Customers increasingly expect remote access and digital banking services, especially since the covid-19 pandemic. But it’s important to offer solutions to even the most basic of banking challenges in the “most efficient and technologically advanced manner,” said Ankit Shah, head of digital banking at Apex Group, which launched a digital banking platform through its subsidiary European Depositary Bank in August 2022.

Shah categorised the main challenge into two portions: the onboarding part and the banking part. Institutional clients--like private equity funds, real estate funds or family offices--often have very complex structures. It’s important to efficiently and quickly onboard them, he said, streamlining the process and increasing accessibility.

The challenge on the banking side involves providing a fully digitised, cloud-based, secure, solution with multi-factor authentification, said Shah. But one also has to consider broader security questions, such as access to data, as well as the speed at which payments can be made or day-to-day reporting requirements.

It’s also important to realise that “different customers have different risks,” pointed out Alia Mahmud, global regulatory affairs practice lead at ComplyAdvantage. Processes around customer due diligence and identifying ultimate beneficiaries, for example, are different.

Covid and the rise of digital banking

The way businesses do business changed because of the lockdowns and social distancing implemented during the pandemic, said Mahmud. Branches were closed or there was reduced service, “so remote access became key during covid. And we did see a trend for institutional clients to adopt more digital banking providers and those types of services,” she said.

“Another area where digital banking plays a key role is fraud protection,” said Mahmud. “During covid, fraud rates increased. So the ability to have technology that can help you identify potential fraud or stop that from impacting your clients became key. And I think institutional clients, once they started using the digital way of doing banking, picked up on the fact that actually their money, their accounts were more secure when you use a digital banking platform.”

“Used to that digital experience in everything else that they’re doing”

In some ways, the covid pandemic was the “accelerator” for digital banking, but it was “built on top of some of the scaffolding, the foundations that had been in place, probably since the late noughties, 2008 onwards,” said Piers Marais, product director at Currency Cloud.

For Marais, “API piping, allowing data--ones and zeroes--to effectively be piped, shared around the digital economy, let alone the sort of digital financial economy, was a really key enabler for everything that followed.” An API--application programming interface--allows programmes to communicate with each other and information to be shared.

“As a consumer, there is no way that I am moving from my iPhone back to my Nokia 3210,” said Marais, illustrating how digital banking has become firmly established in today’s world. “People are used to that digital experience in everything else that they’re doing,” he added. “And they’ve started to expect exactly the same types of experiences within their business applications and environments as well.”

“At the end of the day, the client expectations are changing,” said Nick van Bommel, market sales director for Benelux, Nordics & Baltics at Mambu. Customer-centric banking is becoming more and more important, and having open, modern, API-driven architecture is key. “I think there’s actually no other way of dealing with the future, other than having these open environments.”

Trends and technology for the year to come

Embedded finance was one of the “big words” of 2022, noted van Bommel. He said he’s “very curious” as to whether doing banking can be made “so seamless, so easy, so that it feels like a very natural process.” That’s a “question mark” for 2023.

For Mahmud, “open banking is going to continue to accelerate. We’ve already seen it in the UK and in Europe,” she said. She sees open banking expanding into other jurisdictions and is “keen” to see how open banking can work across borders, allowing customers to have accounts from several different jurisdictions on one platform.

“It doesn’t just provide that ease and flexibility to customers,” she added. “From a financial crime control perspective, it will give providers the visibility of the information they traditionally need to assess whether certain activities are suspicious or not.” It will increase the ease of investigations and reduce customer friction.

Mahmud also said that she thinks “we’re now in a stage of digital adoption,” a sentiment that Marais echoed. “I think this idea of digital adoption echoes this mindset shift from product-led approaches to customer-centric approaches that are as relevant in the institution and business banking space as anywhere else,” said Marais.

“I think this concept of real-time everything is the macro-trend,” noted Marais. “Underpinning that is the level of automation across the entire end-to-end process.” This will be backed up with artificial intelligence, machine learning and big data sets.

Marais also highlighted the importance of trust in a brand. “It becomes absolutely crucial to any type of customer, that they feel like they have the trust in the brand that can supply the types of services that meet their specific needs and desires,” he said. “I think that will continue to grow, especially in this space, in the months and years to come.”