It has always been cost effective to sell to existing customers, rather than trying to acquire new ones. The pride and joy of every business is a loyal customer; one who believes in their service provider and trusts in their ability to deliver the best possible value every time they use their services. This logic holds well for all industries and across business segments. Growing industries, such as banks, can derive the maximum benefit out of this logic as their customers never tend to move to a different service provider, due to the intricacies and data security issues involved with moving to a different service provider. However, the ties between banks and customers are constantly being tested; the ease of transferring accounts, commoditisation of products & services, and transparency through regulatory requirements have translated into a volatile customer base. As a result, banks need to go an extra mile to make their customers happy in order to position themselves as trusted advisors. Therefore, banks are proactively looking to improve their services in order to build and maintain trust and loyalty, among their customers.
Over the past 18 months, banks that have successfully recognised this shift have demonstrated a double digit growth in the retail banking segment of some markets, while at the same time they have successfully grown their private banking portfolios as well. So what is the secret to their success? The reason is they are adapting and listening to their customers through the available data, and accepting new technologies to create a rich customer experience.
Creating a genuine mobile experience with geospatial banking
The impact of mobility on banking has been well documented. Statistics show that 60% of people in the UK have a smartphone, and among them, more than 80% of the individuals are between the age group, 18-24 years. The omnipresence and increased usage of smartphones are transforming the bank’s relationship with its customers.
Yet it is important to note that these devices not only enable internet over the phone, but also provide the ability to locate devices accurately through GPS feature. Advanced banks are now able to leverage this feature to create ‘Geospatial’ banking apps, which can be easily downloaded by customers on their smartphones.
Imagine sitting in your favorite restaurant, enjoying your food, when suddenly you get a message on your smartphone screen: “Hi John, we see you are dining at ABCD restaurant. As a valued and loyal customer of our bank, we would like to offer you a discount of 10% on your bill today. Please swipe “ACCEPT” to redeem the discount.”
A QR Code is generated on your screen (very similar to the ones generated for the boarding passes), which can be scanned by the restaurant and the discount is applied against your bill. You just saved 10%.
This application not only creates a unique customer experience, but also allows the bank to store the location and transaction data. As such, the next time when you are in the vicinity of the same restaurant, the app can prompt you with a discount and list the details of similar restaurants around your location where it can offer similar discounts.
Another example of geospatial banking that some banks have tapped into is the creation of an “In Store-Retail” experience. Imagine you enter a Sainsbury /Boots/M&S, or any other retail store. As soon as you step into the shop, the bank’s geospatial app quickly highlights all the various discounts and sales that you are entitled for in that shop. As you buy your groceries or other items, you just tap the item on your phone. At the end of the shopping, you swipe a finger to generate a QR code, which gets scanned at the Point of Sale (PoS) machine and the cumulative discount is applied. The payment is then made through the mobile wallet, making the entire shopping experience personal, economical and within the security of your bank’s app.
In the backend, the banks are tying up with these popular restaurants and retailers to get volume discounts, which they can pass directly to their customers, thus creating a new business model for the banks and retailers. This business model creates a win-win situation for everyone: the customer saves money; the bank gets the transaction and the loyalty; and the restaurant/retailer gets a volume committed business from the bank.
Understanding customer behavior through data analytics
The data acquired through the multiple mobile transactions and geospatial apps are a gold mine of customer behavior. A few banks are using this data to analyse spending pattern based on the locations and pro-actively engage with the customers.
For example: Dave lives in London. Every week he shops for his regular groceries from the nearby retailer. The geospatial app has been helping Dave save money every time he goes to this shop .The data gathered over the past few months enables the app to analyse the shopping frequency, amount spent, typical time of the week/month, travel route to the shop , etc.
Last week Dave threw a party and paid everything through his credit card. He wakes up in the morning and starts walking towards the grocery store for his regular shopping trip. He gets a message “Good morning Dave. You currently have a pending balance of £1800 on your card and your limit is £1850. Your average grocery bill over the past 3 months has been £75 with all discounts applied. Would you like to pay part of your balance?”
The app just saved Dave from an embarrassing trip to the store by analysing all his trips down this route, the frequency of those trips and the typical costs involved during those trips.
Knowing the spending pattern and the location, the bank’s app can use the data to validate the customer’s credit limit on the card, and if the limit is not sufficient based on the customer’s average spending pattern, it lets the customer know that he needs to pay his credit card bill before making a new purchase.
There are many examples of this sort where the app analyses the data of the various journeys undertaken by a customer for business. If the customer were to travel a particular route every day/week, the app would use this data to analyse the best possible cost options like a Weekly Pass, Monthly Pass, or a Pay as you Go Oyster. The bank’s app would then ping the customer’s mobile, letting them know the best possible option which could be purchased through the mobile wallet or the possible discount on long distance train journeys, where the bank would have tied up with the rail service provider, just like the retailers.
There is no magic formula to loyalty – it will always be trust and advice!
But what these banks have been able to tap into is the use of mobility and data analytics through geospatial applications and innovative partnership models. By using technology to create these innovative pay-backs to customers, banks can build trust by highlighting the best economical value and cost savings, while also providing intelligent advice by knowing their spending behavior.
Sameet Gupte, Virtusa Senior Vice President and Managing Director, Europe
Sameet Gupte heads Virtusa’s Business and Operations for Europe and is responsible for all sales, delivery and operations metrics across all industry segments within Virtusa spanning UK and Continental Europe. Prior to Virtusa, Sameet spent 12 years with Headstrong where he lead and built successful businesses in North America and Europe. He was responsible to build the strategy and team to execute a multi-year vision which helped Headstrong acquire multiple new logos in Investment Banking, CFD Markets, Brokerage Houses and Asset Management. Sameet managed the North America – West business for Headstrong where he built multi-year relationships with F1000 companies.
Sameet completed his Finance and Accounting Executive Program from Stanford Graduate School of Business in California and has a degree in Computer Engineering from Pune University.