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Customer service has an ROI too – but it’s not always easy to deliver

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Customer service has an ROI too – but it’s not always easy to deliver

Matt Phillips, VP, Sales & Systems, Diebold Nixdorf UK/I

We are in the age of ‘now’, with customer demands shaping the competitor landscape, as well as entire business systems.

This has never been more true than in the world of financial services – where net promoter scores stand for everything, where technology is advancing customer interactions at a rapid pace, and where physical touch points (especially those on the high street) are under increasing pressure to prove their worth.

 The case for customer service

Matt Phillips

Matt Phillips

Against this backdrop, there is a strong case to show that high quality customer service can deliver real business value in the financial and payments sector – something that has already been proven multiple times, by multiple other industries. Indeed, across a broad range of sectors, 84% of organisations that improve their customer experience have also reported an increase in revenue.

In the financial services world, this point has been made clear by the challenger banks, such as app-based Monzo, Starling and Atom, which have recently shaken up the industry. The growth in popularity of these digital-only financial services, where customers can apply for mortgages and manage their current accounts directly from their smartphones, has often been put down to their ability to both offer a high-quality service to the always-on customer, and quickly bring new platforms and services to market.

In order to stay competitive, the more traditional financial services firms have needed to add value to their offerings, boost their customer experience and journeys for these ‘now’ consumers, yet still drive efficiencies. They have needed, in effect, to make customer service demonstrate ROI, and fast.

More than a challenge

Needless to say, this hasn’t been an easy task. Traditional financial services organisations have for a long time suffered from large, complex and inflexible infrastructures. These systems have been built up over many years, with layer upon layer of legacy platforms making it hard to drive agility and competitive differentiation. Indeed, Capgemini has recently found that many core banking systems were originally developed in the 1970s and 1980s, making most banking system solutions over 30 years old and counting.

This, understandably, makes the digitisation of services, such as online and mobile banking, extremely difficult.

Added to the challenge of legacy infrastructure is the fact that those within the financial services sector are under increasing pressure to implement engaging digital transformation strategies, often with limited resources. This puts not only budgets under strain, but also puts the teams required to transform the customer experience with new and innovative technologies under pressure – pushing some organisations to the limit, and leaving little time to manage day-to-day operations effectively.

Taking a holistic view… and winning back some customer service kudos

Where there is a desire to get customer service right, there is not always the agility or perceived resources to do so.

In many instances however, a mind-shift from treating customer services as a separate entity, to putting the customer at the heart of every operation, helps organisations to find a more practical way forward.

This is customer-centricity in its purest form. It involves more than just responding to what challenger banks are doing by copying their approach. It involves more than introducing new apps, more digital platforms, or new gimmicks. Instead, it involves using digital as a way of improving or evolving the customer journey – enhancing every touch point, where necessary and where it’s going to improve the customer experience.

This approach can make the overall customer journey more holistic. But to be successful, it must be underpinned by digital platforms which can build a picture of how a customer is banking, what platforms they are relying on at different points in the day or month, and what products they might need help with.

Evidence suggests traditional banks are starting to get customer-centricity right. For example, RiF Group has found that appetite for digital-only banking providers fell from 74% in the first half of last year to 63% in the second half, perhaps due to the bigger banks providing a service that’s less likely to make customers consider defecting to market challengers in the first place.

A practical way forward

The reality of putting the customer at the heart of every operation requires, as mentioned earlier, a mind-shift. But at a processes level, it also involves a change in how internal teams work, how different departments work together, and how different platforms communicate.

Making operational changes like this is no mean feat and there is a new industry trend of banks embracing service providers as a way of provisioning resource effectively, getting access to new skills quickly, or freeing up internal staff.

This so called ‘as-a-service’ phenomenon has been prevalent in other industries for decades. In the retail sector, for example, it’s a tried and tested model, with the British Retail Consortium recently finding that 70% of retailers are outsourcing an element of their operations, with warehousing and IT being the most likely functions to be outsourced. This helps them to reduce costs, and optimise how their businesses are run.

Indeed, the transformation from traditional resourcing, to an ‘as-a-service’ economy is well underway in the UK, with analysts expecting the XaaS market to grow 38% by 2020. For the financial sector there are clear benefits to be gained, if organisationsare able to boost operational efficiencies, and provide internal staff with the time they need to evolve their current customer service offering.

BankData in Denmark is just one example of a financial organisation that has already using an as-a-service model successfully. Rather than spend precious time managing its own huge ATM network, BankData has elected to work with a service provider to implement enhanced ATM monitoring tools, newly automated processes and services support across BankData’s entire self-service network of 11 Danish banks. This means that internal staff can instead focus on future-proofing the bank’s services, and placing customers at the heart of every new innovation.

Even some banking services start-ups are exploring as-a-service options to improve their growth performance. For example, mobile-based Coconut, which combines banking and accounting services so that freelancers can pay/ get their bills paid easier is partnering with a banking-as-a-service provider to run its back-end technology.

Future-focused services

Ultimately, adding value to every touch point is crucial when it comes to putting customers first, and thus gaining ROI. It is encouraging to see more financial services firms find new ways to boost their offering, with many increasingly turning to service providers to do so.

Every platform needs to add something to the journey if a customer-centric strategy is to be successful, and the ‘as-a-service’ model holds the key to striking the right balance between making a customer-centric approach successful, and also efficient. Long live the ROI of customer service.

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Robinhood plans confidential IPO filing as soon as March – Bloomberg News

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Robinhood plans confidential IPO filing as soon as March - Bloomberg News 1

(Reuters) – Online brokerage Robinhood, at the centre of this year’s retail trading frenzy, is planning to file confidentially for an initial public offering as soon as March, Bloomberg News reported late on Friday, citing sources.

The California-based brokerage has held talks in the past week with underwriters about moving forward with a filing within weeks, Bloomberg said.

Robinhood did not immediately respond to a request for comment.

Reuters reported last year that Robinhood has picked Goldman Sachs Group Inc to lead preparations for an initial public offering which could value it at more than $20 billion.

Robinhood was at the heart of a mania that gripped retail investors in late January following calls on Reddit thread WallStreetBets to trade certain stocks that were being heavily shorted by hedge funds.

The online brokerage tapped around $3.4 billion in funding after its finances were strained due to the massive trading in shares of companies such as GameStop Corp.

(Reporting by Ann Maria Shibu in Bengaluru; editing by Richard Pullin)

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Analysis: How idled car factories super-charged a push for U.S. chip subsidies

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Analysis: How idled car factories super-charged a push for U.S. chip subsidies 2

By Stephen Nellis

(Reuters) – When President Joe Biden on Wednesday stood at a lectern holding a microchip and pledged to support $37 billion in federal subsidies for American semiconductor manufacturing, it marked a political breakthrough that happened much more quickly than industry insiders had expected.

For years, chip industry executives and U.S. government officials have been concerned about the slow drift of costly chip factories to Taiwan and Korea. While major American companies such as Qualcomm Inc and Nvidia Corp dominate their fields, they depend on factories abroad to build the chips they design.

As tensions with China heated up last year, U.S. lawmakers authorized manufacturing subsidies as part of an annual military spending bill due to concerns that depending on foreign factories for advanced chips posed national security risks. Yet funding for the subsidies was not guaranteed.

Then came the auto-chip crunch. Ford Motor Co said a lack of chips could slash a fifth of its first-quarter production and General Motors Co cut output across North America.

“It brings home very clearly the message that the semiconductor is really a critical component in a lot of the end products we take for granted,” said Mike Rosa, head of strategic and technical marketing for a group within semiconductor manufacturing toolmaker Applied Materials Inc that sells tools to automotive chip factories.

Within weeks, automakers joined chip companies calling for chip factory subsidies, and U.S. Senate Majority Leader Chuck Schumer and President Biden both pledged to fight for funding.

Industry backers now aim to be part of a package of legislation to counter China that Schumer hopes to bring to the Senate floor this spring. Still, all agree it will do little to solve the immediate auto-chip problem.

Headlines about idled car plants resonated with the public that had shrugged off abstract warnings in the past, said Jim Lewis, a senior fellow at the Center for Strategic and International Studies. Lawmakers, already worried that a promised infrastructure bill will not materialize this year, decided to push for quick solution.

“Nobody wants to be seen as soft on China. No one wants to tell the Ford workers in their district, ‘Sorry, can’t help,'” Lewis said. “It was one of those moments where everything aligned.”

The package includes matching funds for state and local chip-plant subsidies, a provision likely to heat up competition among states including Texas and Arizona to host big new chip plants that can cost as much as $20 billion.

The subsidies could benefit a factory in Arizona proposed by Taiwan Semiconductor Manufacturing Co and one in Texas eyed by Samsung Electronics Co Ltd, even though those factories would be geared toward high-end chips for smartphones and laptops, rather than simpler auto chips. And those factories would not come on line until 2023 or 2024, according to plans disclosed by the companies, the world’s two largest chip manufacturers.

In the longer term, a raft of U.S. companies are also poised to benefit. Any chipmakers that build factories will source many tools from American companies such as Applied, Lam Research Corp and KLA Corp.

Intel Corp, Micron Technology Inc and GlobalFoundries – which already have U.S. factory networks – will also likely benefit.

Smaller, specialty chip factories also could benefit.

“The recent chip shortage in the automotive industry has highlighted the need to strengthen the microelectronics supply chain in the U.S.,” said Thomas Sonderman, chief executive of SkyWater Technology, a Minnesota-based chipmaker that makes automotive and defense chips. “We believe that SkyWater is uniquely positioned due to our differentiated business model and status as a U.S.- owned and U.S.- operated pure play semiconductor contract manufacturer.”

Even with subsidies, the U.S. companies still must compete with low-cost Asian vendors over the long run, and the immediate auto chip troubles will probably persist.

Surya Iyer, a vice president at Minnesota-based Polar Semiconductor, which makes chips for automakers, said his factory is booked beyond capacity and has started to speed some orders up while slowing others down, to meet automakers’ needs as best it can.

“We are expecting this level of demand to continue at least for the next 12 months, maybe even longer,” he said.

(This story has been refiled to add attribution to quote in paragraph 9, add dropped words in paragraphs 10 and 17)

(Reporting by Stephen Nellis and Hyunjoo Jin in San Francisco and Alexandra Alper in Washington. Editing by Jonathan Weber and David Gregorio)

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Atlantia disappointed with CDP bid for unit, continues talks

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Atlantia disappointed with CDP bid for unit, continues talks 3

By Francesca Landini and Stephen Jewkes

MILAN (Reuters) – Italy’s Atlantia said on Friday an offer by a consortium of investors led by state lender CDP for its 88% stake in Autostrade per l’Italia fell short of the mark and asked its top managers to see if the bid could be sweetened.

“The offer falls below expectations,” the Italian infrastructure group said in a statement, adding it had mandated the chief executive and the chairman to assess “the potential for the necessary substantial improvements” to the bid.

Italian state lender CDP, together with co-investors Macquarie and Blackstone, has presented a proposal valuing all of Autostrade per l’Italia at 9.1 billion euros ($11 billion).

The consortium also requested Atlantia guarantee up to 700 million euros in potential damage claims and another roughly 800 million euros for a pending legal case, making the bid less attractive than previously expected.

One source said the consortium estimated overall pending legal claims against Autostrade at 3 billion to 4 billion euros, adding the 700 million euro cap did not mean the amount would be detracted from the offer price from the start.

Earlier on Friday Atlantia’s minority investors TCI and Spinecap had called on Atlantia’s board to reject the offer, saying it undervalued the asset.

“No deal is better than a bad deal, especially a bad deal and a wrong price,” TCI Advisory Services partner Jonathan Amouyal said in a emailed comment to Reuters.

TCI, which holds an indirect stake of around 10% in Atlantia, repeated that the value for 100% of Autostrade should be no less than 12.5 billion euros.

The board will hold a further meeting in order to take a final decision on the offer in due time, Atlantia said.

The negotiations between Atlantia and the CDP-led consortium are part of an effort to end a political dispute over Autostrade’s motorway concession triggered by the collapse of a motorway bridge run by the unit.

(GRAPHIC – Atlantia share performance: https://fingfx.thomsonreuters.com/gfx/mkt/qzjpqggjdpx/image-1614331237501.png)

The bid expires on March 16, but the deadline could be extended in case Atlantia calls an extraordinary shareholders meeting (EGM) on the issue, according to one source with knowledge of the matter.

Shares in the group ended down 0,7%, after recovering some losses, as investors waited for the decision of the board.

Atlantia, which is controlled by the Benetton family, owns 88% of Autostrade, with Germany’s Allianz and funds DIF, EDF Invest and China’s Silk Road Fund holding the rest.

The group also kept open an alternative plan to demerge and sell its stake in Autostrade per l’Italia unit and called an EGM on March 29 to extend to end-July a deadline for offers for the demerged stake.

(Additional reporting by Stefano Bernabei, editing by Louise Heavens and Steve Orlofsky)

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