When Transforming Bank Systems, It Pays to Listen to The Customer

Cyrus Bhathawalla, Managing Director, KPMG Advisory
Cyrus Bhathawalla, Managing Director, KPMG Advisory

Cyrus Bhathawalla, Managing Director, KPMG Advisory

The world of payments continues to undergo transformational change globally. With online and mobile experiences now part of our everyday lives, consumers and businesses expect streamlined interactions. This is especially true with banking payments services across both business and consumer segments, which offer today’s users more convenient, effective, and flexible payment options across multiple channels. However, as new consumer-focused solutions are optimizing the purchasing experience for all of us, corporates today also expect their payment experiences to replicate the fast, simple and secure nature of consumer payments.

Some of the most common questions CIO's, CFO's and treasurers ask me is "what type of strategic payments decisions do I need to make to stay relevant with my customers, and avoid new market entrants turning my bank into a utility?", "How do I productize new payment offerings such as real time payments?" and the simple question of "what will the payment product mix of my business look like in a few years' time, and supported by what type of technology?"

In order to answer these questions, we believe engaging the customer directly in the product innovation process is critical. We have seen a range of fintechs such as Venmo offering simple payment solutions for consumers and corporates alike – and key to almost all of them are customer centricity; Ant Financial offering a one-stop shop of payments services and more within their app and, Adyen simplifying how merchants receive payments and generate insights from their customers. These providers aren’t selling traditional ACH/wire/ check/etc products – they are selling customer business solutions – and this is what our corporate customers actually want to buy.

  We believe engaging the customer directly in the product innovation process is critical​  

A key trend we are seeing is built on recognizing that a payment is always part of a broader business transaction, and by removing the friction introduced by legacy payment types, we can better embed into and transform the broader end-to-end business transaction. Take for example a private used car sale, normally paid for in cash or by a cashier’s check - both of which have inherent speed and convenience challenges. If we were to remove this friction, a more data-rich and speedy payment could also integrate the purchase of insurance, DMV registration changes, vehicle titles, write-off checks, and more.

In order to help banks address these changing customer demands and new competitive pressures, KPMG’s Collaborative Corporate Product Ideation solution leverages our U-Collaborate methodology and design thinking concepts that are centered on three pillars: Alignment, Mobilization and Accelerated Design. We begin with a facilitated workshop alongside our client and their corporate customers to explore the state of payments today both locally and globally, and we begin to identify our customers’ biggest payment pain points. This can range from payment timing issues that result in additional manual reconciliation, to payment errors for companies that disburse a high volume of checks to their customers. One insurer that participated highlighted a significant pain point from payment of invoices to a 3rd party via Automated Clearing House as there was a significant overhead in manual remittance efforts to support the receivables process of their major supplier. We learned that without this deep level of detail and truly understanding the specific complexities of corporate customer payments processes today, we would not be able to properly highlight the detailed benefits that a real time enabled data rich payment solution could deliver for the customer and work towards a tailored product solution to be prototyped and deployed.

As a case study, we recently worked with a large North American bank which was looking to transform its payments system and wanted to understand their customers' needs and expectations as part of their change process. Together with a number of the bank’s corporate customers, we identified over 20 different use cases to streamline current business processes and created data-rich real time payment solutions around improving cash management outcomes. This then led to a successful co-design prototype development for a real time payment billing solution with our client.

Our three key takeaways from these corporate product ideation events were:

1. When transforming bank products, it pays to listen to the customer.

2. Understanding the specific payment pain points and complexities of your customer, and leveraging a broad range of insights from both incumbents, 3rd party providers and emerging fintech players offers the highest chance to succeed in developing a customer centric solution that reimagines the customer experience

3. Payments modernization offers both banks and corporates significant opportunities to revolutionize their back-end systems from a cost perspective as well as enhance the customer experience through productization.

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