Connect with us

Banking

Redesigning the Banking Experience with Customer Value Management

Published

on

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.

 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.

Banking

Citigroup considering divestiture of some foreign consumer units – Bloomberg Law

Published

on

Citigroup considering divestiture of some foreign consumer units - Bloomberg Law 1

(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)

Continue Reading

Banking

European shares end higher on strong earnings, positive data

Published

on

European shares end higher on strong earnings, positive data 2

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)

Continue Reading

Banking

ECB plans closer scrutiny of bank boards

Published

on

ECB plans closer scrutiny of bank boards 3

FRANKFURT (Reuters) – The European Central Bank plans to increase scrutiny of bank board directors and will take look more closely at diversity within management bodies, ECB supervisor Edouard Fernandez-Bollo said on Friday.

The ECB already examines the suitability of board candidates in a so-called fit and proper assessment, but rules across the 19 euro zone members vary, so the quality of these checks can be inconsistent.

The ECB plans to ask banks to undertake a suitability assessment before making appointments, and they will put greater emphasis on the candidates’ previous positions and the bank’s specific needs, Fernandez-Bollo said in a speech.

The supervisor also plans more detailed rules on how it will reassess board members once new information emerges, particularly in case of breaches related to anti-money laundering and financing of terrorism, Fernandez-Bollo added.

Fernandez-Bollo did not talk about enforcing diversity quotas, but he argued that diversity, including diversity in gender, backgrounds and experiences, improves efficiency and was thus crucial.

“Supervisors will consider furthermore all of the diversity-related aspects that are most relevant to enhancing the individual and collective leadership of boards,” he said.

“Diversity within a management body is therefore crucial … there is a lot of room for improvement in this area in European banks,” he said.

(Reporting by Balazs Koranyi, editing by Larry King)

Continue Reading
Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

Call For Entries

Global Banking and Finance Review Awards Nominations 2021
2021 Awards now open. Click Here to Nominate

Latest Articles

FTSE Russell to include 11 stocks from China's STAR Market in global benchmarks 4 FTSE Russell to include 11 stocks from China's STAR Market in global benchmarks 5
Trading11 hours ago

FTSE Russell to include 11 stocks from China’s STAR Market in global benchmarks

SHANGHAI (Reuters) – Index provider FTSE Russell will add 11 stocks from China’s STAR Market to its global benchmarks, according...

Foxconn chairman says expects "limited impact" from chip shortage on clients 6 Foxconn chairman says expects "limited impact" from chip shortage on clients 7
Business11 hours ago

Foxconn chairman says expects “limited impact” from chip shortage on clients

TAIPEI (Reuters) – The chairman of Apple Inc supplier Foxconn said on Saturday he expects his company and its clients...

Bitcoin, ether hit fresh highs 8 Bitcoin, ether hit fresh highs 9
Top Stories11 hours ago

Bitcoin, ether hit fresh highs

SINGAPORE (Reuters) – Bitcoin hit a fresh high in Asian trading on Saturday, extending a two-month rally that saw its...

UK insurers estimate to pay up to 2.5 billion pounds for coronavirus claims 10 UK insurers estimate to pay up to 2.5 billion pounds for coronavirus claims 11
Trading11 hours ago

UK insurers estimate to pay up to 2.5 billion pounds for coronavirus claims

(Reuters) – The Association of British Insurers (ABI) said on Saturday insurers are likely to pay up to 2.5 billion...

Citigroup considering divestiture of some foreign consumer units - Bloomberg Law 12 Citigroup considering divestiture of some foreign consumer units - Bloomberg Law 13
Banking11 hours ago

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...

World Bank pushing for standard vaccine contracts, more disclosure from makers 14 World Bank pushing for standard vaccine contracts, more disclosure from makers 15
Top Stories11 hours ago

World Bank pushing for standard vaccine contracts, more disclosure from makers

By Andrea Shalal WASHINGTON (Reuters) – The World Bank is working to standardize COVID-19 vaccine contracts that countries are signing...

Google to evaluate executive performance on diversity, inclusion 16 Google to evaluate executive performance on diversity, inclusion 17
Top Stories11 hours ago

Google to evaluate executive performance on diversity, inclusion

By Paresh Dave (Reuters) – Alphabet Inc’s Google will evaluate the performance of its vice presidents and above on team...

EU seeks alliance with U.S. on climate change, tech rules 18 EU seeks alliance with U.S. on climate change, tech rules 19
Business11 hours ago

EU seeks alliance with U.S. on climate change, tech rules

By Sabine Siebold and Kate Abnett BERLIN (Reuters) – Europe and the United States should join forces in the fight...

Oil extends losses as Texas prepares to ramp up output after freeze 20 Oil extends losses as Texas prepares to ramp up output after freeze 21
Trading11 hours ago

Oil extends losses as Texas prepares to ramp up output after freeze

By Devika Krishna Kumar NEW YORK (Reuters) – Oil prices fell for a second day on Friday, retreating further from...

Dollar edges lower as investors favor higher-risk currencies 22 Dollar edges lower as investors favor higher-risk currencies 23
Investing11 hours ago

Dollar edges lower as investors favor higher-risk currencies

By Stephen Culp NEW YORK (Reuters) – The dollar lost ground on Friday as market participants favored currencies associated with...

Newsletters with Secrets & Analysis. Subscribe Now