Racing from Digital Engagement to Customer Intimacy

Digital disruption is upending established business models across the spectrum, and banking is no exception.

At its core, the industry still provides savings and loans, but interaction has moved from a traditional, face-to-face, branch-based approach – based on cash, cheques and bank tellers – to a digital channels-dominated model, with real-time payments and communication based around integrated data and systems with rapid consumer adoption of mobile and digital platforms.

Retail banks are responding to these forces with different strategies. Some have patched their legacy IT systems and maintain a hybrid approach, reluctant for various reasons to completely overhaul the core architecture on which they built their businesses. Other new entrants and incumbents now facilitate and accelerate the provision of digital services via multiple channels in response to changing client needs, whatever and wherever those are. Another group has abandoned branches and embraced digital-only models.

All, though, share the goal of providing the most seamless services at the lowest price, to retain loyalty and win new business. And all are aware that providing clients with experience-rich banking and placing themselves alongside the customer always is essential for success.

However, banks must avoid past mistakes in their approach to core IT systems – patching over gaps in existing legacy systems and layering on top multiple “silo” solutions that are not integrated or that duplicate capabilities across different business units – to liberate front-end functions like marketing, sales and other communication services, and enable all channels to function effortlessly via a single command centre.

This paper explains how this new, unified command-center approach to banking works – switching the focus to the customer’s demands from the current, transaction-driven core model. Those who embrace this customer-centric, unified approach will thrive.

Racing from Digital Engagement to Customer Intimacy

Digital disruption is upending established business models across the spectrum, and banking is no exception.

download white paper

You may have read Tom Goodwin’s popular TechCrunch article. But almost certainly you’ve heard the famous quote from it that starts:

Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content”.

The quote has become the accepted metaphor for disruption in the internet age – so much so that it was cited by more than 80% of the speakers at a conference we attended in London last November.

What started as an interesting observation – that the internet has shaken up the supply chain and allowed for the emergence of balance-sheet-light, distribution-only platforms – has morphed into orthodoxy. In the information age, the theory goes, one set of companies does the hard work of producing goods and services, while another set – internet platforms – distributes them, earning super-normal profits on account of having few assets and negligible costs.

This is an interesting and intuitively appealing theory, but it doesn’t hold when you examine it in detail. It turns out that these internet platforms are not as balance-sheet light as we might think and are, in fact, becoming much more operationally geared and vertically integrated as they seek to cement leadership and deliver better customer experience. But, more importantly, it looks at digitization through the wrong lens. The fact is the internet era is not producing an overall trend to smaller balance sheets – just different routes to customers (with varying delivery models). And when we look at the FinTech sector, we see no reason why this won’t be the case, either.

Hierarchical models have given way to ecosystems. Within an ecosystem, some things are controlled while others are not; some assets are owned, others are not. What matters is the route to the customer, not the size of the balance sheet.

Racing from Digital Engagement to Customer Intimacy

Digital disruption is upending established business models across the spectrum, and banking is no exception.

download white paper

In this white paper, Optimizing High-Value Customer Journeys, you’ll get insightful tips from Tim Walters at the Digital Clarity Group on how banks can keep up by focusing on high-value customer journeys.

Racing from Digital Engagement to Customer Intimacy

Digital disruption is upending established business models across the spectrum, and banking is no exception.

download white paper

To gain competitive edge, banks must seize the opportunity to become more involved in customers’ commercial and financial lives, analyzing their transactional data to provide them with expert advice, find ways for them to save money and proactively recommend products and services they actually need.

The most successful companies will be those that are able to marry this analysis with analysis of customers’ locational and contextual information to be able to deliver the right products, personalized to individual customers’ circumstances, at the right time and over the right channel – what we are calling experience-driven banking.

Delivering experience-driven banking is a race against time. Banks have access to customers’ transactional data. But big technology companies such as Google and Apple have a deeper reach into customers’ lives. And, through initiatives like Apple Pay and Google Wallet, they are fast building data on customers’ financial transactions.

So, banks need to act fast – to put in place the conditions to be able to deliver experience-driven banking, ranging from cultural change to technology renewal.

It is a race banks must win. Banks won’t disappear, but if they aren’t able to deliver the value-added services that customers want, then others will – with profound consequences for the role and profitability of the industry.

The future of banking starts here

Discover how our platform helps financial institutions navigate change, embrace new opportunities, and deliver smarter, faster banking. Together, we embrace the future of finance – Leading Banking Forward.

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