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MAKING REWARDS WORK HARDER FOR YOUR RETAIL BANK

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James Berry

 James Berry, e-commerce director at Collinson Latitude

The digital revolution is transforming the way in which consumers interact with brands, and the retail banking sector is no exception to this. Over the past decade, the retail banking experience has evolved to deliver a more connected experience and these services have driven competitive differentiation for banks. Particularly for newer more agile entrants, like First Direct.

However, online banking, mobile banking and remote account management are now more often considered a necessity rather than a benefit for the ‘connected customer’ who expects a personalised service from their bank 24 hours a day, seven days a week.

So, the question is, as ‘connected’ banking becomes the norm, how can banks continue to differentiate themselves from the competition and maintain customer loyalty – whilst also keeping the business happy by protecting the bottom line?

James Berry, e-commerce director from reward and ancillary revenue programme provider Collinson Latitude shares his top tips for developing intelligent and personalised customer reward and redemption programmes for retail banks.

Understanding the potential of existing customers

Defining customer loyalty in the retail banking sector is difficult. Last year, a Santander report found that 58% of consumers keep the same current account for more than 10 years, while one in six keep the same account for more than 30 years – so does this make them brand loyal?

The simple answer is no. While at first glance these figures look promising, research has found that a high percentage of these ‘loyal’ customers will stay with a bank: out of habit (they have always been a customer of the bank); out of fear (they have a lot of money invested in the bank and switching is considered high risk); or because they are worried about the associated hassle of moving banks.

James Berry

James Berry

With the cost of keeping an existing customer at around 10% of the cost of acquiring a new customer, we believe that banks are missing a trick when it comes to unlocking the value (and financial gain) from their existing customer base.  By creating a reward and redemption programme that translates just one of these ‘loyal detractors’ –  staying with a bank out of habit/fear – into a ‘loyal promoter’, banks can gain £5,850 more profitability from that customer over their lifetime.

With more and more ‘new entrants’ like traditional retailers such as Marks and Spencer swooping in to offer value-add financial services to customers, how can high street banks keep up?

Step 1: By using big data for big benefit

Making sense of big data in an intelligent manner has transformed the meaning of ‘knowing your customer’ and when used effectively, big data enables organisations to understand consumer preference and predict consumer behaviour.

Data has, of course, always been an important part of any loyalty/reward program strategy, but big data allows you to profile customers, understand which ones are profitable and crucially, deliver programmes that are relevant and attainable for each and every individual. Reward programmes that are built on intelligent and responsive technology platforms aid this process by offering a 24/7 view on member behavior. This continuous insight means that the personal touch, is much more than just a one off as programmes can be continuously tweaked to make them more relevant and engaging to specific individuals.

Step 2: By tailoring rewards

Once you’ve generated all this insight, the next step is creating a portfolio of rewards that match the diversity and profile of your customer base. There is also now an ever increasing variance in terms of online savviness – from the novice, through to the digital native, giving ever more opportunities to tailor your programme, or, ever more opportunities to get it wrong.

It’s not just about selecting the right content and rewards for your members, it’s also about ensuring your customers can engage and make transactions in an environment and at a time that suits them.

Step 3: By creating beneficial partnerships

To achieve the breadth of rewards required for a relevant and engaging rewards programme, you need to create a supplier and partner base of retailers/ merchants that can support the different needs of your customers.

The good news is that the retailers and merchants want to participate, and why wouldn’t they?

  • Partners get access to often huge bases of customers, with huge opportunities to generate revenue and customer data
  • Members get a broader selection of relevant goods/ services and receive relevant, timely and exclusive offers
  • Banks/financial service organisations get happy and engaged customers and crucially – direct ROI on their loyalty programmes

Step 4: By driving long-term engagement

So now you’ve established your network of retail and merchant partners – you know exactly what your member base want and you’re seeing large numbers of customers transacting with your programme. It would be very easy to rest on your laurels, as after all, you now have engaged and happy customers. But it’s important not to let this huge investment go to waste.

The key to this is regular communication, in fact our research shows that when a programme member has completed their first initial transaction, they then become up to seven times more profitable to your business. If you’ve got the data insight right from the very beginning, and have put the right content in place, your communication will be timely, relevant and personalised and ultimately, add more revenue to your bottom line.

About Collinson Latitude

At Collinson Latitude, we unlock the value of your customer relationships by blending a unique combination of e-commerce expertise, content delivery and technology solutions.

You will benefit from increased customer engagement which drives increased revenue. Your customers will benefit from access to a wider choice of products and services.

Our track-record shows that we build successful long-term partnerships with our clients who include many leading global brands. These relationships are founded on strong, mutually beneficial performance-based commercial modelling that drives both financial targets and engagement levels.

Banking

The Next Evolution in Banking

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The Next Evolution in Banking 1

By Young Pham, Chief Strategy Officer at CI&T

Everything we know about banking is about to change. A new industry around the sharing of financial data is primed to give birth to a host of new consumer services, all thanks to Application Programming Interface (API) technology. Already known for being the safest place for money, there are opportunities for banks to expand that relationship to other aspects of the customer relationship. Banks will no longer simply be just a place to deposit and withdraw your cash, but a one-stop-shop for a range of data-sensitive services.

The passing of GDPR and the Payment Services Directive (PSD2) were the first steps in this process of banks modernising how they handled their customer data. However, incumbent institutions have so far not engaged enthusiastically. Rather, it was only after growing pressure from fintech challengers and government regulation that they were forced to open up and share their data. This should not be treated as a regulatory challenge, but rather a way to grasp the unique opportunities that banks have to reposition themselves as the most trusted resource for their customers.

Expanding offerings

It is hard to overestimate the breadth of possibilities arising from open banking, should banks choose to take advantage of this evolution. While the public rarely holds bankers in high regard, it still puts a high level of trust in banking institutions. People are more willing to hand over their sensitive data than they would be to almost any other private entity. Furthermore, banks have a unique perspective into their customers’ behaviours, needs and desires. Spending habits, income streams and risk appetites are just a few examples of the data that no other institution can tap in to.

There is certainly appetite to expand offerings. In our recent study of business banking customers, over 68% of respondents indicated that they were open to their financial institution providing digital non-banking services.  This includes services such as tax support, managing payroll, or invoicing to help them with their day-to-day businesses.

More banks should consider how open banking can maximise their digital capabilities and create a greater range of services for customers to enjoy. Such offerings could be tailored according to each bank and their particular customer audience. For instance, banks could offer everyday services for most users, such as insurance for individuals or business management tools for business accounts. Alternatively, banks could offer more exclusive and specialised services for high net worth individuals to meet their specific needs, such as art appraisal and investment management.

The idea that a firm can expand its offering into new verticals is hardly new. Many of the world’s largest tech companies, such as Apple and Amazon, already offer diverse products including hardware, software, entertainment and cloud services. They are able to do this thanks to the vast quantities of data they have gathered, which provide invaluable insights into consumer behaviour and demand. Banks are in prime position to follow the example of these top tier tech companies thanks to their monopoly on key financial data.

Disruptors vs incumbents

The business model described above is already being adopted by numerous challenger banks. These firms have led the innovative charge thus far, thanks largely to their agility afforded by their smaller size. Indeed, some fintech banks already provide a range of non-banking services to their customers. Revolut, for instance, offers users several types of travel insurance as well as access to airport lounges as part of its premium service for a monthly subscription.

These offerings are not a sign that the challenger banks are about to topple the large incumbents. Rather, these disruptors have always flagged the gaps in the market that larger institutions have been too slow to fill. It is now up to the established banks to learn from their example.

While challenger banks may have a first-mover advantage for these services, the incumbents have two key advantages: capital and credibility. Firstly, the top banks have enough cash to fund this overhaul of their business models. While the challengers have been able to afford to do so in recent years, they lack the reserves to tide them over during economic downturns such as the current pandemic.

Secondly, even though challenger banks are perceived as more convenient and are less vilified than traditional banks, the public still trusts the latter. Many of these large banks can point to their extended histories and long-term investment success – accolades young challengers simply cannot match. In short, people don’t have to like their bank to trust them with their cash and their data. These two advantages strongly suggest that large banks are better positioned to take advantage of the open banking business model in the long term, despite being slower to adopt and adapt.

What’s next?

All this opportunity is within reach. We already have the technical capabilities for data sharing, and the regulatory framework is not insurmountable. Rather, the key for this evolution of the sector lies in banks’ appetite for risk and willingness to reinvent their business model.

Banks need to take a leap of faith and leave behind the business paradigm to which they’ve become accustomed. They should embrace transparency, run towards regulation and take advantage of opportunities to invest in these areas or collaborate with outside technology firms. Only then will banks be able to make the most of their data assets, creating value for the customer and further strengthening the relationship.

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Banking

Banks talk a good game, but are bankrupt when it comes to change and innovation

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Banks talk a good game, but are bankrupt when it comes to change and innovation 2

By Erich Gerber, SVP EMEA & APJ, TIBCO Software

You hear all the time about the incredible pace of change in technology and the way that it affects business, but sometimes we kid ourselves about the real speed of that change and the depth of its effects. Retail banking is a perfect example to illustrate the yawning chasm between the illusion and the less attractive reality. In this article, I want to provide a critique of the banking sector and its failure to change fundamentally and to modernise.

Banking is an old sector: the Banca Monte dei Paschi di Siena has its roots in the 15th century and the oldest UK banks go back to the 17th century. We often talk about legacy holding companies back, restricting their speed of operations and hampering their ability to adapt. Well, established banks have legacy in spades.

They also have cultural challenges. The old saying has it that something is “safe as the Bank of England” and that is a standard for security. But today we need banks to be more dynamic and represent something more than being a deposit box for our wealth. Consumers are accustomed to the superb customer experiences in entertainment (Spotify), devices (Apple), retail (Amazon), travel (Uber) and much else. Surveys show that they want their banks to be responsive, easy to use and available across multiple channels. They’d like banks to be secure but also to be advisors, enable flexible movement of assets between accounts, provide useful data analytics, be cloud- and mobile-friendly and offer deals that are specifically targeted at their interests.

S-l-o-w progress

At their core, banks now must become digital enterprises but, frankly, it has been slow going. As Deloitte observed: “While many banks are experimenting with digital, most have yet to make consistent, sustained and bold moves toward thorough, technology-enabled transformation.”

Erich Gerber

Erich Gerber

We all know that retail banking has changed significantly: you can see that in the proliferation of apps and the fact that, in pre-pandemic times, the morning and evening commute are peak times for transactions as people arrange their finances while sitting in trains, buses and subways. Banking has become a virtual, often mobile business, thanks to new tech-literate consumers pushing banks in that direction. But my fear is that the banks aren’t moving even nearly fast enough and that’s bad for us as consumers and bad for the banks themselves.

Banks are under pressure to change because challengers don’t have the legacy constraints of incumbents and because PSD2 and open banking regulations are having the intended effect of promoting banking as a service, delivering transparency and greater competition.

Attend any business technology conference and banks will talk about their digital transformations and customer experience breakthroughs, but it’s my contention that a lot of this work is more window-dressing than platform building. Or, to put it another way, banks are injecting Botox, rather than undergoing the open-heart surgery that they really need. It’s a case of ‘look: fluffy kittens and shiny baubles’ in the form of apps and websites, but the underlying platforms remain old and creaking and that means that the banking incumbents are hampered.

To be fair, I have lots of sympathy here. They simply can’t move as fast as the challenger banks that have had the luxury of starting their infrastructure from scratch and sooner or later that will come back and bite them. Look, for example, at cloud platforms where only 10 or 20 percent of infrastructure has been migrated despite promises of cloud-first strategies and the banking data centres where monolithic on-prem hardware still reigns.

You feel that slowness of action in your interactions with banks that communicate only via issued statements, letters notifying you of changes to Ts and Cs, and threats when you go into the red. Inertia is nothing new in banking either: we like to think that technology change happens in the blink of an eye but in banking contactless NFC took the best part of 20 years to go mainstream.

This is the dirty secret of banks. They see the need to change but remain shackled. Why are the banks so slow? Historically, because it was hard for competitors to gain banking licences and the capital to really challenge so there was no catalyst or mandate for change. Also, because change is tough and fear of downtime or a security compromise to critical systems is very real. More recently, because internal wars in organisations set roundheads against cavaliers, the risk-averse against the bold, resulting in impasse and frustration.

I said change is tough and that’s why banks need to power through on the basis of Winston Churchill’s wisdom that ‘if you’re going through hell, keep going.” How? By a combination of maniacal focus on expunging legacy systems, placing maximum emphasis on superb customer interaction experiences and digitally enabling anything that moves.

Right now, the banks are surviving, not thriving; they’re rabbits blinking into the headlights of approaching traffic, frozen in the moment. But they need to disrupt themselves before others do it to them: change is painful but not as painful as the alternative. They have to do much more or they will see a decline in their fortunes due to their bankrupt capacity for innovation and their inflexible infrastructures.

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Banking

Vietnamese National Citizen Bank Rises to Excellence with Three Global Financial Awards

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Hanoi, Vietnam – Global Banking & Finance Review is proud to announce the sweeping victory of National Citizen Bank in the 2020 Global Banking & Finance Awards®. The bank was recently presented with three prestigious global financial awards: Best Place to Work Vietnam 2020, Fastest Growing Retail Bank Vietnam 2020, and Best Investor Relations Bank Vietnam 2020. The Global Banking & Finance Awards® recognize the innovation, enterprise, method, progressive and influential transformations that transpire every year within the global finance community. National Citizen Bank would like to extend their thanks and appreciation to the community and their customers for their continuous loyalty and support throughout the last 25 years.

Vietnamese National Citizen Bank Rises to Excellence with Three Global Financial Awards 3

 

The National Citizen Bank was recognized for its all-inclusive professional working environment and ongoing staff development that enhances its internal communications and employee relations. Throughout the last 25 years, National Citizen Bank has focused on the core fundamentals of regulatory modifications with the underlying goal of dividing the volume of both business and administrative tasks. As a result of this, the bank has successfully strengthened its staff’s capacity to obtain, manage outstanding liabilities, and acquire assets to negotiate and retrieve capital efficiently and reliably.

When asked what allowed the bank to triumph against the fierce competition, Wanda Rich, Editor for Global Banking & Finance vocalized, “one of the key factors that stood out to the committee is that National Citizen Bank strives to maintain and maximize profit to shareholders through the implementation of stable, sustainable business operations and advanced production methods. The bank has also remained stable, positive, and had a high growth rate in all of its activities, which is not often seen; however, it clearly indicates how prestigious and overall accomplished they are. They should be exceptionally proud of all three awards.”

About National Citizen Bank

The National Citizen Bank was initially established as a rural bank in 1995 under the name Bank of Kien River. The bank optimized its competitive standing within the global financial industry, later transforming into an urban banking institution where they reinstated their name as the National Citizens Bank. With a team of highly professional financial experts and customer service representatives, the bank embraces each customer’s diverse needs to ensure customary, efficient, and trustworthy experiences from start to finish. Over the years, the bank has prided itself on its continued emphasis on risk management and global business relations with investors, customers, and partners. For more information, please visit the National Citizen Bank.

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