Refocusing retail banking for the modern customer

First off the role of a bank needs to change dramatically. It will become less of a stoic stopping point on your way to the grocery store or an ATM machine in the mall. The modern bank of TODAY will need to become involved and ubiquitous within customers’ daily lives and devices. Like the rest of the industries, banking in Industry 4.0 will see a massive blurring of lines between humans and their technology; all with the intent to be more and more intertwined with the customer’s daily activities. Whether that’s buying groceries without a wallet, sending money to friends over facebook or looking for advice and financial support for a new stereo or house.

Let’s take this to first principles. You have their money and/or have cash to lend to help them get their needs and dreams. The trick is to be first there to offer them it. Either by allays being around or being their first, ideally before they know they need support, in order to beat the competition or before they find other means of funding. ​​Lot is left to chance in current banking. Amazon doesn’t chance it. They offer subscriptions and even re-order buttons (Amazon Dash) to communicate via wifi to re-order common household supplies like Tide detergent before a customer even considers shopping around. They earn the business they get. Banks need to get back to this basic idea.

This means for the bank it’ll need to get real about transforming to become quick to identify and respond to customer needs. There is a fight already going on for the privilege to handle money and transact on behalf of the customer. The threat is not coming from other traditional banks either. Banks need to become relevant and irreplaceable in a customer’s life just as Amazon has.

At least four key ideas must be surging through the bank in order to keep your share of a customer’s piggy bank.

Like a good concierge or waiter a bank should always be around but unseen and always aware of the customers needs with an offering or service. You’ll hear about building an ecosystem around the customer, which is a great way of looking at it. Build relevance in as many aspects possible across services and industries like communications, groceries, clothes, electronics, etc….

The bank will be part of daily tasks by partnering with supermarkets, parking lots, cafes and other staples of our lives and finding hooks to ensure the bank gets the transaction by participating from ideation to execution phases with the customer. Early adopters have pushed suggestions (think ad business) to customers using augmented reality, novel coupon placements and even GPS driven text messages leveraging the trusted partner role.

Cases:

It’s time to finally create that single view of the customer AND integrate it across the bank. Even if you have one already make sure a connected single view of the customer is available across all products lines and departments. And if applicable share across commercial, wealth management and retail banking. Ensure every interaction uses the same rich and real-time data of the customer.

Take segmentation beyond simplistic traditional demographic based clustering (e.g. Jim and Lisa both live in the same affluent neighborhood and keep > $100k with us) into micro-segment or even “segment of one” based on additional key information like transaction context, intra-personal/company relationships, life-goals (interpreted and volunteered). The same recommendation algorithms Amazon and NetFlix uses to match similar customers with suggestions can be used for customers within similar cohorts using similar transactions, spending patterns and of course preferences.

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While lots of work has been done in this area to start organizing and exposing data found across internal systems (e.g. CRM, payments, core banking platforms) there is much more to do with internal data and to cleanse it.

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This is as much a cultural transformation across the bank as it is putting in place practices such as agile coaches, open innovation platforms, hack-a-thons and a constant challenging mechanism for all norms; especially ones dealing with the customer — which should be nearly everything.

It has been said that unlike the human and government capacity to adapt in a linear fashion technology changes exponentially. We are at the start of this exponential curve and it’s not going to give us time to catch up. Bank must act immediately to release teams from traditional bureaucratic change methodologies and push digital and customer-centric changes quickly.

Be open to external ideas through open innovation techniques and platforms like Kaggle, Idea42 and others.

Cases:

Help the customer with their needs, not your services. Redesign ‘customer service’ around the customer not the bank’s services.

There is no option here but for wholesale change in many of the banks I’ve seen. With hundreds of FinTech’s coming out every year; someone will take your customers before you know it.

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