Digital Banking

In retail banking, new competition has
accelerated in recent years from the digital
challengers—those so-called Neobanks or
digital only banks. While some banks may have
poured money into technology and digitization,
the others focus on streamlining the back office
and automating repetitive operations. The
results vary.
While traditional banks contend with inflexible
legacy IT systems, the transformational ones
deploy Agile methods to significantly reduce
their time to value and make the organization
more flexible as a whole. Transformation is
difficult and digital transformation is even
harder. The following are the top 3 priorities for
banks to shape their competitive advantage in
digital banking race:
1. Redesign the jobs to be done for its
customers, make them more convenient across
all channels
2. Modernize mobile banking authentication,
protect customers from fraud and cybercrime
3. Embrace Team and Technical Agility
Foreword
Doing Digital Banking Right | Introduction
TAI LE
VP of Vietnam Business
KMS Solutions

Digitization clearly links to higher customer
satisfaction, by giving customers access to
bank services anywhere and any time. This
has become critical as customers demand
the convenient, technology giant-like
experience such as that of Amazon, Apple
products during their daily life, and
expectations for personalized experience
keep rising.
Customer centricity puts the customer at
the center of every decision and uses design
thinking to ensure the final solution has 3
characteristics: it’s desirable, it’s viable, and
it’s feasible. In retail banking, more often
than not, the development value streams
jump right into brainstorming for the
problems at hand. Design thinking is not a
new concept. It’s been around for sometime
and in fact today it will be difficult to find any
team that is not aware of design thinking
concepts. Applying Design Thinking
practices is a problem to most of the team
when it lacks an empathize step.
Understanding their journey, observing
what they are doing while interacting with
Bank’s Mobile app will discover more of
their motivations or discouragements in
any stage of the process. The true goal is to
gather observations, emphasize with them
while not jump into any solution or
conclusion early.
In the SME space, the traditional banks
completely missed the opportunity because
of the changing work environment. The
freelancers, the Gig workers, young
start-ups are now making up a growing part
of the working population. Their banking
and lending needs are not being addressed
by the traditional banks. For example,
secured loan applications geared toward
full-time employees who have a full time
contract with track record in salary
payments via bank accounts.
1 - Redesign the Jobs to be Done
Cards /Payments Accounting
The Neobanks such as Tide.co tap into this market segment of independent workers,
small business owners the tools they need to manage and grow their businesses. The
jobs-to-be-done in these cases are invoicing, expense management, pay to staff, pay
to vendor, shipment tracking, etc. There is a trend that Neobanks integrating
3rd-party providers in Accounting and Finance space as part of their value
propositions to these.
Redesign the Jobs to be Done | Page 01
Integrations for SME Neobanks (Europe) – Source: Arrival Bank

The rise of cybercrime in 2021 was widely
reported in the Financial industry. It’s
increased by 118% from 2021 according to
Modern Bank Heists 4.0 Report. One
obvious thing is that financial institutions
need to take this as a wake-up call, protect
their customers against fraud and
cybercrime in order to embrace digital
banking practices.
SMS One-time-password (OTP) is the
popular authentication method in Vietnam
banks today. However, SMS OTP is not as
secure and personal as you think it is. The
banks send SMS to customer’s mobile
phones with an OTP when users login or
perform a financial transaction. The OTP is
subsequently keyed into the digital banking
interface, either via mobile channel or web
channel to confirm the transaction. SMS
protocol was designed in the 1970s and
modern security exploits its potential
loopholes. For example, a Signaling system
attack 7 (SS7) can be done with special
equipment to read the text messages
without being detected.
Digital OTP is a cheaper alternative.
Smartphone manufacturers such as Apple
and Google offer push notification features
for application developers. The push
channel can be used to push such OTPs.
With separated Digital OTP, the trade off is
user experience, where users have to
switch context while they login into mobile
apps or perform the transaction.
To further enhance digital user experience,
banks are moving digital OTP features back
into their Mobile applications with
Solutions such as PayConfirm from
Airome. It’s a software platform that
performs mobile transaction
authentication to authenticate or confirm
any type of operations. No more hardware
tokens, no more OTP-Generators and no
dependency on mobile operator network
and SMS. This solution offers protection
from most common security threats in
digital banking such as SIM swap fraud,
phishing, bank account details replacement
and other security threats.
2 - Modernize Mobile Banking
Authentication
Payconfirm
• Secure
• User-centric
• Cost-saving
Modernize Mobile Banking Authentication | Page 02

The core foundation when it comes to
digital banks should be the mindset shift.
Banks have a long history in investing in
technologies such as using ATM machines
to shift bank tellers to outside of the
branches and work 24x7, or deploy online
banking systems for customers to access
their bank accounts remotely. With many
consumers willing to go fully digital in
banking services, a set of digital
propositions is emerging to cater to these
digitally savvy customers. The mindset shift
is enabled by a blend between banking
operations and digital thinking. To do this,
the banks need Team and Technical Agility
competency. It outlines the principles and
practices that high-performance Agile
teams use to create high-quality solutions
for their customers.
Agile teams create and support the
business solutions that deliver value to the
bank’s customers. This is the real
cornerstone of Business Agility. While
traditional organizations commonly align
for functional expertise, value delivery
spans functional silos. It’s not uncommon to
find these silos in the business these days.
The true Agile teams have all the skills
necessary to define, build, test and deploy
value in short iterations. To deliver the value
to customers, they can be business teams,
operations teams, support team, software
team or hardware teams. They are
empowered and focused on a shared goal.
To help illustrate how to organize the Agile
teams to deliver values to its customers,
let’s take a look at the following example
from financial services. This example
consists of consumer banking loan
operational value stream and 2
development value streams that support it.
Loan Application Development Value
Stream
In this example, there are 340 people
involved, so they are split into multiple
teams. One option is to split into different
channels to market such as online, mobile,
branch, etc. Another option is to group by
customer groups such as existing customer,
students, homeowners and so on. Another
option is to organize around products such
as mortgages, personal loans, auto loans,
3 - Team and Technical Agility
DEFINE BUILD TEST DEPLOY
Team 1
Team N
Team and Technical Agility | Page 03
Agile teams are cross-functional

and loan structuring. Together, these
teams share the responsibility to
maintaining and developing the loan
application system. Without this
system, the banks can’t process loan
applications.
There is one note in the picture. Credit
Scoring System is complicated and
requires specialist skills that are in short
supply, the decision is to split Credit
Scoring System into one team that
support all other teams under Loan
Application Development value stream
Core Banking Development Value
Stream
This is the 2nd stream that support the
servicing of the loans. One of its team is
the consumer loans. Its charter is to
develop specific consumers loans
functionality that needed to support the
operational value stream. Another team
in this stream is Core Banking Platform
team, who will provide the services not
only for current stream but also access
the wider scope of the bank. This
platform team normally organize by
steps in customer journey such as: New
Account Creation, Account Closure,
Payment Processing.
Team and Technical Agility | Page 04
Financial services example showing 2 development value
stream support one operational value stream.
Attract
Customers
Channels
LOAN
NEEDS
Quick
Rate
Quote
Loan
Origination
System
Credit
Scoring
System
Core
Banking
System
Complete
Loan
Application
Eligibility
Decision
and
Uncerwriting
Extend Loan
Terms
Setup
Payment
Terms
Repay
Money
Close Loan
Award Loan
“Loan application”
development value
stream
“Core banking”
development value
stream
$
Consumer banking
loans operational
value stream
Repayment plus
interest
30 Estonia
80 US (Atlanta and Redmond)
230 India (Bangalore and Delhi
150 US (Chicago)
Original source: Scaled Agile

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the globe to bring the most advanced and innovative technologies to
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goals through world-class fit-for-purpose solutions and proven
industry best practices. KMS Solutions’ success is ultimately mea-
sured by the positive impact that it makes to the client’s business.
Learn more about KMS Solutions: https://kms-solutions.asia/