Successful Digital Innovation - Barclays Voice Biometric System - Case Study Example

Successful digital innovation

Barclay’s Voice Biometric System

Introduction

Digital innovation is widely recognized in both academic and business environments as a critical element in achieving business goals, outperforming competitors, optimizing business processes and operations, etc. (Nylen and Holmstrom, 2015). In fact, many companies pursue digital innovation strategy with a focus on new business processes and models in order to differentiate themselves from competitors. Digital technology facilitates innovation process and offers new opportunities for achieving firm’s strategic goals. While there are developed many different innovative breakthrough ideas, relatively limited number of these innovations are effectively implemented and finally become successful. This paper aims to provide a detailed analysis of one of the successful digital innovations introduced by Barclays investment bank in 2013 and to discuss the key driving forces that enabled it it to evolve from an idea into a widely adopted innovation.

About Barclays’ innovation

Barclays is a globally operating investment bank, which is known for being a leader and first-adopter of innovations in the banking industry. In 2013, Barclays wealth investment management integrated the Nuance Free Speech technology in its call centres. This voice biometrics technology was used in order to simplify the process of client authentication. The Nuance FreeSpeech technology enables the Barclays call centre agents to identify the client by voice within a minute of conversation (Saran, 2013). Voice of a client calling to the Barclays’ call centre is analysed for many different unique characteristics and are immediately compared to the voiceprint on file (Nuance, 2016). Thus, the company introduced a new way of interaction between a bank employee and the customer by phone. Before this digital technology was introduced, Barclays used a traditional knowledge-based authentication procedure for verifying the identity of a client contacting via call-centre (Saran, 2013). This procedure implied a necessity to ask the client a set of questions and personal data such a birth date, first school, secret code, etc. (Saran, 2013). Even though this procedure was quite efficient in terms of personality authentication, it had significant drawbacks: longer time for answering all the verification questions, or posing client to a situation when it is not comfortable for her/him to answer these questions. Another major drawback was associated with inconveniences posed and time required due to the necessity to start the process all over again in case of phone call disruption or second call.

While the costs of the project were quite high, the benefits of this innovation also were significant. According to the statistics, voice biometric system allows to complete authentication in 5 seconds of conversation (Nuance, 2016). Therefore, implementation of the voice biometrics system allows Barclays to reduce significantly time of client authentication, to improve overall customer experience and, thus, to increase customer satisfaction leading to greater customer loyalty. According to the reports by Nuance, since the voice biometrics system has been implemented, about 93% of the Barclay’s clients rated “at least nine out of ten for the speed, ease of use and security” (Saran, 2013, n.p.). Moreover, this technology enables its users to reduce significantly the time of conversation between the call centre agent and the client, which leads to reduced headcount costs and greater efficiency. Thus, according to the estimates, the company that introduces voice biometric system in average saves around $15 over a three-year period (Nuance, 2016). Therefore, this particular digital innovation adopted and effectively integrated by Barclays should be considered as successful. Moreover, nowadays, another successful leading banks such as HSBC have enrolled the voice biometric system (Ashford, 2016). Below is provided a more detailed analysis of the driving forces that enabled it to evolve from an idea into a widely adopted innovation.

Driving forces

While analyzing the driving forces behind a digital innovation, it is possible to refer to the framework proposed by Nylen and Holmstrom (2015), which is comprised of three key dimensions: the firm’s products and/or services; firm’s digital environment; and organizational properties. Product/service dimension covers two areas: user experience and value proposition. Environment dimension implies digital evolution scanning, while the dimension of organizational properties includes such aspects as the firms’ learning capacity, roles, teams, space, time and coordination. Sapsed et al. (2007) identify the building blocks of system-level innovation, which include: technology and knowledge; actors and networks; and institutions. Inclusiveness and right balance of the above identified dimensions and building blocks of innovation allow the firm to effectively manage its digital innovation portfolio (Nylen and Holmstrom, 2015).

Improvement/enrichment of customer experience

Barclays recognizes the importance of continuous improvement of customer experience in banking industry. The bank operates in service industry, whereas the high level of service, speed, reliance, privacy and quality are the basic features that make up the list of basic clients’ expectations. As Nylen and Holmstrom (2015) explain, digital services and products to be considered as successful should not only be easy to learn, efficient to use but also to enrich customer’s experience (Nylen and Holmstrom, 2015). Thus, the innovative idea of the biometric voice detection system was primarily driven by the company’s focus on user experience improvement. Voice biometric system allows the clients to overcome time-consuming knowledge-based authentication process and resolve their issues straight away after a call.

Value drivers: complementarities and efficiency

As Amit and Zott (2012) explain there are identified three types of value drivers of innovative business models: novelty, lock-in, complementarities and efficiency. Barclays digital innovation was driven by value driver of complementarities, which refer to “the value-enhancing effect of the interdependencies among business model activities” (Amit and Zott, 2012: 45). Voice biometrics allows Barclays’ clients to go through a simplified but still reliable process of personal identification. This technology enabled the company to create value for the clients by making the process of personal authentication less time-consuming and easy (Saran, 2013; Nylen and Holmstrom, 2015). Efficiency is another value driver, which refers to “cost savings through the interconnections of the activity system” (Amit and Zott, 2012: 47). The time requires to service every customer at the stage of personal authentication is reduced significantly, and therefore, Barclays needs less call-centre operators per shift (Amit and Zott, 2012).

Digital evolution scanning

Another driving force that enabled the Barclays bank to adopt the voice biometrics technology was its capability of digital evolution scanning. In pursuit of improving customer service, the company has undertaken the so called “digital evolution scanning”, by gathering information on new devices, new technologies, new systems, and existing digital technology platforms (Nylen and Holmstrom, 2015). Having performed effective scanning, Barclays has chosen a third party contractor Nuance as a reliable partner for implementing this innovation.

Digital technology platform

Gawer (2009:2) defined digital technology platform as “a building block, providing an essential function to a technological system – which acts as a foundation upon which the firms can develop complementary products, technologies or services”. Based on the digital innovation screening results, obviously the company realized that there is a digital technology platform, Nuance FreeSpeech technology, developed by a third party contractor Nuance. Barclays has approached Nuance for adapting this adapting this digital technology platform for its biometric voice system. Barclays managed to find a right balance between layers of devices and networks, between generativity and control, necessary for utilizing a pervasive digital technology platform (Yoo et al., 2012).

Acquisition of new skills and knowledge/ Strong risk management team

As Nylen and Holmstrom (2015) explain, digital innovation requires new skills. In order to implement voice biometrics technology across the call-centers, Barclays bank had to ensure that all the employees involved into the process including both management and call-centre operators had sufficient skills in order to use the program.

The voice biometrics innovation was associated with privacy risk, undermining thus the overall viability of the program. However, the management team of the bank has adopted an effective statistical analysis in order to detect any failures of the system to identify correctly the caller. While the bank still faces with some privacy risks, Matt Smallman, vice-president, global client services at Barclays Wealth believes that the risk is negligible (Saran, 2013). Such confidence on behalf of the Barclays’ vice-president indicates that the company has developed powerful and efficient risk monitoring system, which enables to manage and mitigate all the major risks and threats.

Conclusion

Successful digital innovation requires not only new creative idea but also effective framework and driving forces that lie behind the idea. There was analysed the case study of investment bank Barclays, which has successfully introduced biometric voice detector system for client authentication process. Analysis of the driving forces of this particular digital innovation has shown that there were several key forces, grouped into three major categories: product/service, digital environment, and organizational properties. More specifically, the main concept of the service was based on the company’s culture to improve and enrich customer experience. Barclays digital innovation was driven by two value drivers: complementarities and efficiency. Furthermore, the company has utilised effectively digital technology platform necessary for physical adoption of innovation and provided to its employees training for acquiring necessary skills and knowledge. Strong risk management team also has been identified as an important driving force of this innovation.