced with data-driven personalised, contextual and actionable recommendations.

The first implementations have been successfully completed with the solution going live to power core features of the bank’s new online-only “Digibank” offering in India, as well as “DBS Omni”, its innovative credit card companion app in Hong Kong.

Olivier Berthier, CEO of Moneythor, said: “We are absolutely delighted that DBS has chosen our solution to provide more intelligent and contextual digital banking to its customers. We see this agreement with one of the largest financial institutions in Asia as another endorsement of our expertise and the value offered by our solution”.

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However, when it comes to banking, little personalization has been rolled out so far behind the firewall of online & mobile banking services, despite the huge amount of highly relevant data begging to be exploited. Things are changing though, as it appears to be the next key development for digital banking.

Comprehensive transactional capabilities

By and large, financial institutions world-wide offer a rich set of transactional capabilities through their online channels today, including multiple types of internal and external fund transfers, domestic or international, standing orders, bill payment, remote check issuance or deposit, card services, account opening, trading and more.

Despite the availability and maturity of such a broad set of transactional features, their delivery within a personalized experience has so far been lagging behind. In several discussions with consumer banking executives, various reasons are mentioned to explain that lag, ranging from limited budget and resources to go beyond the initial priority of getting the transactional capabilities right, to lack of skills in the area of personalization or a fear of the regulator and concerns over privacy issues in exploiting too much of the customer data.

Far from neglecting the need for more personalisation, we are now seeing many bankers acknowledging that analytics to better understand customers’ financial behaviour and the ability to turn these into enhanced digital services are a key investment priority in the year ahead.

Marketing behind the firewall

Analyzing personal and transaction data gives banks the opportunity to understand customers’ needs today and anticipate future ones. Personalization then adds the ability to deliver those insights to customers in a contextual manner. The most obvious application of these techniques, and the one directly inherited from the e-commerce pioneers, is to increase sales targeting and effectiveness.

A low balance with upcoming bills might call for a personal overdraft offer, a high balance on a current account might suggest appetite for a fixed deposit, recurring visits to the mortgage loan information page might indicate plans to purchase a home, a frequent traveller may be interested in a travel insurance, a fine dining lover might appreciate discounts at a popular restaurant, etc. The opportunities to leverage customer-centric data analytics and personalization for targeted cross-selling or merchants-based campaigns behind the firewall are numerous.

Personal finance advisory

While there is a clear opportunity to drive business from the online channels, it is also crucial for banks to avoid limiting the benefits of personalization to achieving pure sales & marketing objectives. The risk of alienating the customer with too many ads and offers, however clever they might be, is significant.

Personalization presents a unique opportunity for a bank to delight its customers with proactive and intelligent online advisory. It is also the ingredient largely lacking from most of the first generation personal finance management (PFM) tools to improve consumers’ financial performance.

Beyond the need to deploy the right technology to enable personalization, maintaining the right balance between marketing messages and unbiased money management advices is a key challenge which banks must not underestimate. Even more so for global financial institutions operating in countries where local culture and preferences might move that cursor of interest and acceptance differently between both.

Not ending up being plain creepy is also a prominent challenge of any implementation of personalized financial services. But doing nothing to make their digital services more relevant and personal for fear of doing too much is not an option either for banks these days.

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Most of the data on the subject is US-based so far. Analysts from Celent said some time ago that only 3.8% of all online banking users are active users of PFM solutions, the Federal Reserve said in a 2012 report that 21% of consumers currently use a PFM tool while Aite Group believed it’s a tad higher at 27% and Javelin concurred with 21% using a mix and match of PFM tools, from traditional money management software or spreadsheets to online banking and third-party services.

There is little public data about the rest of the world’s relationship with PFM today, largely because the deployment of related online tools, whether embedded into online banking or standalone, is in a more nascent stage and simply because of limited analyst coverage. However the glass-half-full consensus is that there is certainly room to grow PFM adoption everywhere.

Lipstick on a PFM

Let’s save security concerns and the trust issue of using third-party services for another blog post and focus on the PFM solutions provided by banks for now. One of the key reasons cited for the lack of adoption is the absence of a common user experience with traditional online banking capabilities. Relegating PFM to another tab and failing to connect its capabilities to key sections of online banking like transaction details and statements clearly don’t help. So usability and design tricks are called to the rescue to better connect the two. Excellent.

Other reasons include the need for banks to do a better job at marketing the PFM tools, with banners and splash pages on the public web site, proper education of both customers and staff and other multi-channel tactics to raise awareness of the new capabilities. Right on.

All good reasons but do these try to address the root cause?

Money Management for the Masses

PFM tools in most of their current incarnations are basically an online port of traditional money management tools like the venerable Quicken or Microsoft Money. This approach assumes that consumers want and even like to manage their money and allocate a significant amount of their spare time to keep track of their finances in great details. The truth is that generally, beyond money management hobbyists, they don’t.

At Moneythor, we contend that an important way to increase adoption is to cater for the very large budget-averse population, for those who never cared about Quicken or Microsoft Money, for people who want to make sure their finances are on track, their bills paid and their savings in order with no effort, and certainly without a regular deep-dive into the tiniest of their expenses.

“Don’t merely throw pie charts at us and don’t ask us to set detailed budgets before we can get any value from the tool, try first to detect automatically things which are likely to be relevant to us based on our spending patterns and give us actionable recommendations or at least food for thoughts to help us improve our finances” shout the masses.

All in all, PFM functionality should simply get out of the way. It needs to truly blend with standard online banking capabilities to deliver automatically the right dose of clever alerts and financial advisory to users. Again, let’s not start the discussion by asking consumers to work but let’s assist proactively and educate softly instead.

What do you think? Do you feel that personal finance management should feature as an activity on its own in consumers’ daily routine or get slightly more subtle and non-intrusive to attract more users and solve that adoption conundrum?

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