Help Customers Navigate Financial Uncertainty With Connected Digital Banking

Banking providers around the world are helping millions of people and small businesses manage tremendous financial uncertainty amid COVID-19. Though banks have risen to the challenge with remarkable ingenuity, the crisis underscores the need for them to accelerate their digital transformations.

The success of chief information officers (CIOs) and IT departments in the banking industry is critical to delivering the financial support that’s so desperately needed to withstand the economic impacts of COVID-19.

As technology leaders seek to digitize and connect the systems, processes, and key channels that support increased customer demand — they should use these three guiding principles to ensure their banks remain a source of financial support and trusted advice in trying times.

1. API-led connectivity is the key to digitize and scale lending operations

Lending operations have been front and center in the banking industry’s response to COVID-19. Banks are now racing to digitize and connect processes that enable them to handle everything from a surge in mortgage refinancing inquiries to a deluge of loan forbearance requests.

Perhaps nowhere is the need for digital transformation more evident than with the banking industry’s effort to administer the U.S. government’s Paycheck Protection Program (PPP) loans for small businesses. With the PPP, banks faced an unprecedented volume of loan applications —14 years’ worth in 13 days. Yet, their front-end intake portals often lacked connectivity to the back-end document management and loan origination systems that processed the loans. To make matters worse, there were common integration challenges with a key government system known as E-Tran, which is required for guaranteeing the loans.

These pain points emphasize the need for greater connectivity across internal bank systems, as well as external partner systems. With an API-led approach, banks can deliver the level of integration required to solve these immediate challenges while future-proofing their lending operations, so they’re able to handle change more effectively in the months and years ahead.

For example, Mascoma Bank used a three-pronged approach to process more than one thousand PPP loans — one year’s worth of work — in just 13 days, supporting more than 12,500 jobs in the community during the first round of government funding.

By wrapping APIs around back-end loan origination systems, banks can expose their data and functionality into modern digital channels. This enables straight-through processing of loan applications received through web portals or mobile apps. Moreover, an API-led approach allows for reuse across other channels, such as chatbots and voice assistants, that can be used to accept loan applications in the future. The same goes for different lending products, such as mortgages and auto loans, that are top of mind for consumers who want to lock in historically low-interest rates.

2. Deliver targeted relief faster with a single customer view

Banks provide assistance and advice to customers who have a variety of financial needs outside of lending. They can administer this support faster and more intelligently by unlocking a single view of the customer.

Many banking customers are dealing with lost income due to layoffs or reduced working hours caused by COVID-19. Rather than waiting for customers to reach out and ask for assistance, banks can proactively notify them about their options for deferred payments or fee waivers, if they detect interruptions in monthly direct deposits. And, for customers who require assistance waiving overdraft fees, banks can use predictive analytics to assess the likelihood those customers will also require loan forbearance. Loan officers can proactively work with borrowers on their payment plans, strengthening the customer relationship and the bank’s ability to forecast and manage risk.

To deliver this type of experience, banks need a single view of the customer across front-line employees, marketing programs, and mid-office functions such as risk and underwriting. To get there, they must integrate back-end systems like core banking with front-end systems like customer relationship management (CRM) and marketing automation. Putting APIs in front of core banking systems enables banks to use transactional data such as direct deposits to trigger marketing journeys, or to suggest that relationship managers offer specific types of assistance. This accelerates and improves the precision of banks’ relief efforts.

3. Double down on digital banking and payments capabilities

Banks should use this time to enhance their digital capabilities for managing and moving money.

Before COVID-19, 57% of customers expected to be able to open a bank account in less than an hour. What’s more, 46% performed the majority of their routine financial transactions online or via mobile apps. Today, with branch access limited and most customers under shelter-in-place orders, these digital capabilities are even more essential for helping people manage their finances.

Connectivity across front-end, back-end, and external systems is a prerequisite for providing a frictionless and fully functional digital banking experience. Digital channels need to be integrated with core banking systems and know-your-customer/anti-money-laundering services to allow for fully digital account openings. Rather than integrating systems point-to-point, APIs securely expose core banking functionality anywhere customers want to open accounts or perform transactions — via web portals, mobile apps, voice assistants, and more.

Banks should use this moment to offer customers access to modern transaction capabilities such as mobile wallets and credit/debit push payments. These tools help customers transact when their cash usage declines and facilitate quicker access to monetary assistance via programs such as the U.S. government’s Economic Impact Payments. These capabilities depend on a secure and well-governed approach to consuming internal APIs and third-party APIs from the likes of major payment networks.

For example, to help small businesses make up for the loss of in-person sales, one high-tech financial services provider is helping merchants by processing payments for free through its ecommerce platform. MuleSoft is powering the connectivity between Salesforce and the company’s order management system to ensure merchants have visibility into their supply chains and know orders will arrive on time.

In another example, RBC Wealth Management used MuleSoft to launch a digital onboarding application process for new clients. The firm transformed its end-to-end application experience for COVID-19 by securely exposing applicant data to its advisors, staff, and clients. Greg Beltzer, VP of Technology at RBC Wealth Management, said, “We were able to come together and roll out an incredibly great digital experience for our advisors and our clients, and do it in an accelerated time frame.”

Accelerate the transition to connected banking

Most banking CIOs were already embracing connectivity before COVID-19. But the crisis means they have to move even faster on their journeys. As banks prioritize helping customers with urgent financial needs, an API-led approach serves as the foundation for lasting improvements in operational efficiency and customer relationships. For more discussion on this topic, tune in to our on-demand webinar: COVID-19’s impact to API strategies in financial services.

To get more tips on navigating change, read other articles in our Leading Through Change series. Find thought leadership, tips, and resources to help business leaders manage through crisis.