Temenos applies this phrase to the banking world, but it's a pervasive theme as all industries strive in a crowded market to attract and retain customers
(Here follows an excerpt from our paper, 'A race banks must win', published last month)
Experience-Driven Banking involves using digital channels and data to analyse the behaviour, demands and transactions of customers. Thus informed, banks are able constantly to predict what their customers will need and want next, and can offer relevant products and services in the right place at the right time, via the right channel.
Increasingly, to retain customers – especially younger ones, the so-called "Millennials"– banks will need to use data and analytics to provide value-added service. An EY banking customer survey found that people would expand their relationship (or pay more) in return for providers giving expert advice, finding ways for them to save money and rewarding their loyalty. Accenture found that 58 per cent of Millennials would like their banking providers proactively to recommend products and services that they need . And, the success of new banking ventures such as Simple (acquired by BBVA), built around the concept of helping people to achieve their financial goals, demonstrates that consumers would like their banks to be more involved in their financial and commercial lives.
When financial providers are able to combine this kind of personalised service with other information, such as context and channel preferences, we begin to enter the realm of Experience-Driven Banking. Imagine, for instance, receiving a text message to remind you of your daughter's birthday with suggestions of top-rated gifts along with the location of the nearest store with these gifts in stock as well as advice on the best way to finance the purchase.
Experience-Driven Banking isn't just a retail banking phenomenon. All banking customers want their banks to become more involved in their financial circumstances, helping them to make better financial decisions. A BCG study of the wealth management market, for instance, found that more than 60 per cent of customers were demanding services – made available across all types of devices – that helped them to understand their financial situation better and offered tailored recommendations. A growing proportion – between 20 and 60 per cent – wanted social interaction built in too.
Similarly, a study from Temenos/IDC on corporate banking showed a strong demand from businesses for services that could bring a real-time consolidated view of information as well as a willingness to look outside traditional financial groups in order to obtain these services. A quarter of corporates are already actively looking at non-bank providers.
In Experience-Driven Banking, every transaction enacted by a bank should be used to inform the next transaction; everything the bank knows informs the next step it takes on behalf of the client. It's about marketing (real-time targeted campaigns), sales (providing a banking marketplace where and when customers need it) and a better service and transaction experience via order management.
All this promises a revolution in user experience. The closest comparison is perhaps how Amazon shook up the online retail world, offering simplified and quicker payments, targeted products, links to other areas of interest and far more.
Banks are well placed to offer Experience-Driven Banking given that they have access to customer transactional data. The challenge for the banks is to be able to use that data, link it to other contextual information, serve it up at the right time and place and at the right cost. This will require significant change – and quickly.