Dharmesh Mistry looks at how banks can use digital expertise to increase sales, engender loyalty and push up profits.
Up to 90% of interactions between banks and customers now take place over a mobile phone, leaving banks with little face time, the time they traditionally used to sell their products.
But this massive shift should not be a threat. It can play to a bank's digital strength, creating opportunities to sell better, in a more timely and targeted manner, create more loyalty, and generate greater long-term profitability.
Digital banking delivers a consistency of service, depth of customer knowledge and the facility to make real-time reactive offers. Combined, these make for a powerful sales opportunity.
A sales team will always have good and poor performers. The good seller reacts to the customer, gains and uses insight into the customer's needs and adapts the offer accordingly. When someone walks into a branch to deposit a large cheque, a good teller will work out whether to offer savings and investment products versus maybe mortgage deals or insurance by seeking to understand more about the deposit. A less successful teller will just take the cheque, missing the up-sell opportunity.
A digital system can be programmed to behave like the good seller, to spot an opportunity and make suitable offers. It can even be self-learning, working out that something didn't work the first time and adapting accordingly.
Not only does the bank benefit from a more comprehensive sales programme, the selling behaviour will be consistent across the entire client base, maximising each opportunity with relevant offers – even the best sellers can't know all their employer's offers all the time. In addition, it eliminates the chances of selling customers products they don't need.
Digital systems allow any offers to be made in real time, directly in response to customer action. A bank can analyse spending and saving patterns and deliver timely offers that correlate to those patterns, or even to an aberration within a pattern.
In this way, online banking will become an advisory service, rather than just a transactional operation, as the banks draw on a complete picture of their customers and access their full histories instantaneously.
Finally, the digital experience will help banks to build loyalty, offering targeted rewards directly related to recent spending patterns. For example, a customer who usually buys a Starbucks coffee every day suddenly goes to Costa for a week; the bank can send a free Starbucks coffee voucher to the customer, on Starbucks' behalf, enticing them back. It's a relevant, targeted reward that is likely to be taken up and engender goodwill towards the bank.
The opportunities offered by digital banking are possibly the most exciting development in banking for decades. While the mobile revolution is clouding the picture right now, it's a cloud that really does have a silver lining.