'Wrapped around the customer': context is king

The expectations we as customers have regarding financial services has evolved considerably. Traditional banks want to retain commercial and retail customers by offering traditional, product based, banking (checking balances and making payments) does simply not cut it anymore. The rise in-app purchases is making one thing crystal clear: customers want it all easy, quick and convenient, but most of all end to end transactions are wrapped around their reality.

The upsurge in ‘convenience shopping’ has ignited expectations around contextual banking. Simply put, contextual banking is the provision of a personalised customer experience integrated seamlessly into a consumer’s day-to-day lifestyle. It provides financial and non-financial institutions with the opportunity to make the right offer at the right time so that the consumer can buy anything, anywhere, at any time, with just the click of a button. This concept of contextual banking means that consumers can rely on their banking applications to recommend the best offers, all at the right time. The defining idea behind contextual commerce is to enable your customers to buy something within the flow of another activity they’re engaged in. It’s presenting a product or service right at the very moment when the buyer might naturally want it, without making them go through a separate commerce or payment experience.

The insights derived from current and historic data provide financial institutions a clear know-how of who their customers are and what they expect throughout their customer journey. This data serves as analytics that then provide responses to customer requests across all channels.

The role of social media in contextual banking

Nowadays, people are not only reaching for social media to connect with others; social media are a premium source of entertainment and are fast evolving into a complex marketplace where businesses and consumers can review products and services, ultimately making purchases that are aligned to their needs at the time.

When it comes to making payments, various options are available; from making a PayPal transaction to one-click ApplePay or manually entering card information, convenience remains the key, followed hot on its heels by security. According to an Accenture study, nearly one-third of consumers are open to using platforms other than a banking app to make payments.

A great example is WeChat, the Chinese platform which has become a true super app by connecting experiences, services, and products to instant transactions. Various innovation and tech partnerships allow a user to instantly rent a car or trade stocks on Wechat.

Becoming the key to an ultimate frictionless experience

Contextual banking is about being where the customer is and embracing his situation, moment, location, and mood. This diminishes the risk that the customer will drop off at any time during the buying process. The key to a frictionless experience lies in the availability of choice: from mobile and digital wallets, contactless card payments, auto-renewing subscriptions, device-initiated payments, invisible payments, contextual online payments, in-app payments, and one-click payments. Even when shopping inside physical stores, customers would love to skip the queue and just pay through the most advanced contactless payment methods; face and palm recognition or QR to wearable payments devices. The success for players is to provide all of the above and let the customer set their preferences and choose their most trusted payment methods for any single interaction.

When we talk contextual banking, the concept of embedded finance cannot be forgotten; where technologies such as 5G, artificial intelligence, Internet of Things, cloud solutions, and Augmented Reality will power the winners who will ‘take it all’.

Getting ready for this new economy

With contextual payments being much more than just the provider of a seamless experience, financial institutions need to add multiple layers of security in their transaction flow. Besides, consumers need more education on financial fraud. As making payments becomes much easier, keeping in mind consumer convenience, paying tips with just a click would also require security measures that need to be embedded and enforced to mitigate risks. As consumers remain the most vulnerable element in a payment ecosystem, social engineering attacks are rising. Consumers less educated about financial crime are in danger, even though relevant risk and fraud checks and restrictions should provide protection from social attacks and malicious software and malware.

How can financial and non-financial institutions better manage risk?

As financial and non-financial institutions embark on collaborations within the payments ecosystem to provide solutions that are more seamless and convenient, the right partnerships will be critical to their success. These technology service providers can provide a better, and more efficient risk scoring which will help financial institutions to find the right balance between generating greater revenues and satisfying customer needs. The more payments become embedded in a wide array of experiences, the more complex and important KYC, AML, and risk management processes become. Regulators, who are grappling with these developments, will choose the side of the customer: business owner and consumer alike. Contextual banking and commerce, supported by AI driven ‘nudges’ will only be allowed as it serves the interest of the customer. FIs need to work with tech companies to find the right balance in security, operational risk, efficiency and cost.

Stop talking, start listening

The most important lesson in a contextual economy is that we must say goodbye to an era where bank teams used to get together to ‘define the best user experience’. That user experience was mostly driven by whatever the bank deemed fit to sell to the customer at particular ‘life stages’ and gave the customer very limited choices. This no longer works. It is not up to the bank to guide their customers to the ‘best’ experience. It is up to the bank to listen and follow their customers as they guide ‘the bank’ through their life. Their life, their context. For the smart readers and listeners amongst financial institutions, this is a major chance to become ‘uber -relevant’ and be the winner that takes all. After all, the best user experience is a relevant one.

About Michalis Michaelides

Michalis Michaelides is a global business development specialist with strong emphasis in the payments technology sector, with over 25 years of experience in diverse markets such as Europe, Middle East, Africa and India. His extensive experience includes working with both established corporates as well as ambitious startups to help them bring to life their value propositions and build lasting consumer experiences.

About BPC

Founded in 1996, BPC has transformed over the years to deliver innovative and best in class proven solutions which fit with today’s consumer lifestyle when banking, shopping or moving in both urban and rural areas, bridging real life and the digital world. With 350 customers across 100 countries globally, BPC collaborates with all ecosystem players ranging from tier one banks to neobanks, Payment Service Providers (PSPs) to large processors, ecommerce giants to start-up merchants, and government bodies to local hail riding companies. BPC’s SmartVista suite comprises cutting-edge banking, commerce and mobility solutions including digital banking, ATM & switching, payments processing, card and fraud management, financial inclusion, merchant portals, transport, and smart cities solutions.