The long, slow journey towards true customer-centric banking

Banks are working to improve their customer experience. The future of banking will be more than just a digital facelift and will include proactive use of consumer data and cognitive computing to sell to and service the customer.

Banking executives report that customer experience and mobile banking are the main drivers behind software investments they plan to make during the next 18 months, according to The State of Retail Banking 2016. Consumers, on their part, are giving banks higher grades on customer experience, according to Capgemini’s World Retail Banking Report 2016

Is that enough? According to Capgemini, even with the increase in customer experience satisfaction, profitable customer behavior increased only marginally.

With the advance of cognitive computing and analytics, banks have the opportunity to deepen their relationship with customers and drive more profits.

“A lot of banking CMOs are giving lip service to digital banking,”said Martin Häring, CMO of Misys, a banking software company. “Many banks say ‘we are customer-centric’, but in effect they are not.”

Häring envisions a world in which banks leverage transactional, behavioral and even location data to touch the customer with the right message at the right time, and proactively help the customer take control over his financial decisions.

Banks can use data to predict customer needs and proactively cross-sell products in a way the customer will appreciate. For example, software can warn a customer his expenses are higher this month, or perhaps, if expenses are lower, offer a deal on a product the customer needs, based on his purchase history.  

“What we we think of as digital banking today is actually just digitized banking,” explains Jason Bates of 11FS in a blog post. “In the same way that putting a copy of a newspaper onto an iPad is not digital news, selling albums on iTunes is not digital music, and getting fast access to taxi numbers is not digital transportation, looking at a digital copy of your paper statement and account balance on your iPhone just doesn’t cut it any more.”

Banks face many challenges in developing new products, like aging core banking systems and data or organizational silos that restrict innovation. That’s not to say nothing is being done. Efforts to launch customer-centric product are underway.

Though some banks will try to develop next generation banking apps in-house, most will turn to partnering with startups and leveraging open APIs to provide a truly personalized customer experience that empowers users.

Banks will turn to companies like Misys or Strands to power their personalization efforts. Other companies, such as Ayasdi, or IBM’s Watson, provide banks with AI or cognitive computing abilities that can better leverage consumer data.

It took newspaper almost two decades to move from online text and photos to a full digital experience that includes interactives, video and infographics. Similarly, even with some experiments in customer-centric banking, it will take banks some time to fully deliver on the promise of digital banking.


Photo via Visualhunt