This article was first published in the Summer 2014 issue of Finance on Windows
These are challenging times for banks as they navigate a hyper-competitive and regulatory charged landscape. Their share of wallet is dropping as customers, lured by financial and non-financial institutions, are apathetic to their commoditised products and service offerings. With looming government regulations that impact mature revenue streams, banks have to redefine their economic framework to build and deliver products and services that address their disparate customer base.
Furthermore, customers have instant access to information via smartphones and an oversupply of competitive offers. If banks continue to offer one-size-fits-all solutions, they will risk diluting their competitive edge and losing what semblance of relationship they have with their customer.
It’s imperative for banks to engage customers by delivering compelling and personalised solutions. This is the true foundation of a value-based relationship, characterised by ‘fair value exchange’ where the customer shares key data and information that the bank can draw on to create befitting solutions.
At the heart of a value-based relationship lie customer data and the ability to derive meaning from it. Today, banks are dealing with in-house data, data that resides with other institutions – such as loans, mortgages, spend and buying patterns – as well as information gathered through social networking and other digital channels. The challenge is to turn the data stockpile into a powerful differentiating advantage. Banks struggle to fully harness the power of analytics and business intelligence technologies to anticipate customer needs. They need to delve deeper into these technologies by making smart operational and technology investments.
Also important is anticipating the needs of the customer in context of their financial footprint – lifestyle, buying patterns, family composition, aspirations and personal need-sets. By analysing such data meaningfully, banks can offer personalised, high-value solutions that customers will perceive as relevant and timely, and in the process allow for a sustainable value-based relationship.
Getting contextual customer data is a challenge in itself, but how banks analyse these data sets and what they do with them is crucial to building and managing customer trust. Banks should therefore develop strategies to drive value-based approaches. Along with improvement in customer segmentation, banks need to invest in execution technologies to enable effective use of new data aggregation tools, predictive analytics and business intelligence.
Banks need solutions that are more structured, scalable and secure to attract, retain and manage different types of customers. They need to invest in solutions like customer-screening tools, spend-tracking monitors, portfolio analytics and pricing tools to refine product and promotions, map them to predisposed customer sets, and deliver them to customers in the context of their busy lives. Banks also need to drive the programme across preferred customer touchpoints, including mobile and next-generation tablets. It is not enough to have the best products, services and friendly customer support if they get to your customer second. Banks have to move at the ‘speed of customer’ to add true value to their customer relationship.
Sean Breen is director of Financial Industry Solutions at Dell
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