Advancing
Digital Banking

Banks see progress in the provision and adoption of digitalization as a resultof the pandemic.

The last 18 months has seen a step change in the digitalization of banking. Indeed, some executives in the industry

claim to have seen 7 years’ of change as a result of the constraints imposed on consumers by the pandemic. Avaya’s
Life and Work Beyond 20201 research confirms 37% of US consumers are doing more of their banking by app and

35% use their smartphones more often to make payments. The growth of cashless transactions has grown, with ATM
withdrawals and check use declining.

Our research with industry experts, and the interactions our people have with banks across the country, indicate thatfurther change is anticipated so banks need to adapt their processes.

There are 5 key elements banks should consider in order to digitally evolve through the 2020s:

1

Improving digital channels to enhance customer experience3

Protecting your reputation and your customers from security threats2
4
5

Making use of data and AI to deepen customer relationships

Shaping hybrid work success
Embracing cloud-based solutions securely

Banking in the 2020s

Strategic
challenges

Improving
digital channels
Making useof data and AI

Protecting fromsecurity threats
Hybrid work
growing

Embracingcloud securely

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How Avaya helps

Avaya One Cloud for financial services

Supporting
self-service channels
Providing valuable
customer data

Secure identificationand verification
Collaborative
based workflows

On-person hybrid
and cloud solutions

One banking executive summarized thechallenge, “Digitalization means thatbusiness leaders need to understandthe art of the possible, driving thetransformation with processes suchas AI that are new and risky. Whenlegacy gets in the way, leaders need agood strategy for steering through it

because managing our data and digitaltransformation effectively will give us acompetitive edge”.

The end goal is establishing a

digital workplace in which unique,personalized experiences are delivered
throughout your customers’ journeys.

2

1. Improving
digital channels toenhance customer
experience

Customer experience must be upgraded to keep pace with changing consumer
demands and to benefit from new revenue opportunities.
The shift towards a reliance on mobile applications and online servicing by consumers means banks need toreconfigure and improve the customer experience they offer. With fewer opportunities to build relationships inbranches, banks need to provide a great service on their digital channels, for instance, via:
▪ Voice, email, video chat, SMS▪ Live chat with an agent or IVR▪ Mobile app, social media▪ Virtual agents (bots, chat bots, conversational AI).

At the same time, they need to support existing customers throughtraditional channels. While banks follow the rationale that simple

transactions can be automated using digital tools, banking executives

report that ‘simple’ transactions are not straightforward for all customers,
particularly those who are older or less technologically able.

As increased customer interactions will be flowing through both digital andtraditional channels, the banks that offer a seamless but engaging, and mostimportantly, personalized customer experience, will be the ones who will

see the most financial benefit. The experts we interviewed confirmed that

improvements are needed and recognized that the advances in digitalization
made by fintechs provide a good illustration of the way forward.

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3Between January and July 2020, the number of Americans who considered adigital bank to be their prime bank increased by 67%.2 Chime currently leads
the market in the app bank space with a market share of 12 million users3

and innovations based around apps have further potential to generate newrevenues.

An important part of the technology upgrade is a complete re-design of thecustomer journey. As know your customer (KYC) compliance and anti-money
laundering (AML) requirements often add friction to a customer journey, newdigital providers are using open banking application programming interfaces(APIs) to pre-populate forms, speed up approvals and make application
processes faster.

The number ofAmericans who
considered adigital bank to be
their prime bankincreased by67%

According to Avaya’s Life and Work Beyond 2020 study of US consumers,
undertaken independently by Davies Hickman Partners4:
Post Covid-19:

16%

56%

said they would prefer,when buying or getting
customer service, tointeract with banks bybranch.

wanted to use amix of channels.

80%
believe there should be aneasy to find phone number
on apps and websites.

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21%
said their preference
was digital tools
like apps.

63%
agree there is often notenough help available onapps and websites.

4Banking branches are still important in serving customers from certain

demographic and geographic groups, as up to a third of customers still prefer

cash to electronic payments. Many customers also use a combination of digitaland branch services. The challenge now is to ensure branches have visibility ofthe entire customer journey to complete a truly seamless experience for thesecustomers. Further, as branches can represent up to 30% of total operationalcosts, in a well-designed digital customer journey that embraces the branch,
there is the opportunity to significantly reduce cost.

New channels can be built on the back of straight-through processing, realtime data and configurable workflows and contact center agents can be

repurposed for more complex tasks, such as advice by video. These newchannels have the promise of reducing operational costs and loweringcost-income ratios significantly.

Avaya delivers Experiences That Matter in banking
Avaya builds memorable customer experiences – Experiences That Matter – for banks across the world. Avaya

helps ensure banks get the very best outcomes from their interactions both seamless customer experiences andproductive employee engagement, enabling banks to meet their customer and employee objectives. Having asingle, AIpowered view of the entire customer journey helps banks create this exceptional banking experience.
Avaya supports both simple, self-service mobile banking interactions, such as bank balance look-up or password reset,
as well as the more complex queries which require employee assistance. Avaya also offers biometric-based, digital
identification verification and authentication to help meet regulatory requirements and save valuable time.

Customers want real connections with their banks. Intelligent routing

based on an extensive amount of customer data (interactions, behavior,transaction history), situational data (location, weather, time, day) andemployee data (skills, experience, performance, location, language,

gender) matches the best resource to solve the specific customer need.
Avaya can even route customers based on their personality.

In addition, intuitive, composable browser-based desktops enable

employees to handle multiple customer interactions simultaneously andreceive relevant data from multiple sources, including CRM and businesssystems, in a consolidated view.

Customers want realconnections with their banks.”avaya.com

5

Avaya OneCloud for financial services is composed to address
the sophisticated operating model of financial institutions
and includes an extensive ecosystem of global industry

solution leaders. Avaya enables financial service organizations
to swiftly respond and interact with customers, and tocommunicate more effectively to deliver memorable customer
experiences while retaining and selling valued-added services:▪ Attract and retain customers with superior customer service▪ Improve employee productivity while increasing
customer loyalty▪ Reduce mortgage, credit, payment, and loan delinquencies▪ Grow high value services and revenue through branches,
agencies, and brokerages▪ Improve the customer experience proactively acrossall customer touch points▪ Deliver 24/7 conversational self-service with options to speakwith an employee▪ Boost compliance and reduce fraud risk with advanced
biometric authentication and data redaction▪ Reduce employee attrition by orchestrating a better employee
experience.

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62. Making use ofdata and AI todeepen customer
relationships

Using a combination of data sources and AI to enable banks to
evolve with their customers.

The use of omni-channel in the banking processes and workflows provides broader customer

insights which generate opportunities to build stronger customer relationships, increase brandloyalty, generate new revenues and protect long term earnings. However, digitalization also gives
customers greater ability to switch providers if they find a better offer.

Personalization is key to a strong customer relationship and banks are investing in data collection

and storage, as well as analytics and AI, to build this functionality. This investment creates a better
understanding of individual customer personas and customers’ journeys across bank channels.

In return, the banks garner opportunities to:▪ Send prompts to customers▪ Make customer help available when and where needed▪ Route calls and chats from customers to the best resources▪ Enhance security and fraud protection▪ Give ‘next best actions’ to agents and employees whenserving customers.

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7

The research highlighted the development of new niche consumer segmentsthat are appearing as societal structures evolve which will provide newopportunities for revenue. In order to benefit, the banking sector needs tobecome less one size fits all and be more tailored to individuals. For example,
44 million5 US workers are self-employed and some providers are developing

products which serve this group effectively. Others in the sector are focusing on

certain ethnic groups while another has developed a banking product solely forcreatives who work in the marketing industry.

Increasingly banks such Goldman Sachs and JP Morgan are investing in

fintech to digitalize customer journeys and build new channel strategies. The

competition is evident in buy now, pay later apps such as Klarna, while point-ofsale financing is attracting younger customers. Embedded finance is generally

becoming more widespread as the goods and services that consumers demand
are being linked directly to banking services.

Typically analysis
of issue resolution
occurs 2-3 days after
customer contact,
now it can be done inreal-time providing
agents with training
faster...”Avaya technology uses data to support banks

Avaya OneCloud creates and uses data to provide memorable customer experiences for banks. Our technology
enables composable and personalized customer experiences, which enables banks to select different
applications for their customers’ specific needs.

Avaya OneCloud provides a wealth of insight from contact center interactions, as well as APIs to other data sources, to meet
key contact center objectives. For example, Avaya has incorporated the Experian API which allocates customers to specificmarketing segments and provides better data to banks to build revenues and relationships.

Avaya OneCloud sends customer transcripts, sentiments, and intent
details with contextual content to agents and supervisors during

live conversations to help agents create more efficient, accurate andmeaningful customer engagements.

Avaya OneCloud also uncovers business intelligence that has previously
been invisible in the voice channel. For example, it tracks customer

conversations about pricing issues, new policy changes and service issues
providing vital business intelligence to banks. Typically analysis of issue

resolution occurs 2-3 days after customer contact, now it can be done inreal-time providing agents with training faster.

In addition, conversational sentiment scoring identifies and intercepts

a customer conversation that is going poorly. It enables remediation to

improve customer satisfaction by reacting in real-time to resolve while theconversation is happening.

© 2021 Avaya Inc. All Rights Reserved. Avaya and the Avaya logo are trademarks of Avaya Inc. and are registered in the UnitedStatesand other countries. All other trademarks identified by ®, TM, or SM are registered marks, trademarks, and service marks,
avaya.com
respectively, of Avaya Inc.

8

Avaya OneCloud for financial services includes:▪ Live services: Transcription services, entity and intent
identification and customer sentiment▪ CRM integrations: AI generated abstracts, transcriptions, andcustomer field bi-directional exchange and populations▪ Knowledgebase integration: Integrated for actions, workflow,
action, and dictionary▪ Workflows: Rules based intent and workflow design▪ Analytical tools: Real time Supervisor and Executive

dashboards with integration to Avaya OneCloud CCaaS
Analytics and Reporting▪ Customer workflow triggers: Event based execution of aworkflow or insertion of an object into a workflow based on

sentiment as well as keyworks and interaction triggered rules▪ API access: Unlimited API access to data including streaming.

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93. Protecting yourreputation andyour customers
from security
threats

Investing in security remains the priority.

Data security, already a challenge for the banking sector, is increasingly vital given the extra emphasis on digitalization
triggered by the pandemic. The sector is particularly vulnerable to attacks given its customer data storage as well as
its access to significant financial assets. In addition, the shift to cloud and API based ways of working, while helping
this sector become more agile and innovative, has also resulted in more devices, applications and data no longer

being contained within an organization’s official security perimeter. Regulatory changes such as open banking andinnovations like blockchain and crypto currencies also increase the probability of data loss.

While regulators are clear that responsibility for controls lie with both the banks and the technology providers, thesector is finding it increasingly harder to protect against breaches due to its interconnecting systems and services andits need to balance appropriate access with complex authentication.

The impact on customer trust of any data breach is significant yet consumers’ self-monitored behaviors are not effective
as they often don’t know how to protect themselves from risks such as fraud. Therefore, it is important for banks tothink differently when using data analytics, security tools, organizational culture, and customer education to protect
customers' data and money. The recent increase in remote working is expected to result in more insider fraud asactivity will become more difficult to measure.

...it is important for banks to think
differently when using data analytics,
security tools, organizational culture,and customer education.”avaya.com

10

Avaya builds in Zero Trust by design

A network that is Zero Trust by design, individually encrypts and verifies an input from one entity, but nevershows the result to the other party.

Using the power of Journey’s Zero Knowledge Network, Avaya’s OneCloud enables faster, more secure, and less costly
digital identification and verification. Verifying identity and authenticating customers can take up to 2 ½ minutes, but
together with our partner, Journey, we can reduce this time significantly, saving time and cost.

Take your contact center out of the scope of compliance

Security and privacy regulations like the Banking Secrecy Act and PCI have guidelines that organizations must

adhere to. Falling afoul of these regulations can mean enormous fines, damage to reputation, and possible lossof revenue. Compliance is essential, but expensive and complicated. If you do it right in the contact center, you
can vastly reduce your scope of compliance - reducing your risk, cost, and effort.

Together with Journey’s Zero Knowledge Network, Avaya OneCloud proves customer data without revealing it.

This can mean sensitive customer data like bank account information or a social security number, any payment
information, or virtually any data that would all be subject to compliance.

Avaya’s OneCloud solution encrypts the data, verifies it from the appropriate source (a payment processor or backend

database, for example) and returns a pass/fail to the agent. This means that no regulated data ever touches the contact

center tech stack, and therefore takes the entire contact center out of the scope of compliance. This vastly simplifies thework of your risk management team who is responsible for compliance of any type.

Avaya OneCloud for financial services Authentication and

Fraud Detection Services provides authentication, secure payment
processing, and PII (Personally Identifiable Information) collection
services.

The approach addresses identity verification, authentication,and customer data privacy throughout the customer journey,
and across voice, digital and in-person interactions.

APIs are used to integrate existing applications and customer

systems in addition to a set of pre-packaged applications such as
customer authentication, continuous agent authentication andprivacy preserving “clean screen” agent applications that can be
rapidly deployed from the cloud.

© 2021 Avaya Inc. All Rights Reserved. Avaya and the Avaya logo are trademarks of Avaya Inc. and are registered in the UnitedStatesand other countries. All other trademarks identified by ®, TM, or SM are registered marks, trademarks, and service marks,
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respectively, of Avaya Inc.

11

4. Shaping hybrid
work success

Developing strategies
for future workers.
As the pandemic took hold, thebanking sector was at the vanguardof home working by quickly moving

contact centers and head office teams
to remote working. Some executives

reported major gains in productivity,
while others were less sure. Someleaders have encouraged people back

68%

62%

would like a hybrid work
model in the futureagree a hybrid work
model is better for
their well-being andhappiness82%

to the office and then recanted, whileother organizations are currently
trialing different options.

According to Avaya’s Life and Work
Beyond 20206 study of workers
in the US:60%
get frustrated when theiremployer doesn't use
technology that would makeworkers more productive

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believe theirproductivity at work
improves when they
are happier33%
say their employer gives
them the necessary tools andtechnology to do their job
from anywhere

12How do you feel
about flexible
working (e.g. home,office, worksite,on the move)?
Saying they love it:

100%
80%

64%

60%
40%

56%

26%

20%
0%

Gen Z

Up to 23 y/oMillenials
24‒39 y/o

Gen X

40‒54 y/o44%Baby Boomers
55+ y/oFor banking leaders, the main concerns about hybrid working are data security, the quality of internet connections

and the ability to deliver productivity. Surveys suggest that while many workers want to be able to visit the office orcontact center, they also want home working options.

This leaves a strategic quandary for some leaders, as summarized by a senior banking VP, “In the future people will
be given the chance to work from anywhere including hybrid, but no-one knows yet. The contact center person

hired to work from home will be different to the one who would come into the office. There is less oversight, so moretrust is required when the agent is working at home, it’s a different discipline and we need the management andmonitoring tools to help supervisors in either situation”.

Experts add that leadership and management skills will evolve as the need for a high-performance culture is greaterthan ever. Leaders, managers, and employees will undeniably need more training and support to adapt to the newworking culture.

...so more trust is required when
the agent is working at home, it’sa different discipline and we need
the management and monitoring
tools to help supervisors...”© 2021 Avaya Inc. All Rights Reserved. Avaya and the Avaya logo are trademarks of Avaya Inc. and are registered in the UnitedStatesand other countries. All other trademarks identified by ®, TM, or SM are registered marks, trademarks, and service marks,
avaya.com
respectively, of Avaya Inc.

13

Avaya enables secure, effective, and efficient hybrid working for banks
Bank employees will continue to be geographically distanced and connecting them into collaborativeenvironments is essential for productivity. Today, many hybrid employees struggle with fatigue from managing
too many separate applications.

Avaya’s workstream collaboration applications can replace disparate tools and integrate video meetings, chat, posts,

file sharing and task management in one application. This empowers teams to communicate in context, in a persistentvirtual workspace built on top of workflows and is accessible with any device. Unlike traditional face-to-face environments,
workstream collaboration tools like Avaya’s provide persistency, ensuring that work continues to progress across time andlocation allowing an expert-centric approach to business and customer problem solving, ensuring that the right subject
matter experts can flow in to and out of teams and customer interactions as required.

With an always-on collaboration-based workflow, things get done faster, easier, and more completely through‘in the moment’ sharing, as much as during formal meetings. Collaboration happens organically in response to shifting
priorities, the availability of team participants, and the information they’re currently sharing, unboundedby time or geography.

All content needed to kick start or progress a project or

discussion is organized, time stamped, securely stored, andeasily retrieved from within a virtual workspace, enabling true

workflow orchestration where all participants are informed, up
to date and understand the decisions and knowledge that has

been shared. The contextual insight provided with workstream
collaboration applications is crucial to improving the way
colleagues work.

The power of workstream collaboration can be the bridge

across the entire organization. It’s a way of bridging siloed

Unified Communications and Contact Center applications into
one powerful tool with one application.

The need to manage contact center agents effectively andAvaya OneCloud for financial services enables:▪ Planning, forecasting, and schedulingemployees to meet service level andcost objectives▪ Balancing shift patterns and service levelgoals with employee skills, proficiencies
and preferences▪ Monitoring intra-day trends and adherence▪ Supporting inbound, outbound, blended
media, in-house, outsourced, and virtual
operations

enable supervisors to monitor and train agents is vital to▪ Developing long-term plans for capacity,

more complex and important queries. Avaya’s Workforce

In addition, Avaya Conversational Intelligenceengagement and allows for supervisor monitoring, coachingand external rules and regulations using

agent development and empowering them to respond to
Engagement Management technology improves agent

and enablement of agents, wherever they are working. Its suiteof tools helps supervisors manage agents more effectively withreal-time intelligence.

The future of work is hybrid and Avaya, along with our partners,
offer industry leading communications and collaboration
security for employees, including our collaboration toolSpaces, wherever they are.

staffing, hiring and vacation.

can help organizations comply with internal

supervisor initiated or automated business rules.
Supervisors can enhance compliance practices

with internal policies and external regulations inreal-time. Sentiment and sales triggers draw thesupervisor’s attention to critical moments in calls.
Supervisors can then act, coach, or join the calls.

© 2021 Avaya Inc. All Rights Reserved. Avaya and the Avaya logo are trademarks of Avaya Inc. and are registered in the UnitedStatesand other countries. All other trademarks identified by ®, TM, or SM are registered marks, trademarks, and service marks,
avaya.com
respectively, of Avaya Inc.

14

5. Embracing
cloud-based
solutionssecurely

Banks move to the cloud.

The banking sector has long been aware of the opportunities that cloudtechnology offers. Claimed benefits include lower costs, better customer

relationships, and faster innovation. Nevertheless, with some banks having up
to 6,000 applications across their estate, the use of cloud technology remains
low particularly around core systems. Concerns around control, security andregulations keep the adoption rate lagging behind other industries.

Hybrid cloud technology and platforms offered by some providers, allow for a
mix of cloud and on-premises solutions. Many banks are adopting a DevOps
approach which combines the work of development and operational teams
to ensure greater flexibility and speed of deployment. The financial services

industry, using AI and APIs, is exhibiting at its periphery the agility, speed andinnovation more commonly found in the technology sector, as it is composing
banking solutions tailored to each customer wherever they are in the world.
However, there is uncertainty and hesitancy surrounding the use of cloudfor core banking processes. 95% of cyber security professionals in financial

institutions are either moderately or extremely concerned about public cloudsecurity7. Instead, the use of scalable, hybrid cloud solutions is becoming amore popular option for some banks.

avaya.com

95% of cybersecurity
professionals
in financial
institutions
are either
moderately
or extremely
concerned aboutpublic cloudsecurity.”

15

Avaya unleashes the power of a multi-cloud ecosystem

Although the majority of their communications systems may be on-prem, financial services companies can
get the benefit of the cloud immediately. For many, a move to a hybrid cloud platform, combining private
and public cloud, provides the most robust solution.

A bank’s cloud choice (public vs. private vs. hybrid) and their cloud provider should be part of a holistic strategy
to accelerate digital transformation and maturity. Avaya partners with industry-leading cloud providers such as

Google, IBM and Microsoft Azure to build security for high-risk organizations in financial services that often work withsensitive data. This process involves providing highly secure and regulatory compliant cloud capabilities. Includedin the Avaya technology solution is data centers in different geographies to meet regulatory requirements andproactively eliminate security problems.

Avaya OneCloud for financial services is composed to address
the security, resilience, and sophisticated operating modelof financial institutions. To achieve this composition, Avaya

OneCloud includes an extensive ecosystem of global industry
solution leaders.

Methodology

Avaya combined its knowledge of the banking industry with research from Davies Hickman Partners
to understand the key drivers of change. This report is the result of this research and analysis:▪ A full survey of published sources on the banking industry▪ Depth interviews with senior executives working in the largest banking organizations▪ A survey of 1,000 consumers carried on a near nationally representative sample using
online surveys▪ Workshops and discussions with Avaya executives based on their insight around thebanking industry

The report was written in November 2021.

Avaya is a leader in Contact Center, Unified Communications & Cloud Business Solutions,more information about Avaya can be found at www.avaya.com.

The research was carried out independently for Avaya by Davies Hickman Partners. The data andviews in this report have been prepared in good faith but neither Avaya nor the authors of thereport can be held responsible for any actions or otherwise taken by those reading it.

© 2021 Avaya Inc. All Rights Reserved. Avaya and the Avaya logo are trademarks of Avaya Inc. and are registered in the UnitedStates and other countries. All other trademarks identified by ®, TM, or SM are registered marks, trademarks, and service marks,
respectively, of Avaya Inc.

Notes

1	Avaya, Life and Work
Beyond 2020 Report, 20202	Forbes, The Online Bank
Insurgency of 2020, 20203	Forbes, Challenger Bank
Chime Reaches the 12
Million Customer Mark, 2021
4	Avaya, Life and Work
Beyond 2020 Report, 20205	Forbes, Nearly 30%
of Americans are SelfEmployed, 2020

6	Avaya, Life and Work
Beyond 2020 Report, 2020

7	AWS, Cloud Security Report,
2020