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It’s time for BANKING v2.0

I believe that the retail banking faces a number of challenges:
- a customer wants services (products) to be easily accessible. Customers don’t care where and how they can get it, but it must be easy and quickly. Besides, a customer requires proved warranties and service quality;
- a customer is able to compare. There are plenty of websites where financial institutions provide detailed information about conditions and requirements of service. There are special websites for financial service consumers.  New ways of gaining access to information deprive us of illusions of making a prospective customer visit our office and letting him get acquainted with our advantages;
- requirements to quality of risk management become. That’s why, verification and risk control services and the back-office have to be as more centralized, effective, specialized, and hi-tech as possible.

Those are the challenging tasks for Banking v2.0.

I believe that a principal opportunity lies in innovations innovations in sales technologies/techniques, and in streamlining of products we offer.

Traditionally every bank has:
• Large experience, investment resources and infrastructure for product creation and transactions making (an operational office, back-office);
• Smaller experience in investment and infrastructure for providing services to customers (a front-office).

I think that opportunities for reducing expenses and increasing efficiency lie in outdated, mainly decentralized infrastructure and business processes based on experienced staff, not on technologies.

And a front-office with its new methods, technologies and sales channels provides a ground for innovations.

Instruments to achieve the following goals:
• For a front-office: to be flexible, dynamic and generate sales.
• For a back-office: to be fast, hi-tech and low-cost processors.

It is unreal and extremely expensive to be strong/leading financial operator in every field, especially trying to compete on all products and services (from the point of view of investments to expertise, staff and technology).

Banking v2.0 is the Open Finance concept

The core of the Open Finance concept is the following:
• Creation of bank’ multichannel integrated front-office with a wide range of services (including services, generated by partnering banks).
• Separation of front- and bank-office operations and technologies: products sold through front-office have to be “packaged” and standardized by an operational department to the extent that enables front-offices at any partnering banks, insurance companies, trade networks. etc., to sell them without difficulties.

Open Finance principles: Disaggregation, Cooperation and Consolidation.

Banking v1.0

At present, banking institutions are characterized by following features:
? Complicated vertical business processes
? A front-office is closely connected with a back-office
? Technological limitations

Banking v2.0

Banks of next generation have the following features:
? Easily adjusted business processes
? Flexible and independent business units
? Growth in accessibility to major services - sales, consulting and support – in a 24/7 mode
? Strictly determined tasks and responsibilities of producers and service providers
? Bank sells  its own  and partner (external) products
? Bank is the major generator of products and services (pertaining to its key competency) so that they are ready for selling by partners