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“The future of transaction banking is not just about being able to do transactions,” he insists. “It’s about being able to understand the context of each and every interaction, and the circumstances that generate it.” Maakan’s comments would seem to chime with the sentiment in the Bain report. “To succeed in transaction banking and stay ahead of the pack, individual banks likely will need to overhaul most aspects of their operating models,” the report asserts. “Too many banks are saddled with payments and other core functionality embedded in legacy IT systems.” This is partly a reflection of the way the industry has traditionally seen itself. The traditional representation of how the transac- tion banking business is organised is through a triangle with a core system at the base, an application layer in the middle and a user interface on top of that. “That hasn’t changed for 30 years,” says Maakan. “I believe it needs to be flipped on its head so that the focus is actually the interaction with the customer. The future is not about product centricity; it’s about corporate centricity.” Without understanding the context of an in- teraction, says Maakan, it is difficult to know what the most appropriate product or service is to deliver. Firms in different industries may want to make use of the same ostensi- ble banking service, for example, payments or collections, but the business context will dictate the most appropriate course of action for each client. “Once we understand the intent, we can provide the most appropriate content,” Maakan comments. Essentially, this means being able to ‘look inside the box’. “Take the example of two customer delivery requirements. One has perishable flowers and the other has scrap steel. Each corporate will want to optimise the delivery accordingly,” he says. “Translate that to a payment: an ACH, a wire transfer or a real time payment may all be options, but the most appropriate choice depends on circumstances.” Banks should be able to lay out the options and their consequences for the client rather than simply reacting to a corporate instruc- tion. When it comes to a payment, for exam- ple, the question isn’t whether to use SWIFT or Ripple. “These are just rails,” says Maakan. The question is what you want to prioritise; for example, fastest time or lowest cost. “The moment I know what you want to ship and why you want to ship it, I can tell you what the optimal path is,” he says. EDITORIAL Editor HEATHER MCKENZIE Tel: [phone] [email protected] Multimedia Editor PAUL SKELDON Reporter ROLAND TELLZEN By flipping the triangle on its head, the focus becomes becomes persona-based rather than simply functional. A corporate might, for example, have a receivables clerk, a payables clerk and a COO, each with their own process for managing an interaction. A payable clerk might log in, download a file, then use their own spreadsheet into which, they may load the data they need to calculate if they have enough money to meet the firm’s imminent liabilities. These customer journeys are what machine learning should enable a transaction banking platform to do automatically, Maakan argues. More crucially, he suggests, a purely reactive approach to customer requirements will lead them become better decision makers.” Banks know they have to be more customer-centric, but, says Maakan, “like most of us, they don’t change until they feel the pain.” He believes, however, that banks are feeling the pressures of cultural change, reflecting the experience of a generation that has grown up with digital media. According to Deloittes, digital natives are expected to drive 40% of total spending power across all generations in the near future and large corporates, business- es, and governments are beginning to focus on meeting the digital demands of their end-cli- ents. ”The newer generation coming up the ranks of the corporates are impatient and don’t place a great value on loyalty to incumbent “The future of transaction banking is not just about being able to do transactions. It’s about being able to understand the context of each and every interaction, and the circumstances that generate it.” MANISH MAAKAN, CEO, IGTB to an inevitable decline in relevance. “Take the example of a consumer bank. If you don’t become part of the consumer lifestyle, at best you’ll be commoditised and at worst disin- termediated as you can see now around the world with challenger banks and non-banks. In the same way, banks always say they are customer-centric, but ask them how their products are designed for the industry their client is in. “An airline,” says Maakan, “is hugely complex with a huge number of coun- tries, currencies – including sanctioned and risky ones – partnerships of many kinds, direct and indirect staff spread around the world often uncontactable, and an industry used for over 50 years to real time complex information display such as air traffic control and aircraft cockpits. A newspaper distribution compa- ny, by contrast, is domestic, with very steady repetitive daily cycle, very few suppliers or customers. Other industries segment their customers and tailor their products. We are aiming to supply specific airline customer journeys as many of our clients bank large airlines, and similarly for other industries.” Cultural shift “If you don’t differentiate your services, the corporates will simply use one of the new digital mechanisms,” says Maakan. “By flipping the model to focus on interaction with the users and their journeys, providing them the data for better insights, we can help Contibutors CHARLES GUBERT ROLAND TELLZEN JON WATKINS RICHARD SCHWARTZ BEVERLEY HEAD DESIGN & PRODUCTION Art Director OLIVIA ROSZKOWSKA Tel: [phone] olivia.roszkowska@ globalcustodian.com service providers,” Maakan says. “They’re not sympathetic to the challenges of working with legacy technology. They expect processes to be aligned to the speed of commerce.” At the same time banks can’t be expected to change all their processes overnight. “The answer is to make the front-end operate in true real time and work with banks to change their process models,” he says. Undefined demand Maakan suggests that corporate customers, like consumers, are not purely fixated on their present needs and banks should bear that in mind. “Don’t underestimate the power of desire,” he says. “It’s the old Steve Jobs question. Did anyone ever say, ‘I need an iPhone’? As Henry Ford once famously com- mented, ‘If I’d asked the customers what they wanted, they’d have said faster horses.” The reason why iPhones are so successful as a consumer product, says Maakan, is that customers start out wanting them for aspects of their functionality, but end up wanting them to discover what new functionality they offer. `To secure their future, transaction banks will need to succeed in generating two crucial sentiments. The first, trust, is the traditional banking bedrock of the business and is built over years, but, says Maakan, “to sell something new every year requires the nurturing of customer desire. That’s how the business will grow.“ ADVERTISING ADDRESS Advertising Director Tungsten Publishing Ltd DALJIT SOKHI Tel: [phone] [email protected] 20 Little Britain London, UK EC1A 7DH Tel: [phone] Senior Account Manager SADIE JONES Tel: [phone] [email protected] Printed by: Innoprint Solutions (Pte) Ltd Club@Sibos is owned and produced by Tungsten Publishing Ltd. ©Tungsten Publishing 2018 No part of this publication may be reproduced, in whole or in part, without written permission from the publisher.