The term “customer-centric” has been around for almost as long as the 35 years I’ve been part of the financial services industry. Banks have used the term to focus on customers, consumers, small businesses, and corporations while justifying innovation in new products, services, and delivery channels. But if the word “centric” implies a circle with the customer at the heart of the bank’s strategy, it has been a very small circle, with an area that only encompassed the bank’s own products and with little regard to any life led by the customer outside the bank.
This is all about to change. And the change will disrupt and challenge the very term banks have come to use as a guide to their relationship strategies and technology investments. The change is not being driven by any fundamental difference in the customer (although COVID-19 has certainly modified the way consumers are interacting with practically everything these days). Rather, the move to open systems and data-sharing is uncovering an opportunity that will become a true game-changer for not only the banking industry, but for every industry with which consumers and businesses conduct their lives. What the global pandemic has done is accelerated the need to invest in technologies that can better support the customer throughout their life experiences.
Imagine a typical consumer spending a day in the city. If we were to use a Ford-like systematic approach to the consumer’s movements, we’d see that the number of interactions with multiple industries create an overall experience not governed by any one interaction or industry, but influenced and supported by all of them. In Ford’s case, all those activities led to the manufacture of a whole thing – a car. For consumers and businesses, all those interactions also create a whole experience on any given day, month, or year. However, in today’s world, those interactions are only somewhat orchestrated. Whether the consumer pays for a ride-sharing service, a meal at a restaurant, or a new mobile phone, these interactions are carried out through invisible, point-to-point connections between enterprises, with little added value or knowledge gained from the immense ecosystem in which the consumer travels. There is no whole or complete experience.
In what IDC calls the Future of Industry, we define an ecosystem comprised of shared applications, shared operations, and, most importantly in this context, shared data that will create opportunities for financial institutions that take the lead in becoming participants in the complex and transitory networks that its customers generate every day, and re-generate constantly, in order to form complete and connected experiences for their customers
Cross-Industry Service Coming
This is where the challenge will be. It’s one thing to support this model of customer-centricity from an operational perspective. Infrastructures and systems based on open APIs make it relatively easy to participate in these ecosystems, at least for institutions that make the necessary technology investments today. The real challenge will be in how any given bank will not only leverage but activate the enormous quantities of data from these ecosystems into valuable intelligence and insights. At each step of every unique journey the customer makes, mountains of data are generated that represent behaviors, preferences, habits, requirements, and identity. A bank can use that data to not only support the journey, but to foresee future journeys and deliver cross-industry customer-centric service. Delivering this service requires a new type of insight that enables banks, retailers, and other industries to understand the larger context of their customers, acknowledge the enterprise’s role as participant (not as destination), and improve and connect the customer experience from one interaction to the next. Imagine now the consumer journey I described earlier. But this time, the bank understands the customer’s cash flow, creditworthiness, and preferences for retail outlets. Working with information from a geo-location service, or a local merchant, the bank could easily make an offer that discounts a meal at a restaurant within walking distance of the consumer, perhaps even using past restaurant data to narrow down the choice of cuisine. Or the bank could offer a discounted interest rate loan based on a real-time risk assessment for a high-value product like a laptop at the point of purchase. Such cross-industry service will be the new definition of customer-centricity.
Of course, providing this service demands that the bank consider the customer, whether a consumer or a business, as totally unique. Customer segmentation will still be useful but only in the broadest sense. For example, one trend to which most banks have been paying attention is the move from next-best-product to next-best-action. While next-best-product can arguably succeed in environments that identify large customer segments, next-best-action (e.g., waiving a fee, offering a reduced rate based on employment status, etc.) requires a more intimate knowledge of that specific customer. The Future of Industry requires that financial institutions gather, analyze, and use data from multiple industries to extend the value proposition to the customer, on a 1-to-1 basis.
While financial institutions have been slowly evolving to what is often referred to as a “360° customer view,” most are still not leveraging the power of the data that invariably exists within the walls of the bank. Combined with the ecosystem view described here, progression on this front will require more revolution than evolution – a complete rethinking of the analytics platform as not only enterprise-wide, but open to other participants and industries outside the organization. This in turn is characterized by open, scalable platforms with intelligence built in. Banks that acknowledge their role as participant and not destination in their customer’s daily journeys, and that deploy advanced analytics platforms to use data to participate in those journeys effectively and proactively will reap the rewards of customer loyalty and expanded relationships that support individual customer needs, preferences, and intent.