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Who’s getting it right?

By Dharmesh Mistry 22 Jun 2016

Taking look at some of the leaders in the race to win their customers hearts and minds. The following is an excerpt from our detailed report: Racing from digital engagement to customer intimacy

The most advanced banks are already connecting all of their data and channels to the back end in a SingleBrain, allowing them to determine what to offer and using insights, predictive models and personalised triggers. They are observing and responding to customer behaviour in each channel in real time, measuring what works and what they are learning. The Spanish bank BBVA's significant investments in digital now appear to be paying dividends. In February, it reported a 10.9 per cent rise in gross income to €23.68bn for 2015, with its digital programme at the heart of its results. It said 19.2 per cent of consumer loans in Spain last year were made purely through digital channels, double the previous year. At the end of last year, 14.8m customers had interacted through the bank's online and mobile channels, up 19 per cent on a year earlier. BBVA is continuing to invest in its channels capability. In November it bought a 29.5 per cent stake in Atom, a mobile-only British bank, and hired in Barclays' chief design and digital officer.

Norway's DNB recently said that it would shutter more than half of its remaining bank branches, because almost all of its customers now interact with the bank through digital channels. Indeed, nine out of 10 new accounts are now opened in this way. Its mobile P2P payments app, Vipps, is used by more than one million Norwegians to transfer cash.

In Britain, the long-established Lloyds Banking Group has invested heavily in digital, creating a hub. It recently released an infograhic highlighting how every 60 seconds 12,900 people visit its website, 400 bills worth £150,000 are paid, with 32,000 page views, 1,500 mobile app logins and 3,000 internet banking logins. That equals £4.6m in digital commercial transactions, much of which would have gone to rivals without the investment. Lloyds has also been experimenting with heartbeat authentication technology from the Canadian firm Nymi. And it has been collaborating with Google, using the tech giant's analytics services including Dataflow. Reza Rokni from Google said Lloyds is "about 18 months ahead of peers in the use of data analytics."

In the United States, the Wells Fargo Labs offer a range of new services including rapid alerts, mobile deposits, text banking, cheque deposits via handheld devices, community responses to questions and polling. According to the American Banker, the tests "range from the more practical (think video banking) to what seems more futuristic (putting virtual reality headsets on bankers)." Wells Fargo tests new technologies – like integrating wireless beacons into apps – before potentially introducing them to customers.

JPMorgan Chase's retail unit has been rolling out a redesigned website, including what it describes as a "conversational area", which includes alerts the user can respond to without navigating to another page and a search engine that answers clients' questions. The benefits to the bottom line are clear. The company said digitally-centric customers – which Chase defines as those visiting a branch or talking to a banker no more than once a quarter and conducting three digital transactions per quarter – cost the company half of their analogue counterparts. In many ways, emerging markets are leading the digital charge. In Poland, MBank has launched a mobile payment service with contactless technology. It also offers a retail advice and discounting service, using client data and behaviour patterns, alongside geo-fencing, to alert on offers. And it also uses 'gamification' to engage customers. Idea Bank developed Europe's first business account in the cloud from Poland. It has also piloted a program where clients can summon an ATM-equipped BMW to deposit and withdraw funds. Turkey has a host of innovator banks like DenizBank, the first anywhere to let customers access deposit and credit card accounts through Facebook. Turk Ekonomi Bankasi was the first lender in the region to give customers debit cards with built-in authentication technology. And India's ICICI has a service enabling customers to transfer money to anyone in the country who has a Twitter account; it has launched an app for Android and Apple smartwatches.

Social media is playing an important role developing the market in China, where Tencent's WeChat allows access to PayPal, E*Trade, Uber, Amazon and TripAdvisor in a single app. ICBC and Bank of China are among the lenders that have integrated the service. The e-commerce giant Alibaba facilitates mobile money transfers, and Baidu is allowing purchases via photos.

The next step is for the bank to get the customer involved in designing the interaction through application programming interfaces (APIs). Banks cannot achieve these results in a vacuum. They need reliable new architecture. They need integrated analytics and to trigger offers and rewards in the front office. And they need real-time campaign marketing modules to allow cherry picking of services and offers.

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