Innovation in Technology and Transaction Banking Awards 2013 - Retail banking

Retail Banking

Winner: DenizBank 

When it comes to innovation, DenizBank stands tall not only nationally, but also internationally. Many banks emphasise their focus on innovation, social media and mobility, and in Turkey this applies to the vast majority of financial institutions.

What makes DenizBank stand out is its agility and stability. In 2012, it was bought by Russia’s Sberbank after previously being owned by troubled Franco-Belgian lender Dexia. But regardless of its owner, for some time now the bank has been continuing its ‘return to life’ programme that followed its privatisation in 1997. With subsequent investments into branches and products, DenizBank has significantly reinforced its market position. It tends to rely on its in-house IT subsidiary Intertech, which counts another 12 banks in Turkey besides DenizBank as clients. 

This access to Intertech’s expertise helps DenizBank to identify market trends and demands, the bank’s chief operating officer Dilek Duman toldThe Bankerin February. Intertech’s suite of products, called Inter-Next, is an open, multi-channel platform that enables faster product delivery. Besides core banking, it also has a customer relationship management component, alternative delivery channels, a business process management tool, a business intelligence layer, software as a service, data centre hosting, mobile payments and even a Facebook branch service, where banks can open a virtual branch on the social networking site.

DenizBank has a Facebook branch (although the visual design was outsourced), which includes features such as product application, money transferring, social gifting and a communication platform with the bank. The service has reached about 10% of DenizBank’s online banking customers.

Elsewhere on social media, DenizBank has launched Mobile Cheque, a loan service on Twitter. By sending their citizenship number to DenizBank’s dedicated Twitter credit account, customers and non-customers can receive a quick update on whether they are eligible for a loan. This builds on the SMS loan offerings that have been common in Turkey for years, though DenizBank has translated it into a social environment used by about 9 million Turks.

Social Media

Winner: DenizBank 

A loan via Twitter, banking on Facebook... Social media-focused banking is something that many banks have sought to master but few have achieved to the point where their efforts could be deemed a success. One clear trailblazer in this space is Turkey’s DenizBank, the country’s largest bank by assets. In a country whose population ranks in the top five of the highest social media users globally, with 34 million Facebook users and 9 million signed up to Twitter, it seems that Turkey offers the perfect environment to offer these kinds of services.

DenizBank shows a high level of understanding when it comes to reaching customers through Facebook banking, and has created a new channel for direct product application, money transfers and social gifting, asset management, product detail information and customer care. Facebook banking was developed by the bank’s IT subsidiary, Intertech.

Following the idea, brainstorming and concept phases of DenizBank’s Facebook banking in the first quarter of 2011, analysis, development and testing ended in January 2012. Through Facebook, DenizBank reached about 10% of its online banking users. It plans to add crowd-funding, crowd-saving, bill payments, gold transactions and other investment functionalities soon.

Following the launch of this initiative, Facebook’s management wrote to DenizBank, saying: “We are delighted to see DenizBank adopting our social technologies to make its business more engaging and provide additional value to customers. It is exciting to see such an innovative integration being offered for the first time by a Turkish bank.”

On Twitter, DenizBank offers loans to both customers and non-customers. To launch the service, DenizBank created a Twitter account which it connected to its existing SMS loan infrastructure. Using the system, if a consumer wants to apply for a loan, they must follow @DenizKredi on Twitter. The bank will then automatically follow the consumer. The consumer then sends their Turkish citizenship number and mobile phone number via a direct message on Twitter. This system was built by Intertech and launched in July 2012 – five months after the idea was first mooted. As of August 2013, the value of the total loans approved via Twitter stood at Tl2.7bn ($1.38bn).

Retail Payments

Winner: Banamex 

Retail payments was one of the most competitive categories in the Innovation in Banking Awards 2013. In the end, however, Mexican lender Banamex emerged as the winner thanks to its iAcepta Movil portable mobile point-of-sale terminal.

iAcepta Movil is in effect a card reader that can be attached to an iPhone, iPad or iPod Touch. Later this year, the bank plans to expand the service to the Android platform, on which Samsung and HTC smartphones run. In addition to the card reader, users also need to download an app from the Mexican Apple store. 

The project began in early 2012 with the intention of filling a gap in the market; according to Banamex only 500,000 of the 5.1 million businesses in Mexico accept debit and credit card payments. The development of the terminal took a year and a team of 15. It complies with industry-wide Europay, MasterCard and Visa standards for chip-based cards.

Banamex launched the card reader in February this year, and besides its portability and potential for drawing in the custom of small and medium-sized enterprises, the bank also took an eco-conscious decision to avoid printing receipts. Instead, the cardholder receives an electronic receipt on their phone, as does the merchant.

Another feature of iAcepta Movil is a web administration service on which the merchant can, among other options, create different types of reports by bank reference. The transaction information gets logged in real-time.

In praise of iAcepta Movil, one ofThe Banker’s judges said: “Transforming the mobile phone into a card reader/point-of-sale terminal helps mobile businesses to flourish and reduces the need to be tied to a specific location. Overall, an increase in card usage can help to reduce tax fraud and other cash-linked shadow economy activities.”

Mobile Banking

Winner: DenizBank 

In the mobile banking category, Turkey’s DenizBank stood out with its innovative Mobile Cheque project. The service was a joint project between the bank’s small and medium-sized enterprises (SME) and digital generation banking teams, and developed in house by its IT subsidiary, Intertech, while the only function that was outsourced was the user interface. However, as the bank was creating a new payment channel, it involved other departments, such as the credit office and the compliance, legal, cash management, accounting, operations and risk systems departments. It also used its call centre and public relations units.

As in other countries, SMEs in Turkey often struggle with cash management, and cheques are still widely used. The idea behind the Mobile Cheque project was to provide a new and secure payment system to customers to make future dated payments quickly and efficiently, as well as guarantee to the payee that the stated amount would be paid in full without the cheque bouncing. To begin with, the bank’s credit office assigned an extra and specific credit line for customers who fulfilled certain criteria.

DenizBank highlights that the Mobile Cheque service is not a cheque reader or cheque deposit application, and emphasises that this is a new payment method that acts like a physical cheque, only in a mobile environment. This way, customers can send mobile money to others with a future value date and receive and collect money at maturity or endorse another person.

DenizBank believes that with time and good marketing, this system may replace cheques that are issued for low-value payments. The bank guarantees the total amount of the cheque and anyone, including non-customers, can receive cheques and pass them on. However, if a person wants to draw on the cheque before maturity, they need to be a DenizBank customer (so the bank can apply the specific credit check to them), though non-customers can also cash out the cheque at a branch on maturity. When the cheque is due, the amount is directly transferred to the customer’s DenizBank account. 

Delivery Channels

Winner: Akbank 

Akbank impressed with its retail and corporate internet banking renewal project. On the retail side, 15 internal and 15 external developers analysed, developed, tested and deployed the project. On the corporate side, Akbank used a total of 28 people. The teams got to work to develop, from scratch, the online retail banking service. This was the first phase of the project, and therefore the most challenging part of it. Following the re-launch of the retail banking internet service in mid-2011, the second phase, the corporate internet banking relaunch, started straight away, between July 2011 and April 2012. Here, the developers involved worked on what is known as scrum methodology.

First, all common functions between retail and corporate internet banking were completed. These were tested and ready within a month and were the most important aspect of the channel integrity. The presentation layer of the two channels is the same and the middle layer is integrated.

The corporate internet banking service relaunched in June 2012, and the bank implemented the infrastructure in tiers. In the functional tier, two types of function implementation took place; one in which the developers implemented the differing functionalities for retail and corporate, and a second in which they mapped the common functionalities between retail and corporate banking (200 of 400 functions) and implemented these in a common sub-layer of the functional layer. 

The common application layer (the framework) involves common applications such as security and static data management. The combination of a common layer and common framework means there is little development and not much test time needed to integrate a function, thus cutting down the time to market. 

In the middle layer, the bank deployed multi-channel architecture, which was crucial for Akbank’s objectives, segregating the front-end channels and back-end systems, which means that once a service is ready on the core system, it takes little time to customise it for a channel. Following the renewal project, Akbank added new functionalities and products with less time to market and less effort required.

Customer Service

Winner: Akbank 

In what was a good year for banks from the country, Turkey’s Akbank has won the Innovation in Technology award for customer service. Akbank’s workstation – Integro – is an enhanced sales force automation system that integrates all sub-systems into a
single banking application. The challenge with Integro was to optimise and standardise the way in which the bank’s departments – branches, headquarters, operation centres and contact centres – did their respective activities.

Akbank’s main objective was to improve the efficiency of the bank’s operations through re-engineering business processes. But Integro is not just a technical transformation, it is also a cultural one, as it has changed the way in which business processes are conducted. 

Integro’s main parts consist of a business desktop to manage daily activities, which has ‘tiles’ with specific contents that can be customised according to the user’s role in the bank and their business line. Integro also contains a customer file module that offers an overview of a customer from an operational, analytical, sales and risk perspective. And there is a static header that includes offers that the customer is eligible for, warnings, products the customer uses, credibility statuses and cross-selling information, as well as a summary of the customer’s assets and liabilities. The system also includes a sales module, which lists a customer’s product use and related transactions, and a reporting module that provides reports from both operational and sales perspectives.

On a technical level, Akbank relies on multi-channel architecture which serves as a transition layer between the front-end channel layers and the back-end systems. With such segregation, the front-end channels can change over time separately from the back-end systems, and vice versa. 

Integro is now being used by 300 bank tellers and in 150 branches as of June 2013. In the next phase of Integro’s development, Akbank is going to enable 16,000 employees from the bank’s contact centre, operations centre and headquarters to use the same banking application with role-based, customised modules to serve customers. The use of Integro has resulted in a decrease in the time it takes to carry out transactions.

Customer Data Management

Winner: State Bank of India

Data management is widely accepted to be an area that could be improved upon where retail banking is concerned. State Bank of India (SBI), the country’s largest bank by assets, impressed the judges with its ability to integrate the data from various units – such as retail, treasury and international business – and then to perform data mining and analytics. With its SBI Enterprise Data Warehouse Project, the bank was able to kick-start a transformation of its enterprise data warehouse to create a seamless integration of various source systems and to adopt advanced data-mining techniques.

This enables the bank to have a 360-degree view of its customers, which provides a better understanding of customer behaviour, banking patterns, preferences and retention. Furthermore, it helps the bank in predictive analytics thanks to a consolidated data repository. 

One way in which the project stood out was in the way that it was able to prove that a large-scale data warehouse roll-out could result in positive improvements to a bank’s market share, cost savings, risk management and visibility of client activities across service segments.

Tools that were implemented included the ‘one view’ for retail accounts and another for corporate accounts (including small and medium-sized enterprises), 12 credit risk models, and a budgeting and planning tool for all of the bank’s 19,600 branches and controllers. The bank also created more than 500 campaigns that went out to customers who contribute 70% of the bank’s profitability.

SBI considers the real-time data capture, dashboard technology for iPads and smartphones, data mining, customer relationship management and its ‘credit risk data mart’ as the project’s key initiatives and unique selling points.

Cost saving is another goal of the bank, and it is therefore deploying account analysis to review service charges. Based on such analytics from card terminal and payment gateway transactions, the bank is also negotiating better prices with MasterCard, Visa and other merchants. In addition, the bank has analysed transactions on its ATMs, and now positions the machines accordingly. It has also noted a shift among customers towards using more alternative channels. 

ATMs

Winner: Banco Bradesco 

Passwords are of vital importance when it comes to securing transactions, yet for customers are often viewed as an annoying step to access their accounts. Brazil’s Banco Bradesco had proclaimed the end of the password – as far as ATMs are concerned at least – by only requiring a card and a biometric solution that identifies a customer by the palm of their hand. The bank went a step further in December 2012 when it introduced the cardless biometric option.

The project took eight months with a 19-strong team working on it, and its deployment followed a year-long analysis that identified the different technologies required. The solution, PalmSecure by Fujitsu, ticked eight key boxes: high precision, stability, no physical contact, hygienic, non-intrusive, acceptable by users, minimal training being required, and a very low false acceptance rate (00008%).

It works like a scanner, in that it captures the vascular pattern of the palm of the customer – the vein pattern of an adult does not change in their lifetime. Besides security and ease, it also holds a practical use: there is no card to carry around when going to the beach, for example. It also proves its worth in emergency situations when customers need fast access to money, as these is no card that could have been stolen, lost or damaged.

By taking away the different traditional security layers, the bank says it has actually increased security levels when it comes to withdrawing money. Fraud was minimised to zero, and cards cannot be stolen or cloned (at least not for purposes at the ATM). Today, Banco Bradesco has got 35,000 biometric-technology enabled ATMs and 13 million clients using them.

Wholesale Payments

Winner: RBS

By February 2014, the eurozone’s payments market should have harmonious standards in cross-border payments, as stipulated in the Single Euro Payments Area (SEPA) project. SEPA has loomed over banks for more than a decade, but no concrete progress was made until the European Commission set a final deadline in early 2012. For many banks, the biggest issue regarding SEPA is in migrating their corporate customers to the new standards, something that is not easy when payments systems vary throughout Europe and many corporates did not anticipate the technical and cultural changes.

In December, RBS authorised a four-man team to find IT software application vendors who could help the bank create a SEPA solution that could be implemented within six months, could increase the speed of client onboarding – from four to six months to four to six weeks, enough time to migrate the about 3600 clients on time – and require minimal changes to clients’ systems.

IT and business process outsourcing provider CGI, which had acquired IT and consultancy company Logica in 2012, and XMLdation, a company that specialises in validating and SEPA testing, received the contract. The result was the RBS SEPA Accelerator, an end-to-end, all-in-one migration service with several applications, hosted on the cloud. It includes a self-service conversion solution for legacy direct debit and corporation tax formats into SEPA-compliant ones. The service’s average rate of successful message delivery is 1 million transactions per hour, with 24-hour availability and a self-service function for testing and validating SEPA formats.

The solution converts legacy messaging formats into SEPA ones, and domestic bank account numbers to international ones, as stipulated in SEPA. Other solutions include SEPA mandate management, a new culture for some corporates as mandate management is not common in some countries.

The project was delivered within four months – initial pilots with six clients took place in April; the first tranche of products went live in May, and by June, the bank had 20 clients live on the system. RBS is set to generate €2.5m in 2014 through SEPA Accelerator, a 500% return on investment.

Green IT

Winner: CaixaBank

After 30 years of loyal service, the decision was made to update CaixaBank’s data centre with an eco-friendly facility in 2012. Efficiency in energy and IT equipment administration was key to the new data centre. The bank developed a new software tool, a mix between a traditional Data Center Infrastructure Management System (DCIM) and Data Center IT equipment allocation tool. The project lasted a year.

The result is a data centre that makes use of, among other things, chiller plants with condensed air and no need for water consumption, a cooling function and a ‘closed’ cold aisle concept to separate cold from hot air, which means there is an even temperatures at different heights of each rack (an alert goes out when this exceeds 28 degrees Celsius).

The hardware consists of energy consumption counters that know the energy use of all rooms in the building, and power distribution units that monitor real-time energy consumption. One control unit per rack collects the produced information, while other pieces of equipment measure humidity and a virtualised server consolidates this data in a database. The software reads the information from the database and matches it to an inventory that is obtained from its configuration management database.  

Using space efficiently was another goal of the project. When approaching such a challenge, IT administrators usually err on the side of caution and prefer adding equipment if they have doubt about the electrical load a rack can support. CaixaBank uses up to two kilowatts per square metre, with an average of 1.33 kilowatts per square metre. An alert kicks in when electrical consumption reaches 50% of the acceptable load.

Today, when a new piece of IT equipment needs to be installed, the application searches all of the free spaces available in the racks and calculates the remaining free power in each one, a list of the best choices to the administrator. No extra racks have been installed this year, and so far total energy savings have improved by 41%.