Redesigning the Banking Experience with Customer Value Management

Banks are equally bad everywhere. A bank customer in US or UK faces the same set of challenges faced by a bank customer in India or Mexico. In a 2017 survey, carried out by the Financial Brand, it was found that most banks do not have a formal customer experience plan in place. In terms of key drivers of customer experience, technology ranked 5th and channel ranked 9th, below branch personnel which was placed 4th. The importance given to branch banking over technology and channels in an increasingly digital world can only be put down to misplaced priorities in the banking sector.

 Banks have a strong reservoir of trust, to be sure, but they seem to be losing ground, with PayPal and Amazon nearly as high as banks in recent study by Bain & Company. Just as intriguing is the increasing willingness of the respondents in India, Mexico, US and UK to run their finances through a fin-tech firm according to the study.  Should banks worry? They do appear to be vulnerable to fin-tech companies providing better customer value propositions with data enabled offerings.

Amit Sanyal
Amit Sanyal

Compared to the rapid pace of innovation in other industries, banking foray into the digital sphere can be best described as rudimentary.  In a way we can say that the digital revolution in banking has just begun, with banks offering mobile apps and high quality websites to their customers, allowing customers the ability to open an account, checking their account balances, and making payments However, all said and done, all these changes are perfunctory, barely skimming the surface considering the wealth of data and customer goodwill at the disposal of the bank.

For a long time, the banking industry was resistant to change, as it was in a comfortable position, with a captive market, little or no competition, robust customer relationships and no pressure to change. Now, new competitors are flooding the industry, with digital only agile models, driving rapid innovations in product and service, leaving banks struggling to regain their loyalty as well as market share.

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 The customer’s attitude towards banking has also changed, adding insult to injury.  They are comparing their banking experience to other disrupted industries (Netflix, Amazon) and finding banks falling short of their expectations. In fact it would be fair to say, that even today, after many years of digitization, bank customers are still waiting for that new banking experience, touted as revolutionary and transformational, with customer centricity at the heart of everything.

Therefore, the biggest question that banks have to address today is what is next after digital banking? This comes from the realization that they have to dive much, much deeper than their perfunctory digital offerings allow, in-order to first understand and then serve their customers. Ideally Retail- analytics should have transformed banking by now but it has not. However, the rise of fin-tech and the digital customer have renewed focus on big data, AI, Machine Learning. Here, it is worth mentioning that banks have laid down stringent requirements for account opening, which makes the customer database more robust than the customer database maintained by telecom companies. This data can be used to create a better customer profile, helping banks to segment customers and provide individualized engagement to each of them.

Banking CVM – The next step after digital       

Banking Customer Value Management (CVM) help banks to understand their customer and fulfill their needs with contextualized offerings that are mapped to customer personas. CVM uses customer data to drive sentiment analysis, 360 degree customer profiling, customer segmentation, next best offers, and channel management.

Social media platform are great sources of feedback for improvement opportunities, and banks should know how to leverage this information. In this regard, advances in the field of Natural Language Processing, machine learning, text analytics are helping banks to uncover customer sentiments from structured as well as unstructured data, allowing them to address customer issues quickly.

Banks have much to gain by gaining a 360 degree understanding of their customer, as it gives them the actionable insights for fine tuning marketing campaigns, improving customer’s engagement with the product, predicting customer behaviour and stopping churn before it is too late.

Similarly, customer segmentation allows banks to provide a higher level of personalization, assess customer’s pricing sensitivity, and build relationship with their valuable customers. For example, banks can used card usage data to design personalized loyalty programs, where customers are offered cash back offers according to their card usage. Similarly, banks can optimize their revenues by testing customers across multiple pricing points, and applying the one that is most optimized. Pricing segmentation also allows banks to give preferential treatment to their most valuable customers.

Next best offers (NBO) provide banks with an opportunity to re-engage with their customers and provide a cross sell or upsell opportunity. It helps to increase loyalty by providing relevant offers in a timely manner. NBO helps the bank in identifying products or services customers are most likely to purchase next allowing its marketing managers to run campaigns like Amazon’s “you may like to buy next”.

Finally, CVM keeps track of customer journey, helping in the understanding of channel effectiveness, driving more relevant content, and optimizing conversions.

Benefits

Shift to personalized banking

Banking CVM provides a shift from mass marketing to n=1 marketing, where services are tailored according to user personas.

Increasing loyalty

CVM provides valuable insights on customer’s lifestyle by analyzing transactional data. This information can be used to design loyalty programs with vertical partners that reflect customer lifestyles. By allowing the customer to indulge in activities and content of their choice, the bank improves customer loyalty.

New revenue through cross sell and upsell opportunities 

Similarly, it will help the bank to realize new revenue streams through up-sell and cross sell opportunities based on customer segmentation, Next best offers.

Identifying the right channel

In today’s omni-channel world, the customer is leaving his footprint on multiple channels like mobile, social media, web, chat, branch and so on. Big data analytics analyzes customer journey in order to understand where the sale is taking place in order to make the conversion funnel better and improve marketing effectiveness by driving the right content on the right channel.

Allows banks to plan for the long haul   

Customer segmentation allow banks to take a long term business view by targeting customer segments, like students, who are likely to evolve into a profitable segment in the long run.

Conclusion

According to Financial Brand, Analytics is the CX initiative that is most challenging for brands. It further goes on to say that most bank marketers are using the same outdated data sources and marketing methodologies they have used for decades, which is only alienating their customers further. In this light bank needs CVM to utilize data at the same level of sophistication of digital disruptors like Netflix or Amazon to drive higher customer engagement and revenues.

 About Author

Amit Sanyal is the Chief Operating Officer of the Consumer Value Solutions at Comviva, a business focused on Customer Value & Life-cycle Management solutions in the telecom space. A marketer at heart and with over 11 years of work experience in the telecom and internet service provider spaces, Amit has also worked with various industry leaders such as Bharti Airtel and Sify Technologies in a multitude of marketing functions across the Usage and Revenue/Retention and Value Added Services domains. A PGDM (Marketing & Finance) holder from TAPMI, Manipal, Amit graduated from the University of Delhi with an Honours degree in Economics.