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Using data to anticipate client needs

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Using data to anticipate client needs

James Eardley, Global Director, Industry Marketing, SAP Customer Experience 

Once upon a time, the bank branch was king, and in those days of yore, bankers really knew their customers.  Not just as customers, but as people who lived in their communities and shared many of the same experiences as the bankers themselves. When they talked about banking, there was trust that the banker would propose the optimum offer based on everything he or she knew about that customer. Every interaction was personal, exchanged in the context of the moment. It was engaging and in real-time. Life was simple, the products few and the process straightforward.

But competition and the corresponding need to deliver cost efficient services began to change the way customers interacted with their banks. Branch interactions gave way to ATMs, call centres and telephony. The internet gave rise to online, email and mobile banking. Products became more numerous and sophisticated and were measured by their own P&Ls. Somewhere along the way it became less about the customer and more about the efficiency and the numbers.

Now, in the era of Digital the banking world has changed again. And in that world data rules.

Bankers simply cannot change the reality that in-person banking has drastically declined, and they cannot expect their employees to recognise the faces that come through the door since they rarely see them.  “Knowing” customers and providing a more personalised experience can only be accomplished through data and the ability to leverage that data in real-time.

Complicating that approach is the General Data Protection Regulation, and the increasing customer savviness about the uses surrounding personal data. Banks must now make sure they collect information that is appropriate and relevant and have the customer’s consent to do so.

So while data may rule, customer trust reigns and banks that are able to earn the customer’s trust/permission to capture and maintain their personal data will dominate as they will have a better understanding of their customer and be able to deliver more timely and more relevant offers and in the process capture a higher percentage of customer wallet share.

Meeting changing customer expectations

Taking their cue from digital experiences in other industries, customers now expect a more personalised and engaging banking experience centred on them. In the world of digital banking, sales processes or journeys are increasingly being dictated by the customer, and the idea of a linear sales process is an illusion confirmed by actual customer behaviour. Multiple touch-points across multiple channels inside and outside the bank lead customers on individual and unique journeys each and every time they interact with the bank. At each waypoint, customers now expect added value that is personal and relevant, taking into account not only hard data but also lifestyle.

Customers want their banks to understand them, to provide solutions tailored to them and to speak to them in a voice that is for them alone. This requires a transformation of the current product centric experience into a customer centric one that adds value and is consistent across channels.

The power of anticipating client needs

Customer-centric banks are those that provide a service that is smart, cognitive, helpful and delightful– something which is very hard to do in banking, considering that this is a very low engagement category in business.

New technologies can make this an easier feat. They allow banks to mine, aggregate and analyse huge volumes of customer data, structured and unstructured, in real-time. By implementing predictive analytics technology, banks are able to predict and satisfy customer needs, in some cases even before the customers know they have them. Banks can also draw data continuously, enabling them to achieve an in-depth understanding of each customer’s behaviour patterns.

Banks can then become trusted advisors capable of proactively warning customers ahead of time that they may need a credit product, for example, or that there may be an opportunity for a savings product – and then providing them the product they need at exactly the right time.  Using enhanced customer data, banks are even able to price products and services for the individual, and can negotiate that price in real time, taking personalisation to the ultimate level. As a result, the entire service model feels generous, warm and incredibly personal.

 Building trust paves the way for customer loyalty

The keystone to every successful relationship is trust. As demonstrated in The 2017 SAP Hybris Global Consumer Insights Report, people need to feel like they can trust the person or entity they buy from or interact with, which is why banks need to ensure there is no room for error when it comes to providing the best customer experience.The key is to put the customer first and align their organisational structure, technology and internal processes accordingly.

It is up to banks to prove themselves worthy of a trusting relationship with their customers by collecting and using data responsibly and transparently. They should also reward this trust by offering value-added experiences at all points of the customer journey, such as apps which give a full picture of a customer’s financial life in a way that is meaningful to them (categorising their spend, suggesting ways to reduce spend/save more), SMS and push notification services to warn of payments that will breach limits, and location– based notifications near airports advising on exchange rates and card protection when abroad.

With perfect execution across all touchpoints, comes perfect customer engagement. In a customer-driven world, consistent execution is the first step in creating a wholly personalised experience. In an industry known for being conservative, now is the time for to step up and own digital, to think big and take risks, before being left behind permanently in an ever-changing digital marketplace.

Business

Euro zone business activity shrank in January as lockdowns hit services

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Euro zone business activity shrank in January as lockdowns hit services 1

By Jonathan Cable

LONDON (Reuters) – Economic activity in the euro zone shrank markedly in January as lockdown restrictions to contain the coronavirus pandemic hit the bloc’s dominant service industry hard, a survey showed.

With hospitality and entertainment venues forced to remain closed across much of the continent the survey highlighted a sharp contraction in the services industry but also showed manufacturing remained strong as factories largely remained open.

IHS Markit’s flash composite PMI, seen as a good guide to economic health, fell further below the 50 mark separating growth from contraction to 47.5 in January from December’s 49.1. A Reuters poll had predicted a fall to 47.6.

“A double-dip recession for the euro zone economy is looking increasingly inevitable as tighter COVID-19 restrictions took a further toll on businesses in January,” said Chris Williamson, chief business economist at IHS Markit.

“Some encouragement comes from the downturn being less severe than in the spring of last year, reflecting the ongoing relative resilience of manufacturing, rising demand for exported goods and the lockdown measures having been less stringent on average than last year.”

The bloc’s economy was expected to grow 0.6% this quarter, a Reuters poll showed earlier this week, and will return to its pre-COVID-19 level within two years on hopes the rollout of vaccines will allow a return to some form of normality. [ECILT/EU]

A PMI covering the bloc’s dominant service industry dropped to 45.0 from 46.4, exceeding expectations in a Reuters poll that had predicted a steeper fall to 44.5 and still a long way from historic lows at the start of the pandemic.

With activity still in decline and restrictions likely to be in place for some time yet, services firms were forced to chop their charges. The output price index fell to 46.9 from 48.4, its lowest reading since June.

That will be disappointing for policymakers at the European Central Bank – who on Thursday left policy unchanged – as uncomfortably low inflation has been a thorn in the ECB’s side for years.

Factory activity remained strong and the manufacturing PMI held well above breakeven at 54.7, albeit weaker than December’s 55.2. The Reuters poll had predicted a drop to 54.5.

An index measuring output which feeds into the composite PMI fell to 54.5 from 56.3.

But despite strong demand factories again cut headcount, as they have every month since May 2019. The employment index fell to 48.9 from 49.2.

As immunisation programmes are being ramped up after a slow start in Europe optimism about the coming year remained strong. The composite future output index dipped to 63.6 from December’s near three-year high of 64.5.

“The roll out of vaccines has meanwhile helped sustain a strong degree of confidence about prospects for the year ahead, though the recent rise in virus case numbers has caused some pull-back in optimism,” Williamson said.

(Reporting by Jonathan Cable; Editing by Toby Chopra)

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Volkswagen’s profit halves, but deliveries recovering

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Volkswagen's profit halves, but deliveries recovering 2

BERLIN (Reuters) – Volkswagen reported a nearly 50% drop in its 2020 adjusted operating profit on Friday but said car deliveries had recovered strongly in the fourth quarter, lifting its shares.

The world’s largest carmaker said full-year operating profit, excluding costs related to its diesel emissions scandal, came in at 10 billion euros ($12.2 billion), compared with 19.3 billion in 2019.

Net cash flow at its automotive division was around 6 billion euros and car deliveries picked up towards the end of the year, the German group said in a statement.

“The deliveries to customers of the Volkswagen Group continued to recover strongly in the fourth quarter and even exceeded the deliveries of the third quarter 2020,” it said.

Volkswagen’s shares, which had been down as much as 2%, turned positive and were up 1.5% at 164.32 euros by 1158 GMT.

Sales at the automaker rose 1.7% in December, at a time when new car registrations in Europe dropped nearly 4%, data from the European Automobile Manufacturers’ Association showed.

Like its rivals, Volkswagen is facing several challenges due to the coronavirus pandemic as well as a global shortage of chips needed for production.

It also sees tough competition in developing electrified and self-driving cars. The merger of Fiat Chrysler and Peugeot-owner PSA to create the world’s fourth-biggest automaker Stellantis adds to the pressure.

Volkswagen said on Thursday it missed EU targets on carbon dioxide (CO2) emissions from its passenger car fleet last year and faces a fine of more than 100 million euros.

The group is expected to release detailed 2020 figures on March 16.

($1 = 0.8215 euros)

(Reporting by Kirsti Knolle; Editing by Maria Sheahan and Mark Potter)

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Global chip shortage hits China’s bitcoin mining sector

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Global chip shortage hits China's bitcoin mining sector 3

By Samuel Shen and Alun John

SHANGHAI/HONG KONG (Reuters) – A global chip shortage is choking the production of machines used to “mine” bitcoin, a sector dominated by China, sending prices of the computer equipment soaring as a surge in the cryptocurrency drives demand.

The scramble is pricing out smaller miners and accelerating an industry consolidation that could see deep-pocketed players, many outside China, profit from the bitcoin bull run.

Bitcoin mining is closely watched by traders and users of the world’s largest cryptocurrency, as the amount of bitcoin they make and sell into the market affects its supply and price.

Trading around $32,000 on Friday, bitcoin is down 20% from the record highs it struck two weeks ago but still up some 700% from its March low of $3,850.

“There are not enough chips to support the production of mining rigs,” said Alex Ao, vice president of Innosilicon, a chip designer and major provider of mining equipment.

Bitcoin miners use increasingly powerful, specially-designed computer equipment, or rigs, to verify bitcoin transactions in a process which produces newly minted bitcoins.

Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co, the main producers of specially designed chips used in mining rigs, would also prioritise supplies to sectors such as consumer electronics, whose chip demand is seen as more stable, Ao said.

The global chip shortage is disrupting production across a global array of products, including automobiles, laptops and mobile phones. [L1N2JP2MY]

Mining’s profitability depends on bitcoin’s price, the cost of the electricity used to power the rig, the rig’s efficiency, and how much computing power is needed to mine a bitcoin.

Demand for rigs has boomed as bitcoin prices soared, said Gordon Chen, co-founder of cryptocurrency asset manager and miner GMR.

“When gold prices jump, you need more shovels. When milk prices rise, you want more cows.”

CONSOLIDATION

Lei Tong, managing director of financial services at Babel Finance, which lends to miners, said that “almost all major miners are scouring the market for rigs, and they are willing to pay high prices for second-hand machines.”

“Purchase volumes from North America have been huge, squeezing supply in China,” he said, adding that many miners are placing orders for products that can only be delivered in August and September.

Most of the products of Bitmain, one of the biggest rig makers in China, are sold out, according the company’s website.

A sales manager at Jiangsu Haifanxin Technology, a rig merchant, said prices on the second-hand market have jumped 50% to 60% over the past year, while prices of new equipment more than doubled. High-end, second-hand mining machines were quoted around $5,000.

“It’s natural if you look at how much bitcoin has risen,” said the manager, who identified himself on by his surname Li.

The cryptocurrency surge is affecting who is able to mine.

The increasing cost of investment is eliminating smaller players, said Raymond Yuan, founder of Atlas Mining, which owns one of China’s biggest mining business.

“Institutional investors benefit from both large scale and proficiency in management whereas retail investors who couldn’t keep up will be weeded out,” said Yuan, whose company has invested over $500 million in cryptocurrency mining and plans to keep investing heavily.

Many of the larger players growing their mining operations are based outside of China, often in North America and the Middle East, said Wayne Zhao, chief operating officer of crypto research company TokenInsight.

“China used to have low electricity costs as one core advantage, but as the bitcoin price rises now, that has gone,” he said.

Zhao said that while previously bitcoin mining in China used to account for as much as 80% of the world’s total, it now accounted for around 50%.

(Reporting by Samuel Shen and Alun John; Editing by Vidya Ranganathan and William Mallard)

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