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USING CODE HALOS TO IMPROVE BANKS’ NET PROMOTER SCORE

Banking

Tony Virdi, VP of Banking and Financial Services in the UK & Ireland, Cognizant

A company’s Net Promoter Score (NPS) has become an important measure of customer satisfaction. It asks them a simple question: how likely they are to recommend that company to a friend. The responses split the audience into three groups: promoters, passives and detractors. By subtracting the percentage of detractors from the promoters, banks obtain their NPS. NPS has been a valued metric in many consumer-facing industries for several years, but its importance and influence in financial services is growing fast.

Everyone wants a better NPS, and the secret to achieving this is simple: know your customers better. Improved understanding of customers means banks can deliver an enhanced service; as a result, loyalty will potentially increase as their clients are more likely to be an advocate.

NPS’ emergence in financial services, and particularly retail banking, is partly due to increasing competition and a greater ease with which customers can switch provider. Traditionally, NPS has been seen as less relevant in industries where there are significant barriers or costs associated with changing to a rival provider, since peer recommendations are not such an incentive to change. In the UK at least, several changes are making it much easier for consumers to switch banks. Firstly, a Parliamentary Commission on Banking Standards, which reviewed standards and culture in the country’s banking sector back in 2013, resulted in a new scheme designed to help customers switch current account provider by removing penalty charges. One year after the scheme was introduced, current account switching increased by 19%, with over a million customers moving. Further changes, including the ability to port account numbers from one provider to another, are planned in the years ahead. As it gets easier for customers to switch, exceptional service and product innovation become more important in making sure customers are not tempted by a rival.

Tony Virdi

Tony Virdi

Secondly, consumer behaviour has been altered significantly by the rise of social media and mobile technology. Today’s banking customers are always connected, always online and heavily influenced by social recommendations and word of mouth. In years gone by, customers’ frustrations or bad experiences with a bank would largely be limited to their immediate personal network. Now anyone who has problems with their bank can broadcast their complaints much further. If several customers are experiencing the same problem at once and all begin talking about it online, the issue can escalate into a major, highly visible reputational crisis that lingers in customers’ minds – such as when a glitch suffered by a bank in December 2013 left customers unable to use their debit or credit cards on ‘Cyber Monday’, one of the busiest online shopping days of the year. By 9pm on the day, over 11,000 social media posts complaining about the fault had been shared online – not a great advertisement for current or potential new customers.

In order to address these modern challenges and improve their NPS, banks must turn to the wealth of digital information that surrounds their customers. Every digital click, swipe, “like”, buy, comment and search produces a unique virtual identity around every one of us – what we at Cognizant call a Code Halo. Code Halos offer unprecedented insight into consumers’ behaviour, preferences and needs. By tapping into this data and analysing it, banks can understand their customers better, react faster when needed and anticipate their future requirements.

Social media has a massive part to play here. Banks’ own social media channels have become critical to customer responsiveness and therefore NPS. In the event of any unexpected problems, the social detractors that emerge have to be tackled quickly and ideally turned into advocates or even promoters. To do this, banks have to actively monitor for and identify customers talking about a poor experience or problem and provide direct, timely support. It is no longer acceptable to ignore these posts, or send a stock holding statement – customers want personalised responses and regular, informative updates. Even if the issue cannot be resolved right away, good responsiveness can calm detractors down and prevent the problem being broadcast more widely. If a bank can immediately solve an issue reported on social media, the original detractor could even be turned around completely and made into a promoter if they share the positive resolution to their problem.

In the longer term, analysing banking customers’ Code Halos can improve product development and service innovation.  Analysis on a macro scale can reveal evolving customer habits and preferences, enabling a bank to meet new requirements as they emerge, and crucially, before its rivals can react. A new video banking service recently announced in the UK takes full advantage of the huge popularity of smartphones, tablets and ever-changing disruptive technologies to offer its customers face-to-face, online service. This kind of innovation comes from understanding how customer behaviour is evolving alongside technology, and then developing new solutions and experiences to match. Again, by providing innovative services that customers value, a bank is more likely to retain them and turn them into promoters.

The importance of Code Halo thinking will keep growing as consumers continue to become more connected and social. For example, the current boom in wearable technology and life tracking might lead to a whole new range of insights that could drive a new wave of banking services. The key for banks is to never stop listening and analysing the data at their door step. By harnessing it, they can turn more of their customers into active promoters, and improve their increasingly important NPS.

Banking

UBX appoints new Chief Investment Officer

In line with its strategy to explore and invest in companies and platforms of the future, UBX—the Fintech and Corporate Venture Capital arm of Union Bank of the Philippines (UnionBank) — is announcing the appointment of Matthew Kolling as the company’s Chief Investment Officer (CIO).

Matt Kolling

Matt Kolling

As CIO, Kolling will be managing UBX’s Corporate Venture Capital (CVC) fund. He will also play a key role in raising capital for UBX while assisting the company in key corporate transactions, including the structuring of joint ventures and acquisitions.

Prior to his appointment at UBX, Kolling has been Head of Venture Investments at Aboitiz & Company since 2019, wherein he had been working with UBX on investment portfolio decisions. Before that, he held senior positions in Private Equity, Venture Capital, and Investment Banking at firms such as Providence Equity Partners and Morgan Stanley in New York.

Kolling has more than 20 years of experience in managing investments and deals in the Technology and Telecommunications industries and is active in Venture Capital and startup communities in the Philippines and the Southeast Asian region. He currently chairs the Manila Angel Investors Network, among others.

“We at UBX are excited to welcome Matt as our new CIO. We firmly believe that Matt will be instrumental in driving value creation opportunities, both within the CVC fund and our corporate ventures. We look forward to working with him as we fulfill UBX’s vision of a future where banking services are embedded into everyday experiences that matter,” said UBX president and CEO John Januszczak.

Meanwhile, UnionBank president and CEO Edwin Bautista said, “The addition of world-class talents in our pool reinforces our strategy to future-proof the organization and our business as we prepare for many new opportunities that come with the changing times.”

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Banking

It’s all relative: Older generations feel helping out the family financially is more important since the Covid-19 outbreak

It’s all relative: Older generations feel helping out the family financially is more important since the Covid-19 outbreak 1

Before Covid, 23% of people prioritised helping younger generations out financially, that increased to a third as a result of the pandemic

A recent survey* conducted by Hodge has revealed that the Covid pandemic has led to more people wanting to help younger family members financially.

A third (31%)** of those questioned said that since the Covid outbreak giving a financial gift to children or grandchildren is more important to them, compared to 23% who said it was a priority before the pandemic.

The traditional “Bank of Mum and Dad” is still very much open for financial help, with parents being responsible for 72% of the gifts, but the study also revealed that financial gifts can come from all corners of the family – including children (14%) and siblings (14%).

The survey also found that a third of people have received a financial gift from family, with those aged between 25-34 as the most likely to receive

The most popular reason for gifting money to family is for special occasions such as a quarter of gifts were given for weddings and birthdays but 11% of people have received money to help with big purchases such as cars and houses. In addition, 19% of people have received help with day to day finances, with around 14% of those receiving a gift have done so to pay off debt.

Emma Graham, Business Development Director at Hodge, said of the research: “Our study showed that, as a nation, we all want to help our family out when it comes to money. And whilst we all think of the Bank of Mum and Dad or Gran and Grandad as a traditional source, we were surprised to see that 14% of brothers and sisters are also helping out.”

The findings come from a recent intergenerational study conducted by Hodge, who interviewed over 3000 people about their attitudes towards finances and their aspirations for the future. The full research findings can be found at https://hodgebank.co.uk/2020/05/19/money-its-all-relative/.

As part of the study, people were also asked about paying back the gift, with 40% of beneficiaries expecting to pay their parents back, but this dropped to 28% if the gift came from grandparents.

From the gift donor’s perspective, 26% expect the gift to be paid back, however just 15% of grandparents expected the money back.

Hodge has produced a set of guides on how families can navigate the tricky subject of giving financial gifts within a family, as well as the considerations and steps that be families should think about taking before a gift is given, such as is it a loan or a gift and thinking about contingencies if the family member’s circumstances change. The guides can be found here: https://hodgebank.co.uk/news/

Emma continued: “It’s clear that families feel strongly about offering financial support to each other if they are able and this has increased since the Covid pandemic. Before Covid, 23% of people prioritised helping their families out financially in the next five years. Since the Covid-19 outbreak that has increased to a third of people saying helping a family member financially had become more important.

“So, it is clear that the Covid-19 lockdown and subsequent predicted economic downturn, has led to more families looking to share wealth to help younger children or grandchildren during this difficult time. Many people may look to Later Life mortgages, where many products have reduced their rates and have flexible lending criteria, to help out a loved during these difficult times.”

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Banking

New report identifies the factors which will determine SMEs’ chances of a successful COVID recovery

New report identifies the factors which will determine SMEs’ chances of a successful COVID recovery 2

·         Analysis of the performance of over 1,000 UK small and medium-sized businesses by Allica Bank provides roadmap for SMEs 

·         Regular training, an openness to innovation, and a clear vision all contribute heavily to an SMEs’ chances of success  

·         Allica Bank has launched a programme of free workshops to expand on the findings and support business owners 

Business bank, Allica Bank has combined data and insight from over 1,000 UK SMEs with a multiple regression analysis to determine what factors most closely aligned with an SMEs’ chances of success and separated the highest-performing businesses from their peers. These ‘rules for success’ have been compiled from the research data to support British businesses as they look to chart a course to post-Covid recovery.  

The full report identifies six behaviours for small and medium businesses to follow, to maximise their chances of a successful COVID recovery. The six top-line rules emphasised by the data were: 

Rule 1: SMEs should regularly train staff 

Of the top-performing businesses analysed, 47% provided training for employees at least on a quarterly basis, compared to just 32% of other businesses. Regular employee training was linked closely to success by the model.  

Despite this, many small businesses have neglected training and nearly half (46%) of the small businesses analysed only provide training for employees about once a year or less often. This included 15% that never provide employer-funded training. This discrepancy could represent a significant opportunity for small businesses to unlock the potential of their employees and thrive in the post-Covid economy. 

Rule 2: SMEs need to focus on innovation and technology 

Looking again to the best performing businesses, 76% were found to either continually (39%) or often (37%) be considering new opportunities for technology in their business. This is compared to only 51% for businesses considered to be outside of the top ranks, out of which only 27% admitted to continually looking for new technology opportunities. 

Rule 3: Small business must have a formal, long-term vision  

Nearly two thirds (66%) of the most successful businesses in the survey had a formal, long-term vision, compared to just 50% of businesses outside the top 100. Looking to the businesses that scored the lowest on the SME Performance index, only 37% claimed to have a formal, long-term vision. 

Rule 4: SMEs should broaden their customer reach and find new markets 

Of the top-performing businesses, 65% of these have overseas customers compared to just 40% of the worst performing businesses. Among the best performing SMEs, over a third (34%) identified international expansion as one of the top three drivers for their success. 

Rule 5: SMEs need to develop reinvestment plans 

22% of the best performing SMEs reinvested some of their profits into the business in the past three years with an average 9% of profits being redeployed. Tellingly, this is nearly double what other businesses admit to reinvesting in their business (5%). 

Rule 6: SMEs should engage with local business organisations and networks  

Of the top 100 SMEs, 30% had obtained external credit to expand over the past three years (compared to 24% of other businesses). Meanwhile, only 16% of all other SMEs had engaged with local enterprise partnerships or growth hubs in the past three years (compared to 23% of the top 100 SMEs). 

Chris Weller, Chief Commercial Officer, Allica Bank, said: 

“All small businesses are different, as are all small business owners, but one trait they share is an innovative resilience. Whilst the coming months and years will undoubtedly continue to present extreme challenges, there is no doubt that small and medium sized businesses across the UK will rise to meet them head on.  

“To give them the best chance to succeed, though, they need to be equipped with the right tools. There is certainly no silver bullet or panacea for every small business, but as this study has found, there are a number of common factors found in the most successful businesses that allow small enterprises to thrive and that they can consider individually for their business.  

“This research has identified common ‘rules for success’ that speak to every aspect of running a business, not just the financials. Once we saw these results, we wanted to use them to help small businesses begin to re-build and prosper, by outlining common factors and then examining how best they can be practically applied to businesses in all sectors of the economy.  

“Small business owners and their employees have been hit hard by the crisis, but they have the drive and resourcefulness to breathe new life into the economy and bring energy to post-Covid Britain. Our commitment at Allica Bank is to give them the support they need to do so, every step of the way.”

The full report contains a wealth of additional data and insight into each of these topics. As part of its mission to empower small businesses, Allica Bank is making the findings freely available and running a series of free online workshops with relevant partner organisations for businesses to attend.

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