In order to enhance its services, Nationwide Building Society has invested in innovative technology to meet its members’ needs. Future Banking speaks to Matt Cox, head of insight and innovation, about the building society’s continued digital advancements in branch and online, specifically around the opportunity to provide increasing convenience and security within its banking app.
Around 170 years ago, the building-society movement was set up as an innovative alternative to banks. Formed by groups of ordinary people, these individuals would come together in pubs or other social settings to pool their savings together to help build a home for one of the members in their group – thus, the idea of a mutual building society was born. Through this mutual pact, these groups were able to provide new ways to afford a home and accomplish something they could not do on their own. Using the power of the collective to innovatively improve the lives of ordinary working people, the foundations of Nationwide, which would later become one of the world’s largest building societies, were laid.
From industry-changing revolutions, such as colour television and the internet, to market-leading success from the society itself, Nationwide’s technological timeline is one of growth, experimentation and pushing boundaries, says Matt Cox, head of insight and innovation at Nationwide.
It was the first to offer an internet bank in the UK in 1997; it was the first high-street financial services provider to offer 24/7 customer support on social media with its @asknationwide Twitter team; and, more recently, it was the first to offer a wearable banking app in the UK, in mid-2015. Innovation lies at the heart of what Nationwide does. This is driven by the society’s mutual status and desire to help members manage their money, and navigate the challenges and opportunities of everyday life.
The rise of fintech
As the world has become one global, digital hub, services have had to respond, making way for exciting possibilities in the technology landscape. Digital technology is now fundamentally changing our relationship with money and our financial services providers. Never has it been easier for customers to manage their money, wherever and whenever, at the tap of a screen. In fact, fintech is changing how the whole financial industry operates and how consumers interact with all aspects of their day-to-day financial needs.
With the rise of fintech, Nationwide has seen its members’ digital usage dramatically change. For example, contactless payments now account for one in four of all card transactions for the society, as opposed to just one in 20 at the same time in 2016. Similarly, the mobile-banking app has seen an 86% increase in logins over a year-long period, with around 30 million each month.
You may recall a time, just a few years ago, when you would have to wait for the monthly bank statement to hit your doormat. This allowed you to review the previous month’s expenditure, crosschecking a wad of receipts with the transactions on your paper statement. Now, members are able to use mobile banking to access a rolling statement, checking the app multiple times a day at the touch of a button.
As Cox explains, “Nationwide itself was founded on an innovative idea – using the power of the collective to improve the lives of ordinary working people. We absolutely appreciate the need to be innovative and consistently work to find new ways to help people with everyday problems. This has been achieved through our social-media developments, wearable-technology advancements and the continuing evolution of digital banking, to name but a few innovations that have had a real and lasting impact on the lives of our members.
“However, we are always mindful not to compromise the traditional faceto- face services that are valued by many of our members. Branches are still very important to them and to us, so while we passionately believe in the convenience of digital services, we trust that our people and customer services will still provide the competitive edge.”
In 2015, Nationwide committed to investing £500 million into its branch network over a five-year period. This has seen technology such as Nationwide Now implemented in around 400 branches across the country, which is the society’s in-branch, high-definition video-appointment facility connecting members to financial consultants around the country. Instead of having to wait for an in-branch consultation, Nationwide Now allows customers to complete mortgage applications and attend financial-planning appointments at a time convenient for them, showing how digital enhancements can complement human service.
Where the magic happens
At the forefront of Nationwide’s technological drive is its Innovation Lab. Based at its head office in Swindon, the lab develops and showcases some of the society’s latest technology. Complete with three different zones – ‘Show’, ‘Think’ and ‘Build’ – this space welcomes pioneering thinking. The Show Zone provides an area for the society to showcase its many prototypes, and for employees to test and provide feedback on some of the latest thinking; the Think Zone is an area for research, collaborative sessions and project building; and the Build Zone is where the designing, testing and building takes place.
The lab informs the organisation how it can continue to be innovative, instilling a culture of creative ideas across the building society. Inviting members and employees on tours and collaborative sessions, the lab looks for ways to improve customer experience through new technology. It also looks to inspire the next generation of startups, supporting Accenture’s Fintech Innovation London Lab start-up accelerator programme, as well as hosting hackathons and designathons, backing a new generation of entrepreneurs and exploring possibilities that could be used to benefit Nationwide’s members.
More than 350 innovative ideas and concepts have been explored in the lab in the past year; one of these includes a partnership with Cutover to test its release management platform with the teams that run Nationwide’s critical systems. The technology provides real-time communications, updates to key stakeholders and a full audit of software releases, and Nationwide plans to go live with the system later this year.
However, innovation is not purely about delivering new technology. Nationwide recognises this, and regularly reviews existing products and services to develop new propositions, helping members to save, borrow and achieve their ambitions.
One area that the lab is currently exploring is the future of authentication. “Our members have told us they would like to see further authentication enhancements, so we are continuing to explore cutting-edge technology in this space to meet our members’ needs,” adds Cox.
Behavioural biometrics is one strand of exploration in the world of authentication. A prototype developed in 2016 explores how a customer’s natural interaction with their smartphone or tablet could provide an additional level of security in the future. Nationwide teamed up with tech partners BehavioSec and Unisys to develop the prototype that could provide a new layer of behavioural biometric security, based on the idea that the individual way we interact with our devices can now be used to authenticate members.
“It is great that we have the ability to recognise the unique features of an individual’s actions and interactions with a particular device. From the way that they type to how they touch and swipe between screens, or even the way the phone or tablet is held, there is nothing more personal than your own unique biometrics, allowing a truly personalised and secure way for our members to manage their finances,” comments Cox. These activities enable the prototype to calculate a confidence score in order to ascertain whether the user is genuine.
With 1.4 million mobile payments a month, it is important that Nationwide continues to explore enhancements so that members can transact conveniently and securely. The behavioural biometrics prototype reads customers’ movements to authenticate their identity before allowing money to leave their account, using a unique algorithm that determines whether the payment should be authorised.
This is particularly important as the building society’s own research recently revealed that the average British person has to remember six different passwords, with almost half of those asked admitting they now have simply too many passwords to remember. The research also revealed that 70% of British people wanted additional layers of security but without the need to remember additional passwords or PINs. This is where biometric security could make a tangible difference at a customer level in the future.
Cox continues, “I am confident that biometrics as a trend has the potential to become an increasingly important part of our customers’ everyday banking habits. Whether it is voice, retina, fingerprint or behaviour, biometric authentication has the potential to have an impact on our members’ lives in the future, and will provide an easy, convenient and, most importantly, secure way for individuals to manage their finances.”
Looking beyond behavioural biometrics, what trends might the future have in store?
‘Open banking’ is the current phrase on everyone’s lips in the finance services industry. More than just ‘banking’, open banking explores how data should be created, shared and used to help members transact, save, borrow, lend and invest their money easily.
As Cox explains, “Financial services providers are approaching an inflection point for a new era of open banking, characterised by increased customer choice, and competition from new providers and IT innovators offering great digital experiences. This will challenge the established business model for banks, and increase demand for them to open up their services and become a part of a much more diverse digital banking ecosystem. As open banking allows even greater integration within our day-to-day lives, Nationwide will continue to explore ways to add value for members.”