By John Fleming, Marketing director Webtrends EMEA
Customers are increasingly interacting with their banks through remote channels, over the internet and mobile devices. Over two-thirds of UK customers now conduct the majority of their banking over the internet – a three-fold increase from 2005*. Research from the Centre for Economics and Business Research (CEBR) said the value of mobile transactions will double in the coming years, from £1.7bn a week last year to £3.4bn in 2020. The sum of all internet banking transactions will total £9.4bn a week, up from £5.8bn in 2013. With fewer transactions now requiring any ‘human’ contact cost-efficiency levels have dramatically improved. People have been sold on the idea that everything can be done digitally.
But contrast this to the view that as internet usage has increased, customers have now become better-informed and more mobile. The brand loyalty that once existed, where people rarely switched current accounts in a lifetime, is changing with an increasing number of us showing the confidence to vote with our feet, particularly when a digital experience or service didn’t quite meet expectations. As a Microsoft study stated last year, attention spans have dramatically decreased over the last 15 years from 12 to 8 seconds, this means consumers will readily shun digital channels if they came across any snags or shortcomings. Some of these will prefer to head straight for the High Street [if a physical branch existed] to speak to the calming voice of a real person.
However, there is more to it and herein lies the dichotomy. Consumers aren’t abandoning digital once they get frustrated; many want more personal interactions when dealing with banking matters. And people don’t necessarily want to visit a physical branch; they just have an affinity for a personal service, remembering the days when bank managers knew them personally. Is there a way for this level of service to be delivered digitally, one that marries old with new?
Making it personal – differentiating in the digital world
With established banks rapidly closing branches, as customers move online, there is a real opportunity to differentiate using digital personalisation to support the acquisition and retention of customers. Emerging and challenger players, like Virgin Money, Metro and Atom, (billed as the UK’s first digital-only bank) are already capitalising on their technological agility with personalisation spearheading their offerings.
Capitalising on Big data, analytics and contextual personalisation gives you the ability to reach different customers with different creative messages or offers; allowing banks to tailor executions based on demographics, interests, location or even savings and investment history. Imagine being able to reach millions of customers but each with something personally relevant and interesting.
Using analytics a bank could identify customers with “packaged-accounts” who were paying twice for their mobile phone or breakdown cover, before they went online, contacted the call centre or met them in person. The bank could use analytics and personalisation to identify and contact every customer paying for insurance products twice to alert them they were already covered and drop a personal message of that nature in their inbox or browser. The simple gesture of making a customer aware of their spending error would enhance reputation and trust no end.
What about if an existing savings customer was searching for loan rates? Surely that would indicate that they were looking to see if they have the best rate and potentially move their savings? Dependant on how much savings they had, a personalised page offering preferential rates for “existing high value customers” could replace the standard savings rates with a call to action to sign up for the better rates. Over time, through honesty and open dialogue, you would expect to reduce the savings attrition rate.
Making IT happen
While we’ve only scratched the surface in terms of the benefits to contextual personalisation delivering a personal banking experience that differentiates and drives more business is going to take data, lots of it. The data tends to reside in disparate systems, each serving only one specific delivery channel or product silo. And as long as the data remains in its silo it will be extremely difficult to provide a superior and personalised banking experience. Whilst internal big-data systems can help with the volume, and the speed of the data coming into an organisation, breaking those silos is still a challenge for many.
Three or four distinct groups or departments within a bank are making this happen; IT, marketing, business intelligence and customer experience. Many financial institutions have already embarked on bringing elements from each of these areas together to create a “Digital Centre of Excellence” DCE – where the traditional departmental silos are broken down and decisions are made based on high level strategic thinking rather than the more tactical approach often taken within each department.
This brings significant benefits, the most powerful of which is using data extracted by the technology to help drive business decisions rather than the technology driving the business. It is no coincidence that banks and financial companies that adopt this model are those that are leading the way in delivering an enhanced customer experience across online and offline channels.
Even those Banks wishing to benefit from the lower operating costs offered through digital banking must think strategically and can benefit from a DCE to deliver an efficient service with a personal touch. This will have a magnetic effect on customers – attracting them firstly then and convincing them to stay.
Churn rates pose a major concern. The cost of acquiring and retaining customers is eroding much of the savings made through the switch to digital banking. Financial institutions need to rethink their approach toward customer service and personalisation needs to happen across all touchpoints on all channels, and new technologies and applications that enable this must be taken seriously.
Delivering your very ‘own’ High Street bank to your laptop, tablet, smartphone or any other device is making it personal. And while you may have all the data it is only ever valuable if you can actually do something with it.
Commerzbank to lose 1.7 million clients by 2024 – Welt am Sonntag
FRANKFURT (Reuters) – Commerzbank expects to lose 1.7 million customers by 2024 as part of its current restructuring, resulting in a 300 million euro ($364 million) hit to revenue, weekly Welt am Sonntag reported, citing sources close to the bank.
The lender hopes to offset the drop by growing its loan business as well as by expanding its business with corporate and very wealthy clients, the report said, without giving any further detail of why customer numbers were expected to decline.
It also didn’t say if any specific category of client was most likely to be lost.
Commerzbank declined to comment.
According to the bank’s website it serves around 11.6 million private and small-business customers in Germany and more than 70,000 corporate and other institutional clients worldwide, so the reported loss of customers would suggest a drop of around 15%.
The bank earlier this month reported a $3.3 billion fourth-quarter loss, sinking further into the red as it continued a major restructuring and dealt with the fallout of the COVID-19 pandemic.
The bank’s restructuring plan involves cutting 10,000 jobs and closing hundreds of branches in the hope it can remain independent.
($1 = 0.8253 euros)
(Reporting by Christoph Steitz and Tom Sims; Editing by David Holmes)
Citigroup considering divestiture of some foreign consumer units – Bloomberg Law
(Reuters) – Citigroup Inc is considering divesting some international consumer units, Bloomberg Law reported on Friday, citing people familiar with the matter.
The discussions are around divesting units across retail banking in the Asia-Pacific region, the report https://bit.ly/3pD57WP said.
“As our incoming CEO Jane Fraser said in January, we are undertaking a dispassionate and thorough review of our strategy,” a Citigroup spokesperson told Reuters.
“Many different options are being considered and we will take the right amount of time before making any decisions.”
The move, part of Fraser’s attempt to simplify the bank, can see units in South Korea, Thailand, the Philippines and Australia being divested, the Bloomberg report said.
However, no decision has been made, according to the report.
Revenue from Citi’s consumer banking business in Asia declined 15% to $1.55 billion in the fourth quarter of 2020.
The divestitures could be spaced out over time or the bank could end up keeping all of its existing units, the Bloomberg report said.
The firm is also reviewing consumer operations in Mexico, though a sale there is less likely, the report said, citing one of the people.
Last month, New York-based Citigroup beat profit estimates but issued a gloomy forecast for expenses. Finance head Mark Mason said the lender’s expenses could rise in 2021 in the range of 2% to 3%, weighing on its operating margins. (https://reut.rs/2ZwXRB1)
(Reporting by Niket Nishant in Bengaluru; Editing by Maju Samuel)
European shares end higher on strong earnings, positive data
By Sagarika Jaisinghani and Ambar Warrick
(Reuters) – Euro zone shares rose on Friday, marking a third week of gains, as data showed factory activity in February jumped to a three-year high, while upbeat quarterly earnings boosted confidence in a broader economic recovery.
The euro zone index was up 0.9%, with strong earnings from companies such as Acciona and Hermes brewing some optimism over an eventual economic recovery.
The pan-European STOXX 600 index rose 0.5%, as regional factory activity was seen reaching a three-year high on strong demand for manufactured goods at home and overseas.
Another reading showed the euro zone’s current account surplus widened in December on a rise in trade surplus and a narrower deficit in secondary income.
Still, the STOXX 600 marked small gains for the week, having dropped for the past three sessions as investor concern grew over rising inflation and a rocky COVID-19 vaccine rollout.
But basic resources stocks outpaced their peers this week with a 7% jump, as improving industrial activity across the globe drove up commodity prices.
“This week’s slightly adverse price action has all the hallmarks of a loss of momentum temporarily and not a structural turn,” said Jeffrey Halley, senior market analyst at OANDA.
“There is not a major central bank in the world thinking about taking their foot off the monetary spigot, except perhaps China. (Markets) will remain awash in zero percent central bank money through all of 2021 (and) a lot of that will head to the equity market.”
Minutes of the European Central Bank’s January meeting, released on Thursday, showed policymakers expressed fresh concerns over the euro’s strength but appeared relaxed over the recent rise in government bond yields.
The bank’s relaxed stance was justified by the euro zone economy requiring continued monetary and fiscal support, as evidenced by a contraction in the bloc’s dominant services industry in February.
The STOXX 600 has rebounded more than 50% since crashing to multi-year lows in March 2020, with hopes of a global economic rebound this year sparking demand for sectors such as energy, mining, banks and industrial goods.
London’s FTSE 100 lagged regional bourses on Friday due to a slump in January retail sales and as the pound jumped to its highest against the dollar in nearly three years. [.L] [GBP/]
French carmaker Renault tumbled more than 4% after posting a record annual loss of 8 billion euros ($9.68 billion), while food group Danone and German insurer Allianz rose following upbeat trading forecasts.
(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Sriraj Kalluvila and Shailesh Kuber)
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