Community

Thanks for the feedback. Indeed, you are absolutely right. As long as top management is not aware of certain necessary trade-offs, it will be impossible for analysts & architects to correctly do their job. But I hope my blog can bring maybe a little bit (not making too much illusions either :-)) of idea, that technology is always a matter of making trade-offs.

Thanks for sharing this blog. Very interesting.
Might be interesting to have a look at a blog I wrote about 4 years ago: https://www.finextra.com/blogposting/19211/from-app-to-super-app-to-personal-assistant, also about the super-apps.

If the payment amount is not matching in full with the invoice for a legitimate reason, it can still not be handled by the structured comment, but it should be possible for the matching to correctly handle this (and expect / anticipate this).
If invoice indicates that 80% should be paid on delivery and 20% on installation, it is possible to use 2 times the same structured comment, but obviously you will expect then 2 payments on different payment dates. 

Thanks for the feedback. 

The "checksum method" in Belgium unfortunately does not solve the issue that customers pay the incorrect amount. The structured comment put on a lot of wire transfers in Belgium is a 12 digit code, for which the checksum is just a modulo 97 of the first 10 digits. So checksum guarantees quite well that the right structured comment is entered, but it does not guarantee if right amount is used.
For this, many companies work with QR codes on their invoice (and in future SEPA Request-to-Pay could be used), but a lot of customers don't use this QR code, so issue with incorrect amounts remains indeed a big hassle for most companies.

Scott, thanks a lot for the feedback. Much appreciated. Indeed even though the list of examples I gave in the article is already quite long, this list is far from exhaustive. 
A few more examples are:

* Discrimination against certain minorities. Although laws exist to avoid this, we can not ignore there is an inherent (often unintentional) bias both in the automated risk algorithm and manual risk decision process. This means that certain minority groups are definitely "underbanked".
* For medical insurance, obviously people with a history of cancer is not the only example. Everyone with a history of medical expenses or pre-existing conditions might be impacted. In many countries medical insurances are even more expensive for women, due to the expected medical costs associated with child birth.
* Any form of non-traditional employment. In the blog I refer to freelancers and gig-workers, but obviously other non-traditional roles like e.g. artists, performers, or creatives are also impacted.
* People with disabilities might need specialized financial products and services that aren't widely available or are offered at higher costs.
* Language barriers for non-native speakers
* Temporary Residents and people doing remote work (due to complex tax regulations)
* ...

Clearly the list is enormous, leading to a considerable percentage of the population being underbanked in some form.

Sorry, I think there is a misunderstanding of what I meant here with term deposits. Indeed obviously if the bank invests my saving deposits in term deposits or any othe bonds this doesn't change anything to the liquidity of my saving deposits. 

What I mean here with term deposits, is that the customer invests directly his excess saving deposits in term deposits. This could be government bonds, but also term deposits offered by the bank. It's this last type I am referring to here. When term deposits are offered by the bank, the amount and duration can be very flexible, making it a good complement for saving deposits. The big difference with those term deposits (typically with maturity of 3, 5 or 10 years), is that the customer has to pay a penalty if he wants to liquidate them before maturity date. This makes the customer less inclined to quickly liquidate in case of a panic.

Many thanks for the interesting comments.
I fully agree that general regulation (applicable to all banks) will be most effective, otherwise commercial short-term gains will always attract certain banks to take more risk. These general regulations will however take time and after all lobbying will always be some kind of half-baked compromise. 

But I do also believe banks can also do a lot themselves. In above comment "Limiting deposits will reduce the size of bank balance sheet. Not sure how many bank shareholders will approve of that measure." I agree that banks will never limit deposits, but they can limit deposits on saving account, when they can ensure the money is put in term deposits at the bank or invested in securities. Often those products gain even more money to the bank than saving deposits and they don't bear this risk of immediate liquidation in case of panic.

Interesting views also on who is to blame for fake news put on social media. This is a very interesting discussion, but it's a discussion for lawyers and politicians. Once panic breaks out, all harm is already done and this harm can not easily be undone even when the perpetrator of the fake news is identified and it is confirmed that the news is fake. As a bank, you should therefore also take action to protect you against fake news, even if illegally spread. In this digital age, you won't have the time to go to court and obtain confirmation of the fact it was illegal fake news.

Ketharaman, thanks for interesting feedback. 

With regards to your comment on "buying products they don’t even need", I agree that this is not an issue per se, i.e. for people that can afford it. Unfortunately these type of credits push people that can't afford it in also buying these type of unneeded products. As a result, debt becomes so problematic, that they have to cut down on products/service they do really need (like food, health care, children's education, utilities...). This is an undesired situation, which should and is also addressed by governments and regulators.

So in the end it's all about financial literacy and budget management. 

Very interesting blog. Thanks for that.

Last year I wrote a similar blog on marketplace analytics and KPIs, which introduces some of the same KPIs, but also some others. Might be worth to checkout: https://www.finextra.com/blogposting/19162/marketplace-analytics---stop-running-your-business-blindly

A good API strategy is definitely key for banks to innovate. And this in 2 directions, i.e. consuming APIs of other parties (providing valueable data & services) and exposing APIs themselves (with a clear business vision behind this). Check out also my blog "Transforming the bank to an Open API Ecosystem"  (https://www.finextra.com/blogposting/17750/transforming-the-bank-to-an-open-api-ecosystem) for a detailed description of what to take into account.