‘With personalization, you have to start by addressing the silos’: Amdocs’ Bentzi Aviv
- Just look at successful tech firms to see the value true personalization unlocks.
- Banks aren't there just yet. But there are moves afoot to accelerate personalized product offers on top of existing core banking software.
There’s a lot of talk about personalization being the Holy Grail of banking. Some firms even use the terminology hyper-personalization. But to be honest, few banks actually provide deeply personalized products. With all the tech advancements of the past decade, it’s still mostly one-size-fits-all banking.
It’s not necessarily their fault, either. Given the history of banking and data siloed by products, banks can struggle piecing it all together. That’s changing though as creative technology solutions are able to help banks take a more customer centric approach and in doing so, get much better at providing personalized offers and pricing.
For this episode I spoke with Amdocs' Benzium Aviv. Bentzi heads the Financial Services Unit within the Amdocs organization. We talk about the big trends toward personalized financial products, drawing from parallels in the telecommunications industry and the technology and business changes it went through. When you hear Bentzi speak, you can tell he's passionate about personalization in financial services. He's an optimist and also pragmatic, aware of the challenges banks and other FIs have to get personalization right.
This podcast was produced by Tearsheet Studios. We worked closely with Amdocs, a global technology company with 40 years of experience providing personalized pricing and products to the telecommunications industry. The firm is increasingly active in the financial services industry, too.
This is part one of a 2-part podcast series. Episode 1 can be found here.
There's also a guide available with the best of this interview: Unlock the power of personalized product offerings: 3 approaches for banks to provide the experiences their customers want. Download here.
The following excerpts were edited for clarity.
Using telecom as a backdrop
Benzium Aviv, Amdocs: In the past, to be a competitor in the telecommunications business, you had to invest hundreds of millions of dollars into building a network. The regulators figured out that the way to open up the market for competition would be by forcing the network operators to open up the network and allowing the virtual network operators to become an effective competitor to other telecommunication companies.
Number portability also changed things. When a customer chooses to move between networks, they are allowed to keep their number because that was a kind of a stickiness mechanism for network operators. It actually allowed them to create a kind of a difficult movement process for customers moving between networks.
Open Banking has probably the closest resonance to number portability and the move to allow MVNOs.
With the introduction of open banking APIs, it was actually the point in time in which the regulator told banks that you need to play nicely with fintechs. You need to allow fintechs to utilize your banking infrastructure. It started with processing payments, but it was the first time, as far as I remember, the banks were kind of forced into allowing fintechs to utilize infrastructure provided by banks to service better, faster, more efficiently with better prices.
Parallels from telecom to banking
There are similarities in what happened in telecommunications to what we see going on in financial services in recent years. Now number portability is also something that's been out there, but being able to move in between banks that easily is not something that is going to happen anytime soon. But when it comes to number portability, one of the reasons why you would not consider moving or switching a bank is because of the complexity of redirecting everything in your financial world: your salary, your direct debits, your insurance, everything today is linked to your current account.
So by going into the process of switching a bank means that you need to change your bank account number. I predict what will happen next is that the number portability would be also allowed in banking -- in the sense that customers could switch between banks while keeping their bank account number.
Siloed data gets in the way of personalization
The thing is that the fact that data is siloed means that it's extremely difficult to create a personalized experience. If you look at yourself as a typical customer of a bank, you probably have different services that you consume from the bank. You will actually see that you get different experiences. So your credit card statement looks different than your mortgage statement, which will look different than your deposit statement and so forth.
What we commonly see is that because of this silo-type of a situation that banks deal with, customers are handled on the silo level. And it creates a difficulty. Because when you want to look at the customer with more of a holistic viewpoint, we want to create this 360 view of the customer. And if you want to start empowering them, and if you want to start giving them a personalized experience, which in my mind is the holy grail of banking, this is where we all aim to be, you need to start by dealing with the fact that everything is siloed in a way that even the technology itself is siloed. So you have a different stack to do different things.
Hollowing out the core of banking software
If you look at the customer attributes on a deposit system, it will look different than a customer in investment and insurance systems. We tell our customers, to get really good at personalization, you could invest heavily into replacing your core banking system, because the obvious answer can be just to centralize everything and create one core banking system that does it all. But that kind of a solution doesn't exist, as far as I know.
What we offer our customers is actually to use a digital banking platform that sits on top of your core systems. And then, you can gradually hollow the core. You can move all product-related, product management-related activities into an enterprise solution. So rather than managing products on the silo level, you have one centralized system: we call it Catalog One. So we have one centralized system that you can maintain all product related activities in one place. This system is configurable enough or flexible enough to be able to maintain any type of a product -- deposits, insurance, investments -- you name it, it's probably already supported.
Externalizing products also enables FIs to embed fintech products
We actually refer to it as the federated catalog approach, which means that you can actually create an ecosystem of catalogs with partners. In some parts of the world, we are already creating a federated catalog in which you can bundle partners' products with your products. It can be through a marketplace, and it can also be through your own partnership engagement model.
So you can create your own marketplace and allow fintechs or your partners to introduce their products alongside yours, but still offer it as a single bundle. From a customer's perspective, they see one bundle that has all sorts of different products embedded into it. Part of it comes from the bank, part of it can come from a partnership that the bank has with fintechs and third party providers.
By the way, it also brings us to the personalization experience. It's the understanding that to eventually be able to service customers well enough, you need to give them an ecosystem that they can consume all sorts of different services that they find useful, rather than just limiting them to what you have to offer. We see it as a possibility to increase revenues and to increase customer centricity.
Working with the cores to get better personalization
Yes, there is work to be done on the core banking system to get better personalization. But what we saw over the years is that if you have a sophisticated and a flexible product management system, like the one that we offer (Catalog One from Amdocs), it can actually take some of the work from the core banking system. That's why we call it hollowing the call because it gives you the flexibility to address elements like charging logic.
Charging logic gets hard coded into the core banking system over the years for different reasons. There were charging logics that were embedded into the core banking systems, like how do you calculate interest? How do you calculate a deposit? How do you calculate commissions?
What we offer to our customers, we say we can identify this rating logics, and take them out of the core banking system and put them into our Catalog One, because Catalog One has the possibility through a user interface to embed this rating logic. So it's not just the way that you configure the product, it's also how you charge this product. How you calculate the commission for this specific product in the context of the bundle. Being able to do that, we can then push that information into the core banking system.
Centralizing products can free product and marketing teams from IT
Once you make the investment to create personalized recommendations and pricing, a lot opens up for the core banking business. First, It empowers the business to take ownership of product management. So many of the customers that we work with, when they make changes that are related to product, it becomes an IT activity. Projects are initiated by the business, but they become an IT project, therefore they go into queue, suffer delays, and time to market tends to be extremely long because of availability.
So one of the most powerful things that we saw while implementing these solutions is the real empowerment of the business. It's the system itself that gives the business user the possibility to define products, to change product attributes. Simple things like changing a discount level on a product, you look at the typical setup, it will be an IT project. When we put the system in place, changing a discount level is something that you can do in literally real time if the process allows it.
There are obviously requirements related to approvals, but in principle, the first thing that we see almost immediately is it's actually empowering the business to take ownership of product management, defining products, changing products, and so forth, which changes the entire time to market dramatically.
Not just for customers: A better view of products across the organization, too
Once you start centralizing products, banks get to see products in a centralized manner, too. So instead of just looking in different systems -- looking at credit cards in one system and deposits in another -- they now have a centralized place that they can see all products. You start to see new ideas coming in. It actually accelerates the entire management of products, the entire flexibility of how to introduce products to the market.
We've seen cases that at least one of our customers moved from months to overnight types of activities when it comes to managing products. I think that this is the most powerful outcome: empowerment and the fact that the entire product lifecycle management becomes agile and much faster. That brings the biggest value to our customers.