So why did I join Feedzai? Speed, scale and solving the “Don’t Get Me Off the Couch” consumer sentiment
By Jon Pearson, Sales Director, Transformational Digital Journeys, Banking @ Feedzai
Technology will continuously change consumer behavior, resulting in behaviors we’ve never seen before. A good example of this is Netflix: After watching part of a film one evening, customers can finish it from any device on the commute to work the next day.
The cultural sea change invoked by these technological advances continues to alter the relationship customers have with businesses. Millennial expectations are immediate, and the “don’t get me off the sofa” sentiment is the norm. This applies to shopping online or getting a quote for a financial product.
Disrupters in the tech field who get it right can flourish, and this is known by your company leadership and shareholders. Uber took more than five years to surpass the value of 107-year-old General Motors and is currently worth $62.5 billion. Let’s not forget they don’t employ any drivers, buy and fuel or own any cars. This is a classic case of technology as a disruptive force.
The mainstream banks and financial services organisations are keen to ensure that disruptive technology doesn’t eat their lunch. To date, much of the disruption in the financial sector is in niche fields. Still, a maelstrom is imminent. Historically, 75 percent of bank accounts in the U.K. reside in the four main banks – Barclays, HSBC, Lloyds and the Royal Bank of Scotland – and there’s an old adage you’re more likely to get divorced than change banks. However, the Prudential Regulation Authority recently changed the rules to encourage competition, paving the way for online-only banks. Before these changes, there was one new banking license in the last 100 years. Now, the number of new licenses are in the double figures.
One area of disruption that will play a role in the short term is how customers interact with banks. With apps and mobile slowly becoming the dominant form of banking, expect most transactions to require some level of smartphone biometrics in the near future. Another change will be using ID cards that are readable with optical character recognition to complete applications. Finally, the most prominent difference in customer behavior is where they bank. Where it used to be a daily activity, it’s now common now to see people visiting a branch once or twice a month at most, while tapping into their mobile banking apps 20 times in the same period.
How will traditional lenders adapt to this challenge with big aspirations, legacy systems and modest budgets? The key challenge is digital customer conversion and abandonment, especially compared to in-branch. There are several studies that show while 85 percent of prospects convert at a branch, as many as 85 percent abandon the application process digitally. The main reasons for abandonment applicants finding the process too onerous at 35 percent and failing an ID check at 25 percent.
What we see here are two paths in the digital loan application process. One is the ideal happy path where customers can breeze through the application. However, most customers will find they need to supply additional information which cannot be digitized, so they go on the unhappy path. This ultimately leads to abandonment.
Why did I join Feedzai?
I heard a story of digital transformation performed by Feedzai at a speed and scale that I never imagined possible. Let me relay it to you.
A tech-savvy US bank with 40 million customers required an omnichannel single digital platform as the nerve center orchestrating and scoring all new applications within their current process. The consumer sentiment of “Don’t get me off the couch” was the essence of the new approach.
The customer had big ambitions: They sought out to double the application acceptance rates across all fields. They wanted all applicants on an all-digital process, or the happy path. This was to occur at all points of the conversion process, whether acceptance occurred after two screens of basic application details or eight screens as a result of additional risk being identified. Moreover, the applicants were to never feel that they were at risk, since that would increase friction and the chance they’ll abandon. Despite the huge increase in acceptances, the platform also couldn’t increase fraudulent activity at all. Finally, this project had to finish in 14 weeks.
Feedzai achieved this through the account opening use case on its platform. It augmented customer information with third party data to model and detect fraud. The platform retrains at a user-defined interval so it could quickly identify and adapt to new trends. To ensure new applicants didn’t go rogue with the increase in acceptance, Feedzai deployed the behavioural monitoring use case to individually supervise each customer. Using an ensemble of models, each transaction was determined in a segment of one, minimizing interruption to a good customer while avoiding an increase in false positives for review. Over time, the bank added more data sources.
As Feedzai can model offline on the same runtime platform, that meant it could model the data source to test its value and determine whether it was beneficial enough launch into runtime. The company can do this in as little as 2.5 weeks. Such a promising yet effective challenge is the reason I joined Feedzai.
Who will lead the digital transformation in your bank ahead of the looming disruption?